Legislature(2007 - 2008)CAPITOL 17

05/02/2007 03:00 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 172 PUBLIC UTILITY EXEMPTION: REFUSE TELECONFERENCED
Moved Out of Committee
+ SB 84 TESTING & PACKAGING OF CIGARETTES TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                          May 2, 2007                                                                                           
                           3:10 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Mark Neuman, Vice Chair                                                                                          
Representative Carl Gatto                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Robert L. "Bob" Buch                                                                                             
Representative Berta Gardner                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Jay Ramras                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 172                                                                                                              
"An Act exempting certain commercial refuse services from                                                                       
regulation under the Public Utilities Regulatory Act and                                                                        
providing for termination of that exemption."                                                                                   
                                                                                                                                
     - MOVED HB 172 OUT OF COMMITTEE                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 84(JUD)                                                                                                  
"An Act relating to the testing and packaging of cigarettes to                                                                  
be sold, offered for sale, or possessed in this state; and                                                                      
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSSB 84(JUD) OUT OF COMMITTEE                                                                                      
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 172                                                                                                                  
SHORT TITLE: PUBLIC UTILITY EXEMPTION: REFUSE                                                                                   
SPONSOR(S): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/05/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/05/07       (H)       L&C, JUD                                                                                               
05/02/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: SB 84                                                                                                                   
SHORT TITLE: TESTING & PACKAGING OF CIGARETTES                                                                                  
SPONSOR(S): SENATOR(S) OLSON                                                                                                    
                                                                                                                                
02/14/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/14/07       (S)       L&C, JUD, FIN                                                                                          
02/27/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/27/07       (S)       Heard & Held                                                                                           
02/27/07       (S)       MINUTE(L&C)                                                                                            
03/06/07       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/06/07       (S)       Moved CSSB 84(L&C) Out of Committee                                                                    
03/06/07       (S)       MINUTE(L&C)                                                                                            
03/07/07       (S)       L&C RPT CS  3DP 1NR 1AM  NEW TITLE                                                                     
03/07/07       (S)       DP: ELLIS, DAVIS, STEVENS                                                                              
03/07/07       (S)       NR: HOFFMAN                                                                                            
03/07/07       (S)       AM: BUNDE                                                                                              
03/21/07       (S)       JUD AT 1:30 PM BELTZ 211                                                                               
03/21/07       (S)       Heard & Held                                                                                           
03/21/07       (S)       MINUTE(JUD)                                                                                            
03/26/07       (S)       JUD AT 1:30 PM BELTZ 211                                                                               
03/26/07       (S)       Moved CSSB 84(JUD) Out of Committee                                                                    
03/26/07       (S)       MINUTE(JUD)                                                                                            
03/28/07       (S)       JUD RPT CS  1DP 4NR  NEW TITLE                                                                         
03/28/07       (S)       DP: MCGUIRE                                                                                            
03/28/07       (S)       NR: FRENCH, THERRIAULT, WIELECHOWSKI,                                                                  
                         HUGGINS                                                                                                
04/23/07       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/23/07       (S)       Moved CSSB 84(JUD) Out of Committee                                                                    
04/23/07       (S)       MINUTE(FIN)                                                                                            
04/23/07       (S)       FIN RPT CS(JUD)  7DP                                                                                   
04/23/07       (S)       DP: HOFFMAN, STEDMAN, ELTON, THOMAS,                                                                   
                         DYSON, HUGGINS, OLSON                                                                                  
04/25/07       (S)       TRANSMITTED TO (H)                                                                                     
04/25/07       (S)       VERSION: CSSB 84(JUD)                                                                                  
04/26/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/26/07       (H)       L&C, JUD, FIN                                                                                          
05/02/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ELEANOR WOLFE, Staff                                                                                                            
to Representative Kurt Olson                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 172 on behalf of the sponsor,                                                                 
the House Labor and Commerce Standing Committee, which is                                                                       
chaired by Representative Olson.                                                                                                
                                                                                                                                
RICHARD GAZAWAY, Hearing Examiner                                                                                               
Common Carrier                                                                                                                  
Regulatory Commission of Alaska (RCA)                                                                                           
Department of Commerce, Community, & Economic Development                                                                       
(DCCED)                                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Responded to questions during discussion of                                                                
HB 172.                                                                                                                         
                                                                                                                                
WILLIAM R. SNELL, Member                                                                                                        
Management Committee                                                                                                            
Alaska Waste                                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 172.                                                                            
                                                                                                                                
SENATOR DONNY OLSON                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Sponsor of SB 84.                                                                                          
                                                                                                                                
DENISE LICCIOLI, Staff                                                                                                          
to Senator Donny Olson                                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented SB 84 on behalf of the sponsor,                                                                  
Senator Olson.                                                                                                                  
                                                                                                                                
JOHANNA BALES, Excise Audit Manager                                                                                             
Anchorage Office                                                                                                                
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Responded to questions during discussion of                                                                
SB 84.                                                                                                                          
                                                                                                                                
RAYMOND B. BIZAL, Regional Manager                                                                                              
Western Region                                                                                                                  
National Fire Protection Association (NFPA)                                                                                     
Long Beach, California                                                                                                          
POSITION STATEMENT:  Testified in support of SB 84.                                                                             
                                                                                                                                
STEVEN "RUSTY" BELANGER, Assistant State Fire Marshal                                                                           
Division of Fire Prevention                                                                                                     
Department of Public Safety (DPS)                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SB 84.                                                                             
                                                                                                                                
WARREN B. CUMMINGS, President                                                                                                   
Alaska Fire Chiefs Association (AFCA)                                                                                           
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SB 84.                                                                             
                                                                                                                                
MARIE DARLIN, Coordinator                                                                                                       
AARP Capital City Task Force                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of SB 84.                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to order at  3:10:43 PM.  Representatives Buch,                                                             
Neuman, Gardner,  and Olson  were present at  the call  to order.                                                               
Representatives LeDoux  and Gatto arrived  as the meeting  was in                                                               
progress.                                                                                                                       
                                                                                                                                
HB 172 - PUBLIC UTILITY EXEMPTION: REFUSE                                                                                     
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL NO.  172, "An Act exempting  certain commercial refuse                                                               
services from  regulation under  the Public  Utilities Regulatory                                                               
Act and providing for termination of that exemption."                                                                           
                                                                                                                                
3:11:17 PM                                                                                                                    
                                                                                                                                
ELEANOR WOLFE,  Staff to Representative Kurt  Olson, Alaska State                                                               
Legislature,  presented HB  172  on behalf  of  the sponsor,  the                                                               
House Labor and Commerce Standing  Committee, which is chaired by                                                               
Representative  Olson.   She began  by reading  from the  sponsor                                                               
statement [original punctuation provided]:                                                                                      
                                                                                                                                
     HB  172  will  exempt commercial  refuse  service,  the                                                                    
     collection  and  disposal  of  refuse  materials  using                                                                    
     dumpsters and  wheel containers with a  capacity of one                                                                    
     cubic  yard  or  more,  from  rate  regulation  by  the                                                                    
     Regulator Commission of Alaska (RCA).                                                                                      
                                                                                                                                
     Removing   rate  regulation   from  commercial   refuse                                                                    
     service will  allow flexibility in setting  rates which                                                                    
     will promote  innovation as to  rates and  services and                                                                    
     will   reduce    costs   for    commercial   customers.                                                                    
     Flexibility  in   setting  rates  should   also  assist                                                                    
     commercial  refuse utilities  and commercial  customers                                                                    
     in  developing   integrated  waste   stream  recycling,                                                                    
     diversion and disposal systems.                                                                                            
                                                                                                                                
     Removing  rate regulation  should reduce  the cost  and                                                                    
     administrative burden  associated with  the generation,                                                                    
     review  and  maintenance  of tariffs.    This  in  turn                                                                    
     should  encourage  more  entrants into  the  commercial                                                                    
     refuse   market,    benefiting   commercial   customers                                                                    
     overall.                                                                                                                   
                                                                                                                                
     Removal  of  commercial  refuse  rate  regulation  will                                                                    
     promote the public good by  allowing the RCA to utilize                                                                    
     the   resources   now   devoted  to   commercial   rate                                                                    
     regulation  to more  pressing  consumer  issues.   Rate                                                                    
     deregulation will  not prevent the RCA  from continuing                                                                    
     to police the  commercial refuse market.   The RCA will                                                                    
     retain  the  right  to  modify,  suspend  or  revoke  a                                                                    
     commercial   refuse  utility   Certificate  of   Public                                                                    
     Convenience and  Necessity for good  cause shown.   The                                                                    
     Commission  will also  retain  jurisdiction to  address                                                                    
     and  resolve  customer  disputes   and  claims  that  a                                                                    
     particular company is acting improperly.                                                                                   
                                                                                                                                
     Alaska   has   a  vibrant,   knowledgeable   commercial                                                                    
     community capable of evaluating  the services and rates                                                                    
     offered   by  commercial   refuse   utilities.     Rate                                                                    
     deregulation will allow market  forces to set rates and                                                                    
     drive service innovation.                                                                                                  
                                                                                                                                
MS. WOLFE then stated that the  HL&C has introduced HB 172 at the                                                               
request of "commercial refuse haulers."                                                                                         
                                                                                                                                
REPRESENTATIVE GARDNER  asked whether  there are  any communities                                                               
in Alaska where deregulation of  refuse collection will result in                                                               
no competition.                                                                                                                 
                                                                                                                                
MS.  WOLFE said  that the  deregulation  provided for  in HB  172                                                               
won't  apply  to areas  where  there  is no  competition  because                                                               
without  competition, rates  would  not have  been  set and  thus                                                               
there would be no need for deregulation.                                                                                        
                                                                                                                                
REPRESENTATIVE GARDNER  noted that  a letter in  members' packets                                                               
from Alaskans for Litter Prevention  and Recycling (ALPAR) states                                                               
that deregulation of commercial  rates will encourage and promote                                                               
recycling.  She  said she doesn't see the  connection between the                                                               
two.                                                                                                                            
                                                                                                                                
3:15:21 PM                                                                                                                    
                                                                                                                                
RICHARD  GAZAWAY, Hearing  Examiner,  Common Carrier,  Regulatory                                                               
Commission of Alaska (RCA), Department  of Commerce, Community, &                                                               
Economic  Development  (DCCED),  replied that  commercial  refuse                                                               
utilities have the power, under  AS 42.05.431(g), to "do a tiered                                                               
rate structure" that would address recycling efforts.                                                                           
                                                                                                                                
REPRESENTATIVE  NEUMAN noted  that a  letter in  members' packets                                                               
from the Alaska  Center for the Environment (ACE)  states that an                                                               
integrated waste and recycling program  will require major refuse                                                               
utilities  to have  flexibility, creativity,  and the  ability to                                                               
structure incentives  to make  a community-wide  recycling effort                                                               
successful.  However,  if only one regulated  company has control                                                               
over recycling,  then where  is the  advantage of  expanding that                                                               
company's  operation to  deal  with all  the  different types  of                                                               
recyclable products, he questioned.                                                                                             
                                                                                                                                
REPRESENTATIVE  GARDNER said  she  still  doesn't understand  how                                                               
regulation either impedes or promotes recycling.                                                                                
                                                                                                                                
3:18:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN asked  for  an explanation  of the  fiscal                                                               
note provided by the RCA.                                                                                                       
                                                                                                                                
MS. WOLFE  surmised that  the bill would  reduce revenue  for the                                                               
RCA  because all  of its  revenue comes  through rate  regulation                                                               
fees, and since  those fees would no longer be  charged to refuse                                                               
utilities providers,  customers wouldn't  have to pay  those fees                                                               
either.                                                                                                                         
                                                                                                                                
WILLIAM  R. SNELL,  Member, Management  Committee, Alaska  Waste,                                                               
relayed that  Alaska Waste  supports HB  172 because  it believes                                                               
the bill  will make  the company's  markets more  efficient while                                                               
ensuring  that the  regulatory  environment  provides for  public                                                               
visibility  and protection  against  any  type of  discriminatory                                                               
action  on  pricing  and also  while  eliminating  a  significant                                                               
regulatory burden.   Alaska Waste also believes that  HB 172 will                                                               
allow  the industry  greater  flexibility  in meeting  customers'                                                               
demands,  bundling  services,  and  being innovative  in  a  more                                                               
timely fashion.                                                                                                                 
                                                                                                                                
CHAIR  OLSON,  after ascertaining  that  no  one else  wished  to                                                               
testify, closed public testimony on HB 172.                                                                                     
                                                                                                                                
REPRESENTATIVE  GARDNER  asked  whether deregulation  would  only                                                               
apply when there is more than one refuse service in a community.                                                                
                                                                                                                                
MS. WOLFE said that is her understanding.                                                                                       
                                                                                                                                
REPRESENTATIVE NEUMAN  moved to  report HB  172 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GARDNER objected to ask  where in the bill it says                                                               
deregulation only  applies when  there is  more than  one utility                                                               
offering service in a community.                                                                                                
                                                                                                                                
MS.  WOLFE   acknowledged  that  the  bill   doesn't  state  that                                                               
specifically; rather, she surmised,  that condition is a function                                                               
of RCA regulations.                                                                                                             
                                                                                                                                
MR. GAZAWAY  countered that according  to his  understanding, the                                                               
RCA doesn't have regulations that  would limit the application of                                                               
a statute to a situation where there is competition.                                                                            
                                                                                                                                
REPRESENTATIVE  GARDNER questioned  whether passage  of the  bill                                                               
would result in  deregulation even in communities  where there is                                                               
only  one  refuse  utility providing  service,  thus  effectively                                                               
stifling competition.                                                                                                           
                                                                                                                                
MR. GAZAWAY said that is his understanding.                                                                                     
                                                                                                                                
REPRESENTATIVE GARDNER  asked whether  members would  be amenable                                                               
to an amendment that would  allow deregulation to occur only when                                                               
there  is more  than one  refuse utility  providing service  in a                                                               
community.                                                                                                                      
                                                                                                                                
REPRESENTATIVE NEUMAN shared  his understanding that deregulation                                                               
would promote competition in the marketplace.                                                                                   
                                                                                                                                
3:24:09 PM                                                                                                                    
                                                                                                                                
MR. GAZAWAY relayed  that existing AS 42.05.711  has a subsection                                                               
that  exempts refuse  utilities that  annually gross  $300,000 or                                                               
less; thus  smaller competitors are  currently exempt  under that                                                               
existing provision.                                                                                                             
                                                                                                                                
REPRESENTATIVE  GARDNER indicated  that  that response  satisfies                                                               
her concern.                                                                                                                    
                                                                                                                                
CHAIR OLSON  surmised that  when a community  is large  enough to                                                               
generate more than  $300,000 of income for  refuse service, there                                                               
will be more than one company providing that service.                                                                           
                                                                                                                                
MR.  GAZAWAY,   in  response  to   a  question,   explained  that                                                               
typically,  refuse  utilities  have  a  two-tier  rate  structure                                                               
wherein  the size  of the  receptacle  distinguishes whether  the                                                               
service being provided  is a commercial service  or a residential                                                               
service.    Therefore,  if a  customer  remodeling  his/her  home                                                               
arranged for  the use  of a  dumpster for  a month,  for example,                                                               
he/she would probably  qualify as a commercial  customer for that                                                               
time period.   In response to another question, he  said that one                                                               
aspect of deregulation as proposed  by the bill is that utilities                                                               
would be exempt  from the requirement that  they not discriminate                                                               
in rates or services.   One of the classic regulatory protections                                                               
afforded  by  rate  regulation is  that  all  similarly  situated                                                               
customers  are  treated equally,  but  that  protection would  no                                                               
longer exist if HB 172 were adopted.                                                                                            
                                                                                                                                
REPRESENTATIVE  GATTO expressed  concern  with  that point,  that                                                               
under the bill, utilities would be allowed to discriminate.                                                                     
                                                                                                                                
MR.  GAZAWAY  replied  that  discrimination  per  se  is  already                                                               
allowed  and   current  statute  merely   prohibits  unreasonable                                                               
discrimination; in  other words, a  refuse utility is  allowed to                                                               
distinguish  between customer  classes as  long as  all within  a                                                               
customer  class are  treated  alike.   Passage  of  HB 172  would                                                               
exempt refuse  utilities from all  provisions of AS  42.05 except                                                               
AS  42.05.221 -  42.05.281.   Under  the  bill, refuse  utilities                                                               
would  no longer  be subject  to AS  42.05.391 -  which addresses                                                               
discrimination  in rates  - and  AS 42.05.301  - which  addresses                                                               
discrimination in service.   In response to  another question, he                                                               
said that  [under the  bill], one  circumstance a  refuse utility                                                               
would  probably  find  desirable  would  be  that  when  securing                                                               
contracts with larger commercial customers,  it would not have to                                                               
make  a  particular  rate  available to  all  of  its  commercial                                                               
customers;  instead,   the  refuse  utility  would   be  able  to                                                               
negotiate a deal  with a commercial customer  without first going                                                               
through the RCA  as is currently required.  He  then detailed the                                                               
current process  a refuse utility  must go through when  it wants                                                               
to offer a commercial customer a special contract.                                                                              
                                                                                                                                
3:30:49 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked whether passage of  HB 172 will result in rates                                                               
going down.                                                                                                                     
                                                                                                                                
MR. GAZAWAY declined to speculate on that point.                                                                                
                                                                                                                                
REPRESENTATIVE BUCH asked  whether passage of HB  172 will result                                                               
in a significant loss of revenue for the RCA.                                                                                   
                                                                                                                                
MR. GAZAWAY  replied that the  RCA, based on the  previous year's                                                               
collections, would lose essentially  $205,000 towards its overall                                                               
operating  budget because  commercial refuse  providers would  no                                                               
longer be paying an annual regulatory cost charge (RCC).                                                                        
                                                                                                                                
CHAIR OLSON surmised  that some of the RCA's  expenses would also                                                               
be off-set.                                                                                                                     
                                                                                                                                
MR. GAZAWAY acknowledged  that there could be  a reduced workload                                                               
for the RCA with regard to reviewing tariffs.                                                                                   
                                                                                                                                
REPRESENTATIVE BUCH  questioned whether the reduction  in revenue                                                               
would be  completely offset  by a reduction  in the  expenses the                                                               
RCA currently incurs in regulating the refuse utility industry.                                                                 
                                                                                                                                
MR. GAZAWAY  said he couldn't  answer that question at  this time                                                               
but would  be willing to  research the  issue further.   He added                                                               
that  RCA staff  members allocate  their time  based on  industry                                                               
needs, and that  figure is kept in a  spreadsheet that determines                                                               
the ultimate charge that industry  is assessed through RCCs.  For                                                               
example,  if  the  RCA  is  regulating  two  industries  and  one                                                               
industry  takes  up 75  percent  of  the  RCA's time,  then  that                                                               
industry  contributes 75  percent of  the RCA's  total RCCs.   He                                                               
reiterated that he is not able  to verify that the estimated loss                                                               
of revenue will be offset by a reduction in costs.                                                                              
                                                                                                                                
REPRESENTATIVE NEUMAN asked  whether the RCA, as  a state agency,                                                               
is required to be revenue neutral.                                                                                              
                                                                                                                                
MR. GAZAWAY said it is.                                                                                                         
                                                                                                                                
REPRESENTATIVE   NEUMAN  surmised,   then,  that   the  estimated                                                               
reduction  in revenue  would be  offset  by a  like reduction  in                                                               
expenses.                                                                                                                       
                                                                                                                                
MR. GAZAWAY  concurred, but  pointed out that  the RCC  amount is                                                               
based on  historical factors, and  from year to year  a different                                                               
amount of  time is spent  on refuse  issues.  He  reiterated that                                                               
the RCA is supposed to be revenue neutral.                                                                                      
                                                                                                                                
REPRESENTATIVE  NEUMAN  again  moved  to report  HB  172  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARDNER  said she  doesn't understand  what effect                                                               
the  bill will  have  on  consumers, and  so  will be  conducting                                                               
further research.                                                                                                               
                                                                                                                                
CHAIR OLSON, after  determining that there were  no objections to                                                               
the motion,  announced that  HB 172 was  reported from  the House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
The committee took an at-ease from 3:36 p.m. to 3:38 p.m.                                                                       
                                                                                                                                
SB 84 - TESTING & PACKAGING OF CIGARETTES                                                                                     
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
CS FOR SENATE  BILL NO. 84(JUD), "An Act relating  to the testing                                                               
and  packaging of  cigarettes to  be sold,  offered for  sale, or                                                               
possessed in this state; and providing for an effective date."                                                                  
                                                                                                                                
3:38:54 PM                                                                                                                    
                                                                                                                                
SENATOR DONNY  OLSON, Alaska State Legislature,  sponsor, relayed                                                               
that as  a doctor in  rural Alaska,  he has seen  the devastation                                                               
that fires can  cause, and offered an example wherein  one of the                                                               
victims, a  young boy, had  burns on  his feet and  suffered from                                                               
smoke  inhalation.    He  mentioned   that  his  staff  would  be                                                               
presenting SB 84.                                                                                                               
                                                                                                                                
3:40:18 PM                                                                                                                    
                                                                                                                                
DENISE  LICCIOLI,  Staff to  Senator  Donny  Olson, Alaska  State                                                               
Legislature,  sponsor, explained  that SB  84 mandates  that only                                                               
self-extinguishing  cigarettes   can  be  sold  in   Alaska,  and                                                               
establishes the testing and  certification requirements to ensure                                                               
that  only  self-extinguishing  cigarettes are  sold  in  Alaska.                                                               
Although no  cigarette can ever  be called safe,  so-called self-                                                               
extinguishing  or "fire  safe" cigarettes  are "reduced  ignition                                                               
propensity  cigarettes."    Referring  to a  picture in  members'                                                               
packets of  a self-extinguishing cigarette,  she pointed  out the                                                               
embedded  bands, called  "speed-bumps,"  in  the cigarette  paper                                                               
that  will  cause  the  cigarette  to extinguish  if  it  is  not                                                               
actively being smoked.  These  cigarettes are designed to be less                                                               
likely than  conventional cigarettes  to ignite  soft furnishings                                                               
such as a couch or mattress.                                                                                                    
                                                                                                                                
MS. LICCIOLI relayed that SB 84  also provides for the marking of                                                               
cigarette  packaging,  in  an approved  and  easily  identifiable                                                               
manner, to indicate that they  are fire-safe.  Cigarettes are the                                                               
leading cause of home fire fatalities,  both in Alaska and in the                                                               
United  States, and  the  most common  material  that is  ignited                                                               
first  in  a home  fire  is  the  material found  in  mattresses,                                                               
bedding, upholstered  furniture, and floor coverings.   A typical                                                               
scenario  for  a  home  fire  is when  a  cigarette  is  lit  and                                                               
forgotten  or  dropped  by  the smoker,  and  the  cigarette  can                                                               
smolder for  hours before it  flares up into  a full blaze.   She                                                               
noted  that a  recent fire  in  Juneau, about  which a  newspaper                                                               
article  is  included in  members'  packets,  fit that  scenario.                                                               
One-fourth  of all  victims of  smoking-material fire  fatalities                                                               
are not  the smoker  whose cigarette started  the fire,  and over                                                               
one-third of those victims are children.                                                                                        
                                                                                                                                
MS.  LICCIOLI  said that  the  risk  of  dying in  a  residential                                                               
structure fire caused  by smoking rises with age:   38 percent of                                                               
fatal smoking-material  fire victims  are age 65  or older.   The                                                               
most  common  technology  used   by  cigarette  manufactures  for                                                               
reduced  cigarette ignition  propensity (RCIP)  cigarettes is  to                                                               
make the paper thicker in places to  slow down the burn.  If such                                                               
a cigarette is left unattended, when  the burn reaches one of the                                                               
thicker places, or speed bumps,  the cigarette self extinguishes.                                                               
Self-extinguishing  cigarettes   meet  established   fire  safety                                                               
performance standards.   Legislation  similar to  SB 84  has been                                                               
enacted in  nine states:   New York, Massachusetts,  Vermont, New                                                               
Hampshire, California,  Illinois, Utah, Kentucky, and  Oregon.  A                                                               
fire safe  cigarette mandate  has also been  approved for  all of                                                               
Canada.                                                                                                                         
                                                                                                                                
MS. LICCIOLI relayed  that SB 84 is supported by  the Alaska Fire                                                               
Chiefs   Association  (AFCA),   the  Alaska   State  Firefighters                                                               
Association (ASFA),  and the Department  of Public  Safety (DPS),                                                               
Division  of Fire  Prevention.   Senate Bill  84 is  an important                                                               
piece  of legislation  that will  save  lives as  well as  reduce                                                               
injuries and damage to property in Alaska, she concluded.                                                                       
                                                                                                                                
3:44:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   NEUMAN  questioned   whether  self-extinguishing                                                               
cigarettes are  currently being produced by  the tobacco industry                                                               
and are therefore readily available.                                                                                            
                                                                                                                                
MS. LICCIOLI said yes.  In  response to a question, she said that                                                               
there  is  a  transition  provision   in  the  bill  that  allows                                                               
wholesalers  and   retailers  to   continue  selling   their  old                                                               
cigarette stock for a period of  time after which they would need                                                               
to  restock  with  self-extinguishing  cigarettes  because  those                                                               
would  be the  only  kind of  cigarettes that  could  be sold  in                                                               
Alaska.    In  response  to another  question,  she  offered  her                                                               
understanding that the price of  cigarettes would remain the same                                                               
because the  cost of  producing self-extinguishing  cigarettes is                                                               
negligible.                                                                                                                     
                                                                                                                                
REPRESENTATIVE NEUMAN  asked whether  the thicker bands  of paper                                                               
would be more hazardous to smoke.                                                                                               
                                                                                                                                
SENATOR OLSON relayed  his understanding that they  would not be.                                                               
In  response to  comments and  a question,  he acknowledged  that                                                               
past attempts to make cigarettes  self extinguish by altering the                                                               
make up  of the  tobacco used  proved unsuccessful  because those                                                               
cigarettes were  unpalatable, and one such  attempt even resulted                                                               
in an increase in a particular lung disease.                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH asked how the  provisions of the bill will be                                                               
enforced, and what the date for "mandatory sale" is.                                                                            
                                                                                                                                
MS.  LICCIOLI  replied  that enforcement  would  fall  under  the                                                               
purview of the  Department of Revenue (DOR),  which regulates the                                                               
sale of cigarettes in Alaska.                                                                                                   
                                                                                                                                
SENATOR OLSON mentioned  that the DOR's fiscal  note reflects the                                                               
enforcement provisions of the bill.   In response to comments and                                                               
a question,  he offered  his understanding  that there  isn't any                                                               
opposition to the bill, and that  even the tobacco industry is in                                                               
favor of it.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LeDOUX   questioned  why  the   tobacco  industry                                                               
doesn't  just produce  self-extinguishing cigarettes  without the                                                               
law having  to require  it, particularly  given that  some states                                                               
can sell nothing else.                                                                                                          
                                                                                                                                
MS.  LICCIOLI surmised  that like  other  behaviors addressed  by                                                               
various laws,  most people simply  won't do something  until it's                                                               
required.                                                                                                                       
                                                                                                                                
REPRESENTATIVE NEUMAN  referred to  proposed AS  18.74.160, which                                                               
addresses  penalties for  violations,  and  asked whether  people                                                               
will still be able to  purchase non self-extinguishing cigarettes                                                               
on the Internet.                                                                                                                
                                                                                                                                
MS. LICCIOLI  suggested that  a representative  of the  DOR could                                                               
better address that question.                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN questioned  whether a  resident of  Alaska                                                               
would  be considered  a criminal  if he/she  purchased cigarettes                                                               
for personal  use from a state  which does not require  that only                                                               
self-extinguishing cigarettes be sold.                                                                                          
                                                                                                                                
3:53:09 PM                                                                                                                    
                                                                                                                                
JOHANNA  BALES,  Excise  Audit  Manager,  Anchorage  Office,  Tax                                                               
Division, Department of Revenue  (DOR), replied that according to                                                               
her interpretation  of SB 84,  an Alaskan citizen  purchasing non                                                               
self-extinguishing cigarettes  for personal use from  outside the                                                               
state would not  be subject to the [civil]  penalties provided in                                                               
the bill,  though under existing  law pertaining to  the taxation                                                               
of  cigarettes,  criminal  tax   penalties  would  apply  to  any                                                               
unlicensed individual  who brings  any kind of  [tobacco product]                                                               
into the state [for the purpose of reselling it].                                                                               
                                                                                                                                
SENATOR OLSON characterized  SB 84 as a very  important bill that                                                               
will save lives and property.                                                                                                   
                                                                                                                                
REPRESENTATIVE BUCH  said he appreciates  that the  bill provides                                                               
for  a  transitional  period  and  doesn't  penalize  people  for                                                               
purchasing cigarettes for personal use from outside Alaska.                                                                     
                                                                                                                                
REPRESENTATIVE  GARDNER, in  response to  Representative LeDoux's                                                               
question, suggested  that perhaps many smokers  don't like having                                                               
their cigarettes go out.                                                                                                        
                                                                                                                                
REPRESENTATIVE LeDOUX  remarked that the  title of bill  does not                                                               
seem  consistent with  the body  of the  bill; specifically,  the                                                               
title  indicates  that  the  bill is  in  part  about  cigarettes                                                               
"possessed in  this state",  and yet the  DOR has  indicated that                                                               
merely possessing non  self-extinguishing cigarettes for personal                                                               
use would not  subject a person to the penalties  provided in the                                                               
bill.                                                                                                                           
                                                                                                                                
MS.   LICCIOLI  shared   her  understanding   that  the   phrase,                                                               
"possessed  in this  state" is  meant  to account  for non  self-                                                               
extinguishing cigarettes  that wholesalers and  retailers possess                                                               
during the transition period.                                                                                                   
                                                                                                                                
REPRESENTATIVE  LeDOUX said  she  is still  concerned about  this                                                               
apparent  discrepancy and  is not  completely  certain that  that                                                               
language needs to be in the title.                                                                                              
                                                                                                                                
SENATOR OLSON  shared his understanding  that to be  in violation                                                               
of the bill,  one must possess the cigarettes with  the intent to                                                               
sell.                                                                                                                           
                                                                                                                                
REPRESENTATIVE NEUMAN  surmised that  a prohibition  against mere                                                               
possession couldn't be enforced.                                                                                                
                                                                                                                                
3:59:41 PM                                                                                                                    
                                                                                                                                
RAYMOND  B. BIZAL,  Regional  Manager,  Western Region,  National                                                               
Fire  Protection Association  (NFPA),  relayed that  he would  be                                                               
speaking in  support of SB 84.   Referring to the  fact that nine                                                               
states have adopted similar legislation,  he calculated that this                                                               
means  that  over  one-fourth  of  the  U.S.  population  is  now                                                               
protected by  this type of law.   Four other states  have similar                                                               
legislation  waiting to  be  signed by  their  governors -  Iowa,                                                               
Maryland, Montana, and New Jersey.   However, because most of the                                                               
aforementioned laws  have only  now become  effective, statistics                                                               
for the  most part are not  yet available.  In  New York, though,                                                               
with  its  law  having  been  in  place  since  2004,  statistics                                                               
pertaining to  the first  six months  that that  law has  been in                                                               
place indicate that there has  been no reduction in cigarette tax                                                               
revenue,  but  that  there  has been  a  one-third  reduction  in                                                               
cigarette-related fire  fatalities and  an even  higher reduction                                                               
in the number of cigarette-related fires.                                                                                       
                                                                                                                                
MR.  BIZAL  remarked that  Alaska  is  not alone  in  considering                                                               
legislation  pertaining to  self-extinguishing cigarettes:   this                                                               
year, 22  state legislators  introduced bills  similar to  SB 84.                                                               
Consideration of this issue is  widespread because it will make a                                                               
difference,   he  opined,   adding  that   nearly  1,000   people                                                               
needlessly die each year in the  U.S. because of fires started by                                                               
cigarettes;  such  fires  injure   many  more  people  and  cause                                                               
millions of dollars  in property damage.   Cigarettes that comply                                                               
with the fire  safety standard mandated by SB  84 actually reduce                                                               
the  likelihood of  fire.    Passing SB  84  will  save lives  in                                                               
Alaska,  reduce   injuries,  and   reduce  property   damage,  he                                                               
concluded.                                                                                                                      
                                                                                                                                
4:02:20 PM                                                                                                                    
                                                                                                                                
STEVEN "RUSTY"  BELANGER, Assistant State Fire  Marshal, Division                                                               
of Fire  Prevention, Department of  Public Safety  (DPS), relayed                                                               
that the  division gives its  full support to  SB 84.   This bill                                                               
embodies the focus  of the division's mission  statement which is                                                               
to  prevent  the  loss  of   life  and  property  from  fire  and                                                               
explosion,  and recognizes  the  significant losses  of life  and                                                               
property due to  cigarettes.  Between 1996 and  2005, Alaska lost                                                               
upwards of  $8 million  in property  to fires  wherein cigarettes                                                               
were  the  ignition  source,  and,   as  of  today,  this  number                                                               
continues  to increase.    In the  same  time period,  cigarette-                                                               
related fires caused 31 percent of  the deaths due to fire - this                                                               
is the leading cause of fire fatalities in Alaska.                                                                              
                                                                                                                                
MR. BELANGER relayed that it is  the division's belief that SB 84                                                               
will  significantly  reduce  the  number of  fire  fatalities  in                                                               
Alaska related  to cigarettes because  manufactures will  have to                                                               
meet the  new requirements for  cigarettes that meet  fire safety                                                               
standards.   This  reduction will  occur at  minimal cost  to the                                                               
state.   This bill is  a tool that the  state can provide  to the                                                               
citizens  of  Alaska without  [negatively]  impacting  them.   He                                                               
concluded by saying:   "It is our  duty as a state  to help those                                                               
that live within our borders; we  urge your support on this bill,                                                               
and I thank you for your time."                                                                                                 
                                                                                                                                
4:03:54 PM                                                                                                                    
                                                                                                                                
WARREN  B. CUMMINGS,  President, Alaska  Fire Chiefs  Association                                                               
(AFCA), after noting that he is  also the fire chief for the City                                                               
of Fairbanks, relayed that the AFCA  is very supportive of SB 84.                                                               
The main  goal of  the [AFCA]  is to reduce  the number  of fire-                                                               
related deaths  in Alaska.   Cigarettes are the leading  cause of                                                               
home  fire  fatalities in  the  U.S.,  killing 700-900  people  -                                                               
smokers and non-smokers alike - per  year.  In Alaska, there have                                                               
been approximately  four such  deaths per  year; in  fact, during                                                               
the last  10 years, there  have been 37  [cigarette-related] fire                                                               
fatalities  .    In  2003,  [cigarette-related]  structure  fires                                                               
killed  760 people  and injured  1,520  others in  the U.S.,  and                                                               
there  were  5  such  fatalities   in  Alaska.    One-quarter  of                                                               
[cigarette-related] fire  fatalities were  not the  smokers whose                                                               
cigarettes started  the fires:   34  percent of  those fatalities                                                               
were  the  children  of  those   smokers,  24  percent  were  the                                                               
neighbors  and friends  of  those smokers,  14  percent were  the                                                               
spouses/partners  of  those  smokers,  and 13  percent  were  the                                                               
parents of those smokers.                                                                                                       
                                                                                                                                
MR. CUMMINGS  relayed that research  conducted in the  mid-80s by                                                               
the  NFPA predicted  that fire  safe  cigarettes would  eliminate                                                               
three out  of four cigarette-related  fire deaths.   If cigarette                                                               
manufactures  had begun  producing only  fire safe  cigarettes at                                                               
that time,  an estimated  15,000 lives would  have been  saved in                                                               
the   U.S.,  and,   during  the   last  10   years,  27   of  the                                                               
aforementioned  37   fatalities  would   still  be  alive.     In                                                               
conclusion  he said  that the  AFCA encourages  the committee  to                                                               
move SB 84 forward and support it on the House floor.                                                                           
                                                                                                                                
4:06:09 PM                                                                                                                    
                                                                                                                                
MARIE DARLIN, Coordinator, AARP  Capital City Task Force, relayed                                                               
that the AARP supports SB 84  and is looking at trying to prevent                                                               
the  deaths that  are  caused by  cigarette-related  fires.   She                                                               
remarked on the dangers that  firefighters are subject to because                                                               
of  cigarette-related fires,  and  noted that  one  of the  other                                                               
people  who  came to  testify  but  couldn't  because of  a  time                                                               
constraint had served  as a firefighter for many  years and would                                                               
have  been   able  to  give   a  detailed  description   of  what                                                               
firefighters  find  at  such  fires.    After  referring  to  the                                                               
aforementioned recent  fire in Juneau,  she opined that  if there                                                               
is something that can be done  to address this problem, it should                                                               
be done.                                                                                                                        
                                                                                                                                
4:07:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  moved  to  report CSSB  84(JUD)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.    There  being no  objection,  CSSB  84(JUD)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:08 p.m.                                                                                                                       

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