Legislature(2005 - 2006)CAPITOL 17

04/13/2005 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 213 ALCOHOL SERVER EDUCATION TELECONFERENCED
Moved Out of Committee
*+ HB 226 PERSONAL INFORMATION BREACH TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
= HB 227 ALASKA SMALL LOANS ACT
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 13, 2005                                                                                         
                           3:34 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Pete Kott                                                                                                        
Representative Gabrielle LeDoux                                                                                                 
Representative Bob Lynn                                                                                                         
Representative Norman Rokeberg                                                                                                  
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Harry Crawford                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 226                                                                                                              
"An Act relating to breaches of security involving personal                                                                     
information; and relating to credit report security freezes."                                                                   
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 213                                                                                                              
"An Act relating to alcohol server education."                                                                                  
                                                                                                                                
     - MOVED HB 213 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 227                                                                                                              
"An Act relating to the Alaska Small Loans Act; and providing                                                                   
for an effective date."                                                                                                         
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 226                                                                                                                  
SHORT TITLE: PERSONAL INFORMATION BREACH                                                                                        
SPONSOR(S): REPRESENTATIVE(S) GARA                                                                                              
                                                                                                                                
03/21/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/21/05       (H)       L&C, JUD                                                                                               
04/06/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
04/06/05       (H)       <Bill Hearing Postponed>                                                                               
04/13/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 213                                                                                                                  
SHORT TITLE: ALCOHOL SERVER EDUCATION                                                                                           
SPONSOR(S): REPRESENTATIVE(S) RAMRAS                                                                                            
                                                                                                                                
03/09/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/09/05       (H)       L&C, FIN                                                                                               
04/13/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 227                                                                                                                  
SHORT TITLE: ALASKA SMALL LOANS ACT                                                                                             
SPONSOR(S): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/21/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/21/05       (H)       L&C, JUD                                                                                               
04/01/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
04/01/05       (H)       Bill Postponed                                                                                         
04/04/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
04/04/05       (H)       Scheduled But Not Heard                                                                                
04/13/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE LES GARA                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 226.                                                                                          
                                                                                                                                
GEORGE BERRY                                                                                                                    
Teamsters Local 959                                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  During discussion of HB 226, stressed the                                                                  
need to keep an individual's right to privacy at the forefront                                                                  
when [employers] perform background checks.                                                                                     
                                                                                                                                
JOHN GEORGE, Lobbyist                                                                                                           
American Council of Life Insurers;                                                                                              
Property Casualty Insurance Association of America                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of the concept of HB
226, but expressed some concerns.                                                                                               
                                                                                                                                
BARBARA HUFF TUCKNESS, Director                                                                                                 
Governmental and Legislative Affairs                                                                                            
Teamster Local 959                                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 226.                                                                            
                                                                                                                                
CLYDE SNIFFEN, Assistant Attorney General                                                                                       
Civil Division (Anchorage)                                                                                                      
Department of Law                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Stated that the department has no legal                                                                    
concerns with HB 226.                                                                                                           
                                                                                                                                
STEVE CLEARY, Executive Director                                                                                                
Alaska Public Interest Research Group (AkPIRG)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During discussion of HB 226, applauded the                                                                 
quick efforts of the committee.                                                                                                 
                                                                                                                                
DAN SIMIEM, President                                                                                                           
Laborers Local 942                                                                                                              
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 226.                                                                            
                                                                                                                                
REPRESENTATIVE JAY RAMRAS                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke as the sponsor of HB 213.                                                                            
                                                                                                                                
MIKE O'HARE, Staff                                                                                                              
to Representative Kott                                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  During discussion of HB 213, related his                                                                   
experience with the techniques in alcohol management course.                                                                    
                                                                                                                                
JON BITTNER, Staff                                                                                                              
to Representative Anderson                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 227 on behalf of the House                                                                    
Labor and Commerce Standing Committee, sponsor.                                                                                 
                                                                                                                                
MARK DAVIS, Director                                                                                                            
Division of Banking & Securities                                                                                                
Department of Commerce, Community, & Economic Development                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Expressed concerns with HB 227.                                                                            
                                                                                                                                
MARK HAMBLEN                                                                                                                    
Wells Fargo Financial                                                                                                           
(No address provided)                                                                                                           
POSITION STATEMENT:  Testified in support of HB 227.                                                                            
                                                                                                                                
RICHARD BLOCK                                                                                                                   
Mellen Investment Company, LLC                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Expressed concerns with HB  227, and stated                                                               
that it would put his company out of business.                                                                                  
                                                                                                                                
SHANE OSOWSKI                                                                                                                   
Equity Investors, Inc.                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Expressed concerns with HB 227.                                                                            
                                                                                                                                
JIM JOHNSON                                                                                                                     
Affordable Loan Company                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified on HB 227.                                                                                       
                                                                                                                                
KENNETH GAIN, President                                                                                                         
Cash Now Financial                                                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Expressed   concerns  with  HB  227,  and                                                               
suggested that at a minimum Section 1 be deleted.                                                                               
                                                                                                                                
PEGGY ANNE MCCONNOCHIE                                                                                                          
Alaska Association of Realtors                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Expressed   concerns  with  HB  227,  and                                                               
suggested that at a minimum Section 1 be deleted.                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order at  3:34:26  PM.    Representatives                                                             
Anderson  was present  at  the call  to  order.   Representatives                                                               
Rokeberg,  Lynn,  LeDoux, Kott,  and  Guttenberg  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
HB 226-PERSONAL INFORMATION BREACH                                                                                            
                                                                                                                                
CHAIR ANDERSON announced  that the first order  of business would                                                               
be HOUSE BILL  NO. 226, "An Act relating to  breaches of security                                                               
involving  personal information;  and relating  to credit  report                                                               
security freezes."                                                                                                              
                                                                                                                                
3:34:59 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON then  announced that  HB 226  would be  held over                                                               
until Friday,  at which time  he indicated the  legislation would                                                               
be  reported from  committee.   He mentioned  that one  party has                                                               
requested that the legislation be held  in order to have time for                                                               
a bit  more research.   He  also mentioned  his intention  to co-                                                               
sponsor HB 226.                                                                                                                 
                                                                                                                                
3:35:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LES  GARA,  Alaska  State  Legislature,  sponsor,                                                               
noted  that  there  is  a  proposed  committee  substitute.    He                                                               
explained  that  HB  226  responds   to  the  ChoicePoint,  Inc.,                                                               
security fraud  cases.  He  informed the committee that  a number                                                               
of  financial  companies  that make  money  by  selling  people's                                                               
personal  and  financial  information   don't  use  the  required                                                               
security safeguards.  Therefore,  people's personal and financial                                                               
information  are  being stolen.    In  the ChoicePoint  case  the                                                               
information of 145,000  people was stolen and  the company didn't                                                               
immediately  tell  the  victims.    This  legislation  follows  a                                                               
California law that specifies that  if a company that makes money                                                               
on  people's  information  discovers that  information  has  been                                                               
stolen or  misused, it  must inform  the individuals  right away.                                                               
In the  ChoicePoint case,  a number of  months passed  before the                                                               
145,000 people were told that  their information had been stolen.                                                               
In  California,  the individuals  were  notified  because of  the                                                               
state law requiring such knowledge  be provided to the individual                                                               
whose information was lost or stolen.                                                                                           
                                                                                                                                
3:38:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  highlighted that  HB 226 also  provides that                                                               
an  individual who  is worried  that his  or her  information has                                                               
been stolen can  call one of the three  credit reporting agencies                                                               
and request  a hold  on his  or her  financial information.   The                                                               
aforementioned   is   referred   to   as   a   security   freeze.                                                               
Representative  Gara  related that  the  Department  of Law,  the                                                               
Alaska  Public Interest  Research  Group (AkPIRG),  and the  U.S.                                                               
Public Interest  Research Group (AkPIRG) appear  to be supportive                                                               
of this legislation.                                                                                                            
                                                                                                                                
3:39:23 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON surmised  that HB  226  is senior  friendly.   He                                                               
recalled  reading information  relating  that one  of the  senior                                                               
advocacy  groups supports  the California  legislation, on  which                                                               
this based.                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  stated that  AARP is  supportive of  HB 226.                                                               
He opined  that in this  kind of  security fraud, seniors  are as                                                               
vulnerable  as everyone  else not  more  vulnerable than  others.                                                               
Representative Gara further opined  that everyone has an interest                                                               
in knowing if  one's personal and financial  information has been                                                               
stolen.   Moreover, it's  quite an  outrage that  these companies                                                               
aren't informing  people when the  information is stolen.   "They                                                               
make  money off  us, and  they  have a  duty to  protect us,"  he                                                               
stressed.                                                                                                                       
                                                                                                                                
The committee was at-ease from 3:40 p.m. to 3:44 p.m.                                                                           
                                                                                                                                
3:44:39 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON  moved to  adopt  CSHB  226,  Version I,  as  the                                                               
working  document.   There  being  no  objection, Version  I  was                                                               
before the committee.                                                                                                           
                                                                                                                                
3:46:11 PM                                                                                                                    
                                                                                                                                
GEORGE BERRY,  Teamsters Local 959,  informed the  committee that                                                               
he  works in  the  oil  and gas  industry  through the  Teamsters                                                               
union.  He  related that he and his coworkers  are very concerned                                                               
with these  types of businesses operating  seemingly unregulated.                                                               
Mr. Berry noted that the  legislation appears to require a remedy                                                               
for the individual  to whom harm is done from  poor or inaccurate                                                               
reporting, or  theft or disclosure  of information to  an unknown                                                               
third party,  and for that he  thanked the sponsor.   He stressed                                                               
the  need  to  keep  an  individual's right  to  privacy  at  the                                                               
forefront when [employers] perform  background checks.  Mr. Berry                                                               
related  that  this will  be  implemented  in  the [oil  and  gas                                                               
industry] in the  near future and thus there is  the desire to be                                                               
sure  that  the  appropriate  protections are  in  place  in  the                                                               
[employee's] contract language.                                                                                                 
                                                                                                                                
3:48:24 PM                                                                                                                    
                                                                                                                                
JOHN  GEORGE,  Lobbyist,  American   Council  of  Life  Insurers;                                                               
Property Casualty Insurance  Association of America, acknowledged                                                               
that   insurance   companies   have  much   of   this   sensitive                                                               
information,  such as  social security  numbers.   The  insurance                                                               
companies   are  concerned   with  regard   to  protecting   such                                                               
information.     He   related  that   generally,  the   insurance                                                               
[industry] supports  the concept of HB  266, which seems to  be a                                                               
national  movement.   He  mentioned that  this  concept has  been                                                               
introduced  in  about  28  states.     Mr.  George  informed  the                                                               
committee  that Congressional  legislation, which  is essentially                                                               
the earlier mentioned California bill,  has been introduced.  The                                                               
aforementioned,  national  approach,   is  probably  better  than                                                               
having  each  state  pass it's  own  legislation,  possibly  with                                                               
slight  differences.    Therefore,  he  urged  the  committee  to                                                               
consider  that.   Mr. George  related that  the organizations  he                                                               
represents believe that privacy  of information and disclosure of                                                               
any breach of this type  of information should apply to everyone.                                                               
Although  this legislation  doesn't  specifically  state that  it                                                               
applies to  governmental entities,  the sponsor has  related that                                                               
the reference  to "any person"  does include the state  and other                                                               
governmental entities, he noted.                                                                                                
                                                                                                                                
MR. GEORGE  further informed the  committee that his  clients are                                                               
also concerned  with regard to information  that's being acquired                                                               
and information  that's being  accessed.   He explained  that one                                                               
can acquire  something, but  not have access  to it  because it's                                                               
encrypted data.   In that  case, there  really isn't a  breach of                                                               
information.   Again,  the  sponsor  believes the  aforementioned                                                               
concern  is  addressed.     Mr.  George  pointed   out  that  the                                                               
legislation   refers  to   encryption,  which   is  the   current                                                               
technology used to  protect information.  However,  in the future                                                               
there may be other applications,  and therefore he suggested that                                                               
the  language should  be  broadened to  refer  to "encryption  or                                                               
other technology  that prohibits access  to the data".   He noted                                                               
that  because  other  states are  adopting  similar  legislation,                                                               
companies   already   have   notification  processes   in   mind.                                                               
Therefore,  he  expressed  the  need  to  have  the  notification                                                               
process  be consistent  with  the law  as long  as  it meets  the                                                               
specified  timeframes  to get  the  notice  out,  even if  a  bit                                                               
different than  what's prescribed  in the  law.   Thus, companies                                                               
could use the same notice procedures  in all states.  He informed                                                               
the committee  that the sponsor has  agreed to meet with  him and                                                               
discuss his concerns.                                                                                                           
                                                                                                                                
3:51:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked if  anyone used a  more generic,                                                               
board language than "encryption."                                                                                               
                                                                                                                                
MR.  GEORGE replied  yes, and  suggested that  the language  "any                                                               
other method or technology that  renders the personal information                                                               
unreadable or  unusable" would  include future  technology that's                                                               
developed.                                                                                                                      
                                                                                                                                
BARBARA  HUFF TUCKNESS,  Director,  Governmental and  Legislative                                                               
Affairs, Teamster Local 959, related her  support of HB 226.  She                                                               
said that Mr. George adequately  covered her concerns with regard                                                               
to background  checks.  For smaller  employers that [financially]                                                               
don't  have access  to  a secure  system  for background  checks,                                                               
something in  statute would  be appropriate.   Ms.  Huff Tuckness                                                               
noted  that  she is  working  with  the  sponsor to  address  the                                                               
background  check,  the  chain  of  custody,  and  how  documents                                                               
received  on  an  employee are  handled  through  the  processing                                                               
company or the specific employer.                                                                                               
                                                                                                                                
CLYDE  SNIFFEN,   Assistant  Attorney  General,   Civil  Division                                                               
(Anchorage), Department  of Law, informed the  committee that the                                                               
department reviewed  HB 226 for  legal concerns for which  it has                                                               
none.  Mr.  Sniffen opined that HB 226 will  help address some of                                                               
the earlier mentioned security breach issues.                                                                                   
                                                                                                                                
STEVE   CLEARY,  Executive   Director,  Alaska   Public  Interest                                                               
Research Group  (AkPIRG), applauded the committee's  quick action                                                               
in addressing this  national problem.  He  informed the committee                                                               
that he  just learned  that about  185,000 GM  MasterCard holders                                                               
had their personal  information breached again.   The question is                                                               
how and  when these people will  be notified as well  as how best                                                               
these people can protect themselves.                                                                                            
                                                                                                                                
DAN SIMIEM, President, Laborers Local  942, stated his support of                                                               
HB 226.  Mr. Simiem pointed  out that companies that retrieve and                                                               
bank this data should have some  kind of firewall protection.  He                                                               
offered  his  understanding that  the  problem  comes when  these                                                               
companies  go  to smaller  [entities],  which  tend to  open  the                                                               
portals  to the  information.   Therefore, he  requested that  be                                                               
given consideration.                                                                                                            
                                                                                                                                
3:56:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  highlighted that  the legislation  refers to                                                               
businesses that use personal information.   He noted that when he                                                               
gets  new  software, it  has  to  be registered,  which  includes                                                               
personal information.   He asked if that would  be included under                                                               
HB  226  or would  it  be  limited  to  large companies  such  as                                                               
ChoicePoint.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA clarified that  [under HB 226] if information                                                               
on an  individual held  by any government  entity or  company has                                                               
been breached,  the individual(s) have  to be told.   He surmised                                                               
that Representative Lynn  is alluding to the  companies that sell                                                               
information, for which legislation was  introduced last year.  He                                                               
said that it's probably worth  another look.  Representative Gara                                                               
clarified that HB  226 relates to stolen  information rather than                                                               
the sale of information.  He  mentioned his concern that the sale                                                               
of  information may  be regulated  by  federal law  and thus  the                                                               
state may  not be  able to  address it.   In further  response to                                                               
Representative  Lynn, he  specified  that HB  226 doesn't  change                                                               
anything  in  regard  to  entering  information  for  a  computer                                                               
information  form, for  example.   However,  he said  that is  of                                                               
concern as well.                                                                                                                
                                                                                                                                
3:58:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG turned  to  the situation  in which  a                                                               
site from  which one has  downloaded information pulls  data from                                                               
an individual's computer  and uses the data.   The aforementioned                                                               
is  a breach  of the  individual's security.   He  suggested that                                                               
most people  don't have  firewalls on their  home computers.   He                                                               
asked if the aforementioned situation is addressed in HB 226.                                                                   
                                                                                                                                
REPRESENTATIVE GARA  reiterated that  HB 226  addresses companies                                                               
that   have   individuals'    personal   information   and   [the                                                               
notification  procedures] required  when they  discover that  the                                                               
information has been  stolen.  This legislation  merely says that                                                               
once the company finds out  that the information has been stolen,                                                               
they have to inform the individuals  immediately.  The sale of an                                                               
individual's  information is  of great  concern, but  he said  he                                                               
didn't know how to regulate it at this point.                                                                                   
                                                                                                                                
REPRESENTATIVE LEDOUX  posed a situation  in which  an individual                                                               
took information  from one  of these  companies that  stores data                                                               
and then sells it.  She inquired as to what would happen.                                                                       
                                                                                                                                
REPRESENTATIVE GARA  reiterated that HB 226  protects people when                                                               
there  has  been  an  unauthorized   use  of  their  information.                                                               
Therefore, if  a company that  holds data discovers  that someone                                                               
has taken  data without the  company's consent, then  the company                                                               
has to  inform those  whose data  was taken.   He said  he wasn't                                                               
sure  of the  federal rules  regarding a  situation in  which the                                                               
person who took the information subsequently sells it.                                                                          
                                                                                                                                
4:01:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  whether  "they" have  to tell  [the                                                               
individual] that his or her information is being sold.                                                                          
                                                                                                                                
REPRESENTATIVE  GARA  specified  that  this  legislation  doesn't                                                               
address the sale  of the information that has  been authorized by                                                               
the  company housing  the data.   Again,  this is  an issue  that                                                               
should be reviewed, but he said  he didn't know how to address it                                                               
at this point.                                                                                                                  
                                                                                                                                
4:01:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG surmised  that  it  would address  the                                                               
Commerce Clause.  He inquired as  to how those companies that are                                                               
located out of state or out of the country would be addressed.                                                                  
                                                                                                                                
REPRESENTATIVE GARA highlighted that  this legislation includes a                                                               
provision that specifies  that it applies to the  full extent the                                                               
constitution  allows.   Generally,  if there  is an  out-of-state                                                               
company  that is  selling personal  information of  Alaskans, the                                                               
company has "touched  us enough" that the state  can regulate it.                                                               
Therefore, this  legislation applies to companies  located out of                                                               
state if they use the information of Alaskans.                                                                                  
                                                                                                                                
CHAIR   ANDERSON,  upon   determining  there   were  no   further                                                               
questions, closed public testimony.                                                                                             
                                                                                                                                
[HB 226 was held over.]                                                                                                         
                                                                                                                                
HB 213-ALCOHOL SERVER EDUCATION                                                                                               
                                                                                                                                
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be  HOUSE  BILL NO.  213,  "An  Act  relating to  alcohol  server                                                               
education."                                                                                                                     
                                                                                                                                
4:05:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JAY  RAMRAS, Alaska State Legislative,  sponsor of                                                               
HB 213, began  by highlighting that as a restaurant  owner he has                                                               
accumulated  years  of  experience   in  the  food  and  beverage                                                               
industry.   He  said  that  this bill  covers  the techniques  in                                                               
alcohol management  (TAM) course, which  provides extraordinarily                                                               
useful  information   for  servers,  bartenders,   security,  and                                                               
doormen.   However,  under the  current law  individuals have  to                                                               
renew their TAM card by  retaking the entire four-hour exam every                                                               
three  years.     The  aforementioned  is  time   ill  spent  for                                                               
professional servers  who have  been in  the industry  for years.                                                               
Therefore,  the legislation  would  provide that  those who  have                                                               
already taken the four-hour course  would merely have to take the                                                               
written  test  demonstrating  an   understanding  of  the  course                                                               
subject.   The aforementioned is  an excellent  funding mechanism                                                               
for  Cabaret Hotel  Restaurant &  Retailer's Association  (CHARR)                                                               
and other advocacy  groups in the industry, since there  is a fee                                                               
charged  for  the  course.    The  fees  for  the  course  aren't                                                               
addressed in this legislation.  He  stated that he is only trying                                                               
to be mindful  of professionals in the food  service industry and                                                               
suggest that  after being in  the industry for three  years, they                                                               
should be allowed  to demonstrate their competency  with the laws                                                               
and regulations concerning alcohol  rather than requiring another                                                               
full course and exam.                                                                                                           
                                                                                                                                
4:07:18 PM                                                                                                                    
                                                                                                                                
CHAIR  ANDERSON  asked  how  much  it would  cost  to  renew  the                                                               
certification.                                                                                                                  
                                                                                                                                
REPRESENTATIVE RAMRAS  answered that  an applicant would  have to                                                               
go  through   the  same  facility   and  the  same   testing  and                                                               
certification  program.    He reiterated  that  this  legislation                                                               
would  not  make  any  changes  to  the  fees,  but  would  allow                                                               
restaurant workers to  arrive in the last half hour  of the four-                                                               
hour exam to take the  qualifying test to obtain recertification.                                                               
The examination is really not the  hard part.  He related his own                                                               
experience  with the  course, and  characterized the  challenging                                                               
part  as  sitting  through the  course  itself.    Representative                                                               
Ramras stated that  the TAM course is  extraordinarily useful and                                                               
makes  servers  more  knowledgeable   about  the  law  concerning                                                               
alcohol, which makes the dispensing of alcohol safer.                                                                           
                                                                                                                                
4:09:43 PM                                                                                                                    
                                                                                                                                
CHAIR ANDERSON surmised then that  this legislation would allow a                                                               
worker in  the food and  beverage industry to skip  the four-hour                                                               
course and simply take the test.                                                                                                
                                                                                                                                
REPRESENTATIVE RAMRAS said that  this correct, clarifying that it                                                               
would be  optional whether  or not the  individual would  sit for                                                               
the four-hour course.  These  workers, numbering in the thousands                                                               
across the  state, oftentimes surrender  work shifts to  take the                                                               
four-hour course for  which the establishment does not  pay.  The                                                               
proposal embodied in HB 213  would save time while the individual                                                               
would  still  have  to  demonstrate   competency  of  the  course                                                               
material.                                                                                                                       
                                                                                                                                
4:11:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  asked if this  legislation was  supported by                                                               
CHARR.                                                                                                                          
                                                                                                                                
REPRESENTATIVE RAMRAS  recalled that CHARR indicated  its support                                                               
for  HB  213 when  the  organization  was  present earlier.    In                                                               
further  response to  Representative Kott,  Representative Ramras                                                               
said he  was not  a TAM  instructor, but he  has sat  through the                                                               
course.                                                                                                                         
                                                                                                                                
REPRESENTATIVE LEDOUX related her  understanding that the purpose                                                               
of  retaking the  test  is merely  the receipt  of  the fee,  and                                                               
therefore she  questioned why  these workers  can't just  pay the                                                               
fee and forgo the test.                                                                                                         
                                                                                                                                
REPRESENTATIVE RAMRAS  disagreed with Representative  LeDoux, and                                                               
stressed that  there is  value in requiring  that those  who have                                                               
taken  the  exam  remain  familiar with  the  rules  that  govern                                                               
serving alcohol.  Therefore, he  opined that it's appropriate for                                                               
the   state  to   enforce  a   renewal  of   the  TAM   card  and                                                               
certification.   However,  if one  can demonstrate  competency of                                                               
the information,  then there  is no  need to  sit for  the entire                                                               
course.   Representative Ramras characterized  the exam  as easy,                                                               
with a low failure rate.   The exam, he explained, is designed to                                                               
get  the industry  workers  to  sit through  the  three hours  of                                                               
course instruction.  Therefore, passage  of the exam fulfills the                                                               
Alcoholic Beverage Control Board's requirement.                                                                                 
                                                                                                                                
4:13:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked if  it's the sponsor's intent for                                                               
the  fee to  be the  same for  taking the  three-hour course  and                                                               
exam, and the exam alone.                                                                                                       
                                                                                                                                
REPRESENTATIVE  RAMRAS  clarified  that  his  intent  is  not  to                                                               
interfere with private  enterprise, and therefore it's  up to the                                                               
entities that  offer the TAM  course to set  the fee.   This bill                                                               
provides the worker with the ability  to forgo the three hours of                                                               
instruction when seeking recertification.                                                                                       
                                                                                                                                
4:15:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG   announced  that  he  didn't   see  a                                                               
statement  from  the ABC  Board,  and  was  wondering if  it  had                                                               
offered any comment on this.                                                                                                    
                                                                                                                                
4:16:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  informed the  committee that when  the ABC                                                               
Board  performs  a  compliance test,  it  reviews  whether  every                                                               
single  employee [in  an establishment  serving  alcohol] has  to                                                               
produce a current  TAM card.  An employee has  30 days upon being                                                               
hired or expiration of a TAM card to take the course.                                                                           
                                                                                                                                
4:17:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  asked if  Representative Ramras  had retaken                                                               
the refresher course.                                                                                                           
                                                                                                                                
REPRESENTATIVE RAMRAS  pointed out that  he was not a  server and                                                               
that he  did not have  to take  the class, although  most working                                                               
owners are  required to  have a TAM  card.  He  said that  at his                                                               
restaurant he is allowed to greet, but not seat guests.                                                                         
                                                                                                                                
REPRESENTATIVE KOTT  pointed out that  Section 1 refers to  a TAM                                                               
card being  shown as  proof to  the ABC board,  and asked  if the                                                               
issuance  of such  a card  is something  new or  is this  section                                                               
merely making the use of the card clear to everyone.                                                                            
                                                                                                                                
REPRESENTATIVE  RAMRAS clarified  that  the TAM  card has  always                                                               
been an  acceptable way to  prove one's course completion  to the                                                               
ABC Board.  This legislation  simply says that when an individual                                                               
demonstrates the competency, he or she  will be issued a new card                                                               
with a new expiration date.                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT  stated that one  of his staff,  Mike O'Hare,                                                               
had been certified and could offer his view of the TAM course.                                                                  
                                                                                                                                
4:20:33 PM                                                                                                                    
                                                                                                                                
MIKE  O'HARE,   Staff  to   Representative  Kott,   Alaska  State                                                               
Legislature, stated that currently, there  is a renewal test that                                                               
requires one  to sit  through the entire  TAM course  every three                                                               
years.   It is  not a  difficult test  after sitting  through the                                                               
four-hour course, he opined.                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT moved to report  HB 213 out of committee with                                                               
individual  recommendations  and  the  accompanying  zero  fiscal                                                               
note.  There being no objection, it was so ordered.                                                                             
                                                                                                                                
HB 227-ALASKA SMALL LOANS ACT                                                                                                 
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be  HOUSE BILL  NO. 227,  "An Act  relating to  the Alaska  Small                                                               
Loans Act; and providing for an effective date."                                                                                
                                                                                                                                
JON  BITTNER,  Staff  to Representative  Anderson,  Alaska  State                                                               
Legislature, presented  HB 227 on  behalf of the House  Labor and                                                               
Commerce Standing  Committee, sponsor.   Mr.  Bittner paraphrased                                                               
from   the   following   written  sponsor   statement   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     The  last  significant  revision of  the  Alaska  Small                                                                    
     Loans Act  (ASLA) occurred between  1995 and  1996. The                                                                    
     bill  (then numbered  House Bill  319) was  signed into                                                                    
     law in  July 1996 and  brought this section  of statute                                                                    
     up-to-date  with  the  changing market  demands.  There                                                                    
     have been  several changes  to the  market in  the last                                                                    
     decade, and more importantly, there  has been many more                                                                    
     changes in technology. As  computer systems become more                                                                    
     and  more  adept  at   taking,  storing,  sorting,  and                                                                    
     retrieving information, our laws  must reflect the most                                                                    
     efficient use of those innovations.                                                                                        
                                                                                                                                
     House  Bill  227, the  latest  revision  of AS  06.020,                                                                    
     takes  into  account  not  only  the  market-driven  or                                                                    
     technological  changes, but  also  the  changes in  the                                                                    
     value of money. Put simply,  goods cost more today than                                                                    
     they  did twenty,  ten,  or even  five  years ago.  For                                                                    
     example, it  is not  unheard of  to pay  between $7,500                                                                    
     and   $10,000  for   an  ATV   or  snowmachine.   Also,                                                                    
     manufacturer's  list  prices  for new  automobiles  can                                                                    
     start as high as $40  - $50,000. Clearly the definition                                                                    
     of   what  constitutes   a   small   loan  needs   some                                                                    
     adjustment.                                                                                                                
                                                                                                                                
     HB   227   improves   the   business   environment   by                                                                    
     encouraging  industry   competition,  which  ultimately                                                                    
     should  decrease  loan  prices  as  well  as  providing                                                                    
     consumers  additional products  and services  to choose                                                                    
     from. HB  227 will also  update the Small Loans  Act to                                                                    
     reflect current  technology. As written today,  the law                                                                    
     does  not recognize  automated  or centralized  process                                                                    
     utilized by most companies today.                                                                                          
                                                                                                                                
     We worked with both  members of financial community and                                                                    
     with  the Division  of Banking  and Securities  to find                                                                    
     language   balancing  the   parties'  wish   lists  and                                                                    
     consumer protection.  HB 227  updates the ASLA  to make                                                                    
     the law  reflective of  current industry  practices and                                                                    
     raises  the  limit of  a  small  loan from  $25,000  to                                                                    
     $50,000   broadening    the   Department's   regulatory                                                                    
     oversight. Additionally,  it doubles the  liquid assets                                                                    
       and bond requirements from $25,000 to $50,000 for                                                                        
     businesses writing small loans.                                                                                            
                                                                                                                                
REPRESENTATIVE  ROKEBERG  inquired  as   to  who  requested  this                                                               
legislation.                                                                                                                    
                                                                                                                                
MR. BITTNER  related his understanding  that both members  of the                                                               
banking  community  and  the Division  of  Banking  &  Securities                                                               
requested  introduction  of  HB  227.   In  further  response  to                                                               
Representative  Rokeberg, Mr.  Bittner  said that  he was  fairly                                                               
certain   Wells  Fargo   Financial   Corporation  was   involved.                                                               
However,  he  deferred  to  Mr. Davis  regarding  the  number  of                                                               
entities that fall under this provision of law.                                                                                 
                                                                                                                                
MARK  DAVIS,   Director,  Division   of  Banking   &  Securities,                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED), clarified  that currently there are  eight licensees, of                                                               
which  seven  are licensees  of  Wells  Fargo  bank and  the  one                                                               
remaining is an  independent licensee.  Therefore,  there are two                                                               
different entities.                                                                                                             
                                                                                                                                
4:25:36 PM                                                                                                                    
                                                                                                                                
MR.  DAVIS noted  that although  the division  generally supports                                                               
the legislation  as written, he  has provided the  committee with                                                               
written remarks regarding some issues  with which the division is                                                               
concerned.     He   agreed  that   the  legislation,   as  reform                                                               
legislation,  is necessary.   This  legislation basically  raises                                                               
the lending  limit for a small  loan from $25,000 to  $50,000 and                                                               
caps  [the interest  rate  of]  most loans  to  a  maximum of  24                                                               
percent.  Currently, licensees are  able to do business as "other                                                               
business"  over  $25,000  at  any   rate  wished.    Furthermore,                                                               
currently  loans  over  $10,000  can  be made  at  any  rate  the                                                               
[lending  institution]  wishes.   Therefore,  this  reform  would                                                               
lower rates.                                                                                                                    
                                                                                                                                
4:26:19 PM                                                                                                                    
                                                                                                                                
MR. DAVIS  expressed concern  with the  exemption for  sellers of                                                               
insurance  under   AS  06.20.010(b)(5),  and  related   that  the                                                               
Division of  Banking & Securities  and the Division  of Insurance                                                               
oppose  that.   He  explained  that  the divisions  believe  that                                                               
although an  entity may  sell insurance, it  shouldn't be  in the                                                               
lending business.   Furthermore, Mr. Davis  suggested including a                                                               
requirement in  AS 06.20.060  of a physical  location.   He noted                                                               
that  in 1996,  the language  "accessibility and  convenience for                                                               
borrowers  of money  was put  in the  Act, the  type of  language                                                               
which  the  division  supports.   He  then  turned  attention  to                                                               
Section  13, AS  06.20.070(b),  regarding web  sites and  related                                                               
that the  division would prefer  to follow the practice  that was                                                               
included in  the Deferred  Deposit Loan Act  of last  year, which                                                               
requires  a license  for  anyone attempting  to  operate [on  the                                                               
Internet].   Mr.  Davis said  the division  has concerns  with AS                                                               
06.20.120 because  the current language  of HB 227  doesn't allow                                                               
the division  the ability to  revoke a multiple  location license                                                               
for a  violation in a singular  location.  He expressed  the need                                                               
for the division to have the  right to revoke a multiple location                                                               
license  if a  singular location  seems  to be  operating at  the                                                               
behest of the central office.   He indicated that committee staff                                                               
had  been given  language  to address  the  aforementioned.   Mr.                                                               
Davis moved  on to  the surrendering  of licenses  at the  end of                                                               
operations,  which is  found  in AS  06.20.130(c).   The  current                                                               
language  specifies a  difference between  non-corporate entities                                                               
and corporate  entities, but  the division  doesn't see  a reason                                                               
for that.   Again,  committee staff  have been  provided language                                                               
that  specifies that  an entity  would  have to  ensure that  all                                                               
loans are transferred before it  can stop doing business in order                                                               
to avoid  harming consumers.  Furthermore,  the language provided                                                               
specifies  that the  entity  would have  to  notify the  division                                                               
because the division can't enforce  the provision unless it knows                                                               
the entity  is going  out of business.   He then  moved on  to AS                                                               
06.20.160(c),  which specifies  that the  division can  only have                                                               
access to  a licensees books  and records during  an examination.                                                               
However,  the  division  believes  that to  be  too  restrictive.                                                               
Obviously, a complaint  to the division may not  occur during the                                                               
time of  an examination, and  therefore the division  should have                                                               
the right to examine for that complaint.                                                                                        
                                                                                                                                
4:29:18 PM                                                                                                                    
                                                                                                                                
MR.  DAVIS  noted  the  division's concern  with  regard  to  the                                                               
legislation's handling  of business  licensing, which  is located                                                               
in  AS  06.20.130(c).   Currently,  the  legislation provides  an                                                               
exemption  for  business  licenses.     After  talking  with  the                                                               
Division of  Occupational Licensing, he said  he understands that                                                               
the  Division   of  Occupational  Licensing  requests   that  the                                                               
exemption be  eliminated and require  these small  loan companies                                                               
to  acquire a  simple business  license.   Mr. Davis  related the                                                               
preference  for  the  fee,  specified  as  $75  an  hour  in  the                                                               
legislation,  to  actually  follow   what  is  specified  in  the                                                               
Deferred  Deposit  Loan  Act,  which   is  $75  per  staff  hour.                                                               
Furthermore, the  fees in HB 227  are excessive, he opined.   For                                                               
example, up  to $500 can be  charged for an origination  fee.  He                                                               
noted  that  committee  staff  has   been  given  the  division's                                                               
proposed fee schedule.                                                                                                          
                                                                                                                                
CHAIR ANDERSON  announced his intention  to hold HB 227  and hold                                                               
open public testimony on it.                                                                                                    
                                                                                                                                
4:30:46 PM                                                                                                                    
                                                                                                                                
MARK HAMBLEN,  Wells Fargo Financial,  noted support for  HB 227,                                                               
although he  said there are  some small changes that  Wells Fargo                                                               
would want  as well.   He concluded  by thanking the  Division of                                                               
Banking & Securities  for coming to Wells Fargo for  input on the                                                               
legislation.   He said  he would  contact the  division regarding                                                               
the small changes.                                                                                                              
                                                                                                                                
4:31:38 PM                                                                                                                    
                                                                                                                                
RICHARD  BLOCK,  Mellen  Investment Company,  LLC,  informed  the                                                               
committee that  his interest in  this is limited because  of what                                                               
Mellen Investment Company,  LLC, does.  He  explained that Mellen                                                               
Investment Company, LLC,  only make loans secured  by interest in                                                               
real  property.   However, the  company's portfolio  does include                                                               
some  loans that  are between  $25,000  and $50,000.   Mr.  Block                                                               
informed the  committee that he  has provided the  committee with                                                               
written testimony.   Mr. Block said that his analysis  of HB 227,                                                               
as  it  relates to  the  activities  in which  Mellen  Investment                                                               
Company, LLC, engages, will drive it  out of business.  "In other                                                               
words, the volume  of business we do will not  justify paying the                                                               
fees, putting up the bonds,  and going through the administrative                                                               
challenges that this  bill would put up for us,"  he related.  If                                                               
Mellen  Investment Company,  LLC,  and  other similarly  situated                                                               
companies  are out  of the  market, then  a monopoly  for certain                                                               
large banking institutions has been  created.  He emphasized that                                                               
Mellen Investment Company, LLC, and  others have been providing a                                                               
service, particularly to  those in rural areas,  that have equity                                                               
in real estate  for business purposes but don't  qualify for bank                                                               
lending.   Mr.  Block related  that  he was  greatly dismayed  to                                                               
discover  that his  bank is  sponsoring  HB 227,  which will  put                                                               
Mellen Investment Company, LLC, out  of business.  In conclusion,                                                               
Mr. Block said  that he would hope the committee  would adopt the                                                               
amendment he has  proposed at the end of  his [written] testimony                                                               
to exclude loans secured by interest in real estate from HB 227.                                                                
                                                                                                                                
4:34:26 PM                                                                                                                    
                                                                                                                                
SHANE  OSOWSKI, Equity  Investors, Inc.,  informed the  committee                                                               
that Equity  Investors, Inc., is  a private lender  that performs                                                               
small  real  estate backed  equity  loans  beyond $25,000.    Mr.                                                               
Osowski  related   that  he   objects  to   HB  227   because  it                                                               
mischaracterizes $50,000  obligations as small loans.   He opined                                                               
that $50,000 is not a  small amount, impulse item, that justifies                                                               
the level of bureaucracy and  barriers to competition provided in                                                               
the legislation.   Mr.  Osowski pointed out  that 50  years after                                                               
the enactment of  the Alaska Small Loans Act, there  are only two                                                               
licensees in Alaska.   Therefore, he said he  didn't believe that                                                               
one  could  claim  that adding  additional  restrictions  in  the                                                               
$50,000  market   would  invite   new  business  and   further  a                                                               
competitive  lending  environment.     Mr.  Osowski  then  turned                                                               
attention to the two credit  studies submitted to support HB 227,                                                               
which actually  lean against the  bill.  The first  credit report                                                               
notes  that restrictions  ration high-risk  consumers out  of the                                                               
market,  and also  tend  to ration  out  consumers seeking  small                                                               
amounts  of credit,  which is  classified as  $50,000 in  HB 227.                                                               
Both  reports conclude  that the  best way  to protect  high-risk                                                               
borrowers  is to  ensure alternative  sources  of financing  from                                                               
which  to  choose  and  facilitate   unrestricted  entry  of  new                                                               
competitors into the market.   However, this legislation proposes                                                               
to do the exact opposite.                                                                                                       
                                                                                                                                
4:37:00 PM                                                                                                                    
                                                                                                                                
MR. OSOWSKI  concluded by charging  that HB 227  treats borrowers                                                               
of $40,000  loans as unsophisticated  borrowers, which  isn't the                                                               
case.  Furthermore, federal law  already protects homeowners with                                                               
a three-day cooling  off period.  Moreover,  individuals have the                                                               
ability  to shop  nationwide for  alternatives via  the Internet,                                                               
but this  precludes that  and forces individuals  to go  with the                                                               
two licensees  in Alaska.   Mr. Osowski stressed that  Alaska has                                                               
unique  property needs  and HB  227 impacts  those with  impaired                                                               
credit as  well as nonconforming  properties in rural areas.   He                                                               
also stressed that  HB 227 doesn't ensure  competition but rather                                                               
does  the opposite.    He  urged the  committee  to consider  the                                                               
aforementioned  when  considering  to  vote  against  HB  227  or                                                               
eliminating Section 1 from it.                                                                                                  
                                                                                                                                
JIM  JOHNSON,   Affordable  Loan  Company,  explained   that  the                                                               
Affordable  Loan Company  basically operates  buying paper  under                                                               
the Alaska Retail Installment Sales  Act, which doesn't limit the                                                               
fee  or  the interest  charged  to  the  consumer.   Mr.  Johnson                                                               
surmised that HB 227 suggests a  fee that has been reduced to the                                                               
consumer for  delinquency.  He  said that  he didn't find  the 24                                                               
percent objectionable  today, but sometimes a  law causes problem                                                               
in the  future and  it takes  years for  the legislature  to make                                                               
changes  to address  the problem.   Mr.  Johnson opined  that the                                                               
administration  of  the  Division  of  Banking  &  Securities  is                                                               
helpful.                                                                                                                        
                                                                                                                                
KENNETH  GAIN,  President,  Cash   Now  Financial,  informed  the                                                               
committee that his company is  a small private real estate lender                                                               
as described by Mr.  Block.  Mr. Gain said that  some of the most                                                               
valuable  testimony  heard today  was  on  HB 226  regarding  the                                                               
problems with  errors in credit  reports and  stolen information.                                                               
With  modern technology,  most institutional  lenders are  highly                                                               
driven  by credit  scores.   Many  people have  good credit,  but                                                               
because of  a mistake in  their credit report are  denied credit.                                                               
Cash Now  Financial serves that  market of people who  don't meet                                                               
the  credit  standards  of  the   institutional  lenders.    More                                                               
importantly, companies such as Cash  Now Financial serve A credit                                                               
borrowers with  properties against which the  major institutional                                                               
loaners won't loan.  While  limiting this to $50,000 wouldn't put                                                               
him  out  of  business,  he  said it  would  severely  limit  the                                                               
company.    He said  that  he  would  either  have to  raise  the                                                               
interest  rates by  4  percent to  comply with  the  law and  the                                                               
company's current  loan volume or  not make loans  under $50,000.                                                               
As written, HB 227 is  anti-competitive and restricts credit.  At                                                               
a minimum, he suggested deleting Section 1 of HB 227.                                                                           
                                                                                                                                
PEGGY  ANNE MCCONNOCHIE,  Alaska Association  of Realtors,  noted                                                               
that she  submitted a letter  to the committee.   Ms. McConnochie                                                               
opined  that HB  227 is  a restraint  of trade,  will allow  less                                                               
choice  for consumers,  and push  those  borrowers with  problems                                                               
with income from the marketplace.   She urged the committee, at a                                                               
minimum, to eliminate Section 1 of HB 227.                                                                                      
                                                                                                                                
CHAIR ANDERSON announced that HB 227 would be held over.                                                                        
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:43:23 PM.                                                                                                                   

Document Name Date/Time Subjects