Legislature(2015 - 2016)BARNES 124

02/11/2015 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 81 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
Heard & Held
*+ HB 9 PRIVATE INVESTIGATORS/AGENCIES TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
           HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                        February 11, 2015                                                                                       
                            3:16 p.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 81                                                                                                               
"An Act relating to an exemption from the regulation of                                                                         
construction contractors."                                                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 9                                                                                                                
"An Act providing for the licensing and regulation of private                                                                   
investigators and private investigator agencies; and providing                                                                  
for an effective date."                                                                                                         
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 81                                                                                                                   
SHORT TITLE: EXEMPTION: LICENSING OF CONTRACTORS                                                                                
SPONSOR(s): REPRESENTATIVE(s) TILTON                                                                                            
                                                                                                                                
01/28/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/15       (H)       L&C                                                                                                    
02/11/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 9                                                                                                                    
SHORT TITLE: PRIVATE INVESTIGATORS/AGENCIES                                                                                     
SPONSOR(s): REPRESENTATIVE(s) HUGHES                                                                                            
                                                                                                                                
01/21/15       (H)       PREFILE RELEASED 1/9/15                                                                                
01/21/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/15       (H)       L&C, FIN                                                                                               
02/11/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DAN BELLERIVE, Staff                                                                                                            
Representative Cathy Tilton                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 81 on behalf of the prime                                                                
sponsor, Representative Cathy Tilton.                                                                                           
                                                                                                                                
SARA CHAMBERS, Acting Director                                                                                                  
Division of Corporations, Business, and Professional Licensing                                                                  
Department of Commerce, Community, & Economic Development (DCCED)                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided comments and responded to                                                                       
questions on HB 81.                                                                                                             
                                                                                                                                
ALAN WILSON, Chair                                                                                                              
Legislative Committee                                                                                                           
Alaska State Home Building Association (ASHBA)                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 81.                                                                           
                                                                                                                                
ANDRE SPINELLI, Design & Development Manager                                                                                    
Spinell Homes, Inc.                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 81.                                                                           
                                                                                                                                
ROBERT YUNDT, Vice President                                                                                                    
Mat-Su Valley Home Builders Association (MSVHBA)                                                                                
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 81.                                                                           
                                                                                                                                
KIRK PERISICH, Member                                                                                                           
Carpenters Local 1281                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 81.                                                                
                                                                                                                                
GREY MITCHELL, Director                                                                                                         
Central Office                                                                                                                  
Division of Labor Standards & Safety                                                                                            
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions on HB 81.                                                               
                                                                                                                                
GINGER BLAISDELL, Staff                                                                                                         
Representative Shelley Hughes                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   On behalf of the prime sponsor,  presented a                                                            
section-by-section analysis of HB 9.                                                                                            
                                                                                                                                
SARA CHAMBERS, Acting Director                                                                                                  
Division of Corporations, Business, and Professional Licensing                                                                  
Department   of  Commerce,  Community,   &  Economic   Development                                                              
(DCCED)                                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:     Provided  comments   and  responded   to                                                            
questions on HB 9.                                                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:16:12 PM                                                                                                                    
                                                                                                                                
CHAIR  KURT OLSON  called the  House Labor  and Commerce  Standing                                                            
Committee meeting  to order at 3:16 p.m.   Representatives Colver,                                                              
Tilton, Kito,  Josephson, Hughes,  LeDoux, and Olson  were present                                                              
at the call to order.                                                                                                           
                                                                                                                                
            HB 81-EXEMPTION: LICENSING OF CONTRACTORS                                                                       
                                                                                                                                
3:16:55 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the first  order of business  would be                                                              
HOUSE  BILL NO.  81, "An  Act relating  to an  exemption from  the                                                              
regulation of construction contractors."                                                                                        
                                                                                                                                
3:17:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON,  speaking  as  prime  sponsor  of  HB  81,                                                              
stated  that this  bill relates  to the  licensing of  residential                                                              
contractors.    She  said  she  introduced  HB  81  after  holding                                                              
discussions  with  members  of  the  Mat-Su  Home  Builders,  Inc.                                                              
Further,  after speaking  with contractors  and realtors in  other                                                              
areas  of the  state  and some  affected  home  buyers, it  became                                                              
clear   that  some   individuals   are  commonly   exploiting   an                                                              
unintended loophole  in the existing statutory  language, creating                                                              
an uneven  playing field for  licensed professionals who  abide by                                                              
the  law   and  potentially   exposing  unwitting  homebuyers   to                                                              
substandard construction.   In short,  HB 81 is really  a consumer                                                              
protection bill and  not a bill to restrict trade,  she said.  She                                                              
emphasized  that HB  81 does  not prevent  Alaskans from  building                                                              
their own  homes, from selling homes  they have built,  or propose                                                              
any new licensure.                                                                                                              
                                                                                                                                
REPRESENTATIVE  TILTON  said  that  under  current  state  law  an                                                              
exemption   for  licensed  contractors   has  allowed   unlicensed                                                              
contractors   to  operate   a  substantial   businesses   avoiding                                                              
licensing,  bonding,  and  insurance.     By  avoiding  licensing,                                                              
bonding,  and  insurance  requirements   in  the  law,  unlicensed                                                              
contractors  are skirting  the  law and  jeopardizing  protections                                                              
for consumers.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  TILTON   surmised  that  most   committee  members                                                              
probably  recall the  first home  they  built and  their sense  of                                                              
taking financial risks  in doing so.  In fact,  for most Alaskans,                                                              
purchasing their homes  is the largest investment  they will make.                                                              
This bill  helps ensure  that home buyers  have expectations  of a                                                              
uniform  standard  of  professionalism   and  seek  to  reasonably                                                              
include  all  individuals  engaged  in  home  under  the  existing                                                              
residential contractor licensure.                                                                                               
                                                                                                                                
3:19:50 PM                                                                                                                    
                                                                                                                                
DAN BELLERIVE,  Staff, Representative  Cathy Tilton,  Alaska State                                                              
Legislature,  on behalf  of the  prime sponsor,  stated that  this                                                              
issue  was  initially  raised  by  home  builders  in  the  Mat-Su                                                              
valley.   A growing  number of  people are  abusing exemptions  in                                                              
state law that were  intended to allow people to  act as their own                                                              
general  contractors;  however,  abuse of  these  exemptions  have                                                              
allowed  unlicensed contractors  to  operate substantial  business                                                              
enterprises   without  obtaining   any   licensing,  bonding,   or                                                              
insurance,   thereby  creating   an  unfair   playing  field   for                                                              
contractors  who  do follow  the  law.   This  bill,  HB 81,  will                                                              
address the  issue by establishing  a two-year timeframe  in which                                                              
an owner-builder  cannot sell a home  after the completion  of the                                                              
construction, but  provides an opportunity for the  owners to sell                                                              
their  homes earlier  if they  notify  the Department  of Labor  &                                                              
Workforce Development (DLWD).                                                                                                   
                                                                                                                                
3:20:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  said he  likes  the bill;  however,  he                                                              
wondered  whether any constitutional  issues  such as due  process                                                              
will  arise  under  the  bill,  with  respect  to  disposition  of                                                              
property,  since home  owners cannot  sell their  homes when  they                                                              
want to do so.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  TILTON answered  that  a few  questions have  been                                                              
raised,  but  she did  not  think  there were  any  constitutional                                                              
challenges at this point.                                                                                                       
                                                                                                                                
REPRESENTATIVE LEDOUX  related her understanding  that contractors                                                              
can  still  sell  homes,  but  they   must  have  the  appropriate                                                              
licensing to build homes.                                                                                                       
                                                                                                                                
3:22:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked whether  this bill  was an  effort to                                                              
obtain compliance  from those parties building homes  who have not                                                              
adhered to  rules and  regulations pertaining  to their  employees                                                              
or by obtaining  contractor licenses that most  contractors in the                                                              
home  building industry  acquire.   He  asked whether  this is  an                                                              
effort  to  "level the  playing  field"  of  those who  have  been                                                              
operating outside the regulatory environment.                                                                                   
                                                                                                                                
REPRESENTATIVE  TILTON replied the  bill could  be viewed  in that                                                              
way;  however, HB  81 does  not prevent  people  from building  or                                                              
selling  their own homes,  but it  does allow  regulators to  look                                                              
for patterns of  unlicensed home building, closes  a loophole, and                                                              
creates an "even playing field."                                                                                                
                                                                                                                                
3:23:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  referred to page 2, paragraph  11, of HB 81                                                              
which read, " ...  the exemption in this paragraph  does not apply                                                              
if  the structure  under construction  is advertised  for sale  or                                                              
sold during  the period  of construction  or for  two years  after                                                              
the   period  of   construction   ends,  unless   the  owner   can                                                              
demonstrate to the  department's satisfaction that  the sale would                                                              
not  result  in  circumvention  of  the  requirements  under  this                                                              
chapter;".   He  expressed concern  about  what "the  department's                                                              
satisfaction" might  mean if owner-builders  desire to  sell their                                                              
homes.   He wondered  what hurdles  the owner/builders  would need                                                              
to  jump over,  and whether  the owners  will need  to show  cause                                                              
such  as divorce  or loss  of  job to  do so.    He further  asked                                                              
whether owner-builders could add their spouses to the deeds.                                                                    
                                                                                                                                
3:25:23 PM                                                                                                                    
                                                                                                                                
MR. BELLERIVE deferred  to the Division of  Corporations, Business                                                              
& Professional  Licensing, Department of Commerce,  Community, and                                                              
Economic Development (DCCED).                                                                                                   
                                                                                                                                
3:25:40 PM                                                                                                                    
                                                                                                                                
SARA  CHAMBERS,   Acting  Director,   Division  of   Corporations,                                                              
Business,  and  Professional Licensing,  Department  of  Commerce,                                                              
Community,  &  Economic  Development   (DCCED),  stated  that  the                                                              
language  "to the  department's satisfaction"  would be  developed                                                              
through the  public comment process  when the department  develops                                                              
its  regulations.    She  envisioned  it  would  be  an  open  and                                                              
transparent process  for public scrutiny, but will  be codified in                                                              
regulations to ensure the process is clear.                                                                                     
                                                                                                                                
3:26:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  whether the  parameters will  be put                                                              
in regulation  and if the regulations  will identify the  types of                                                              
exemptions  or  reasons  the  department   will  accept  to  avoid                                                              
contractors circumventing the law.                                                                                              
                                                                                                                                
MS. CHAMBERS answered that is correct.                                                                                          
                                                                                                                                
3:27:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked whether there would be  a "catch all"                                                              
for  other  circumstances  that the  department  deemed  will  not                                                              
circumvent the law.                                                                                                             
                                                                                                                                
MS. CHAMBERS responded  that the department will work  to create a                                                              
process  that  is  transparent  and   educational  to  the  public                                                              
without being  so restrictive  that some qualifying  circumstances                                                              
wouldn't fit  within the structure.   She said setting  a standard                                                              
for  the public  must be  in regulation;  however, the  department                                                              
will  want to  ensure that  the process  meets the  intent of  the                                                              
bill by closing any loopholes, yet not be unduly restrictive.                                                                   
                                                                                                                                
3:27:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked for further clarification  on whether                                                              
the answer is yes.                                                                                                              
                                                                                                                                
MS. CHAMBERS answered yes.                                                                                                      
                                                                                                                                
3:28:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER  asked  for  a  general  framework  of  the                                                              
conditions  the  department  envisions  will be  in  the  proposed                                                              
regulations.   He further  asked what the  department has  done to                                                              
enforce contracting  regulations,  in particular, the  requirement                                                              
that  general contractors  hold  a  residential endorsement.    He                                                              
recalled  the residential  endorsement  requires contractors  must                                                              
obtain training  and undergo  a certification  process.   He asked                                                              
whether the  department has worked  to assist the industry  in the                                                              
Mat-Su  Valley to  achieve compliance,  the  types of  enforcement                                                              
actions  the  department employs,  and  the  reason this  bill  is                                                              
needed.                                                                                                                         
                                                                                                                                
MS. CHAMBERS  explained that the  DCCED works with  the Department                                                              
of  Labor &  Workforce Development  (DLWD)  to enforce  contractor                                                              
licensing  throughout   the  state.    Although   the  enforcement                                                              
statutes  are located  within  the  DCCED's statutes,  the  DLWD's                                                              
Division  of Labor  Standards and  Safety, Wage  and Hour  section                                                              
conducts   wage  and   hour   inspections   statewide  to   ensure                                                              
compliance.   As an  efficiency measure,  the departments  decided                                                              
that  the DLWD  will  also perform  licensing  compliance.   Thus,                                                              
rather  than  having two  departments  with  separate  enforcement                                                              
staff located  throughout the state,  the DLWD provides  licensure                                                              
compliance  and   ultimately  issues   fines,  cease   and  desist                                                              
letters, and follow-up  collection of fines.   She emphasized that                                                              
the DCCED's  goal was to  ensure compliance  and to work  with the                                                              
public and  first-time offenders  to bring  them into  compliance;                                                              
however, the department  does have the authority  to take stronger                                                              
action  with repeat  offenders  or  those blatantly  skirting  the                                                              
law.                                                                                                                            
                                                                                                                                
3:31:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  asked whether the department  could provide                                                              
data on  complaints and subsequent  investigations to  support the                                                              
legislative   intent   of   non-compliance.     He   related   his                                                              
understanding that  DCCED issues and administers  licenses and the                                                              
DLWD  conducts the  wage and  hour inspections  to verify  whether                                                              
contractors are properly licensed.                                                                                              
                                                                                                                                
MS.  CHAMBERS  related  that the  division  lists  the  contractor                                                              
enforcement activity  and those out  of compliance on  the DCCED's                                                              
website.    She   offered  to  provide  the  information   to  the                                                              
committee.                                                                                                                      
                                                                                                                                
3:32:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES related her  understanding that  this issue                                                              
was brought  to the sponsor's attention  in the Mat-Su area.   She                                                              
asked whether this problem exists in other parts of the state.                                                                  
                                                                                                                                
REPRESENTATIVE  TILTON answered  yes;  that unlicensed  contractor                                                              
activity also  occurs in other parts  of the state.   She reported                                                              
that this  issue is  the number  one legislative  priority  of the                                                              
Alaska State  Home Builders Association  (ASHBA) and  although the                                                              
Mat-Su  Home  Builders   first  approached  her,   the  ASHBA  has                                                              
subsequently   highlighted   the   problems   its   members   have                                                              
encountered.                                                                                                                    
                                                                                                                                
CHAIR  OLSON added  that this  issue is  a priority  for the  home                                                              
builders  [Kenai Peninsula  Builders  Association  (KPBA)] in  his                                                              
district, too.   He suggested unlicensed contractors  might not be                                                              
as  prevalent  in   Anchorage  due  to  the  number   of  building                                                              
inspectors  in  that area,  but  it is  an  issue in  the  smaller                                                              
communities.                                                                                                                    
                                                                                                                                
3:33:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  for further  clarification  on  the                                                              
fiscal note.                                                                                                                    
                                                                                                                                
REPRESENTATIVE    TILTON   answered    that   the   Division    of                                                              
Corporations,  Business  and  Professional   Licensing  identified                                                              
costs  of $2,500  in its  fiscal note,  but she  has been  working                                                              
with the department  to see if these costs can be  zeroed out.  In                                                              
response  to  a question,  she  agreed  that  a similar  bill  was                                                              
introduced  last year  without any  fiscal impact  so she  thought                                                              
there might be some leeway.                                                                                                     
                                                                                                                                
3:34:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  whether  the fiscal  note costs  are                                                              
limited to $2,500.                                                                                                              
                                                                                                                                
REPRESENTATIVE TILTON  answered yes.  She stated  that contractors                                                              
pay fees  and their  program pays for  itself; however,  there are                                                              
some additional  items  she has been  working  on with respect  to                                                              
the fiscal note.                                                                                                                
                                                                                                                                
3:35:48 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON opened public testimony on HB 81.                                                                                   
                                                                                                                                
3:35:57 PM                                                                                                                    
                                                                                                                                
ALAN  WILSON,  Chair, Legislative  Committee,  Alaska  State  Home                                                              
Building Association  (ASHBA), stated  that HB  81 is the  ASHBA's                                                              
number one  priority.  He stated  that the problems  are magnified                                                              
in  the  Mat-Su  area, but  as  previously  mentioned,  the  Kenai                                                              
Peninsula  and rural areas  have also  experienced some  problems.                                                              
Although ASHBA views  this bill as a consumer  protection bill, it                                                              
is also a means  of closing a loophole since some  homeowners have                                                              
complained to  the ASHBA.   He offered his  belief that  this bill                                                              
will  "level  the  playing  field" since  some  people  have  been                                                              
operating  outside  of the  regulations  that everyone  else  must                                                              
abide by;  however, the bigger issue  is consumer protection.   He                                                              
said his organization  has worked extensively with  Grey Mitchell,                                                              
Director,   of  the  Division   of  Labor   Standards  &   Safety,                                                              
Department   of   Labor   &  Workforce   Development   (DLWD)   on                                                              
enforcement  issues.    Although  significant  progress  has  been                                                              
made, the  issue has  become a  priority for  The ASHBA,  he said.                                                              
He urged members to support HB 81.                                                                                              
                                                                                                                                
MR. WILSON added  that he was surprised by the  fiscal note costs;                                                              
however, licensed  contractors are willing  to pay extra  fees, if                                                              
necessary.    In  response  to a  question,  he  agreed  that  the                                                              
"valley" is the Mat-Su Valley and not the Mendenhall Valley.                                                                    
                                                                                                                                
3:39:24 PM                                                                                                                    
                                                                                                                                
ANDRE  SPINELLI,  Design  & Development  Manager,  Spinell  Homes,                                                              
Inc., testified in  support of HB 81.  He offered  his belief that                                                              
this issue  is not limited to  rural Alaska or the  Mat-Su Valley,                                                              
and   said  that   unlicensed  contractor   activity  happens   in                                                              
Anchorage,   even  though   it's   a  heavily-regulated   building                                                              
environment.   For example, someone  will build a house  without a                                                              
contractor's  license and immediately  put up  a "for sale"  sign.                                                              
These  unlicensed  contractors don't  pay  fees for  licensure  or                                                              
other  fees  for  their  employees,  he  said.    He  related  his                                                              
understanding  that  the  need  for   this  bill  arose  when  the                                                              
attorney general's  office advised the  DLWD that the law  was too                                                              
vague to  enforce and  he envisioned  that HB  81 will tighten  up                                                              
existing  law.    For example,  when  owner-builders  build  their                                                              
homes,  they  are  allowed  to  perform  their  own  plumbing  and                                                              
electrical  work.     If  these   owner/builders  are   acting  as                                                              
unlicensed contractors,  it allows  them to unfairly  compete with                                                              
licensed  contractors.    It  raises  consumer  protection  issues                                                              
since licensed plumbers  and electrical contractors  are not being                                                              
used in  homes that  are built  and subsequently  marketed  to the                                                              
public.                                                                                                                         
                                                                                                                                
3:41:53 PM                                                                                                                    
                                                                                                                                
ROBERT  YUNDT,   Vice  President,  Mat-Su  Valley   Home  Builders                                                              
Association (MSVHBA),  stated his family  has lived in  the Mat-Su                                                              
area since  the 1940s.  He  graduated from Wasilla High  School in                                                              
1998 and  has also worked  as an owner-builder.   Although  he now                                                              
does consulting  work, he  has family  members [who build  homes].                                                              
He offered  his belief  that this  bill was  not intended  to harm                                                              
anyone who wants  to put sweat equity into a project.   Members of                                                              
his organization  and the  DLWD frequently  have observed  "owner-                                                              
builders" in  the Mat-Su  Valley who  build multiple homes,  often                                                              
in the  same subdivision.   These owner-builders post  real estate                                                              
signs in  their yards during  construction and market  their homes                                                              
on Craigslist.   He related a situation in which  an owner-builder                                                              
did  work to  a home  and  the family  died  from carbon  monoxide                                                              
poisoning due to  inadequate air exchange.  The  home with [faulty                                                              
ventilation]  was the  only home  in  the subdivision  he had  not                                                              
built.  He  offered his belief  that these deaths could  have been                                                              
avoided  if  the  owner-builder had  hired  a  contractor,  noting                                                              
contractors  are required  to have  continuing  education on  safe                                                              
practices.                                                                                                                      
                                                                                                                                
MR.  YUNDT  acknowledged  it was  difficult  for  contractors  who                                                              
abide  by rules  to  compete with  unlicensed  contractors who  do                                                              
not.   He  offered  his  support  for HB  81  since it  will  help                                                              
provide consumer protection.   Although he did not  think the bill                                                              
would curb  owner-builders from building  homes, it  will probably                                                              
result  in more  residential contractor  licensing and  continuing                                                              
education.                                                                                                                      
                                                                                                                                
3:45:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked how this bill will be  enforced.  She                                                              
asked whether the banks will require some type of certificate.                                                                  
                                                                                                                                
MR. YUNDT answered  that the unlicensed builders  don't use Alaska                                                              
Housing  Finance Corporation  (AHFC),  but  use larger  nationwide                                                              
conventional  mortgages,  such  as  Fannie  Mae  or  Freddie  Mac.                                                              
These conventional  financing organizations do not  require a full                                                              
set of  inspections, but rely on  a licensed safety  inspection at                                                              
the  end  of  construction;  however, this  bill  will  force  the                                                              
unlicensed builders to get a residential endorsement, he said.                                                                  
                                                                                                                                
3:47:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  for further  clarification  on  the                                                              
provision related  to owners  selling a  home within the  two-year                                                              
period.   She questioned  how it  would be  known and whether  the                                                              
purchaser  could  declare  the home  sale  null  and void  if  any                                                              
problems  arose.   She said  she wants  to put  "teeth into  this"                                                              
issue and  not just  add prohibitions.   She  then questioned  how                                                              
this bill will stop the unlicensed builders.                                                                                    
                                                                                                                                
MR.  YUNDT  related  his  understanding  that  owner-builders  not                                                              
being  able   to  openly  market   their  homes  will   help  curb                                                              
unlicensed  activities.    He  suggested   that  from  a  business                                                              
standpoint, it typically  takes about 4-6 months to  build a house                                                              
and  during  this  time  other  general   contractors  notice  any                                                              
building  activity  and  can  monitor  and  report  any  suspected                                                              
unlicensed activity.   Under the bill, anyone who  has posted "for                                                              
sale" signs  on their  property will need  to verify  whether they                                                              
are licensed contractors  or owner/builders.  He  offered that the                                                              
bill  will  likely   force  unlicensed  contractors   to  get  the                                                              
appropriate  licenses   so  they   can  legitimately   post  their                                                              
properties, satisfy their lenders, and sell their homes.                                                                        
                                                                                                                                
REPRESENTATIVE LEDOUX  commented that  she was satisfied  with his                                                              
answer.                                                                                                                         
                                                                                                                                
3:50:26 PM                                                                                                                    
                                                                                                                                
KIRK PERISICH,  Member, Carpenters  Local 1281, viewed  regulation                                                              
of home builders  as a good thing.   He referred to  paragraph 10,                                                              
of HB 81, which  read, "an owner or tenant of  commercial property                                                              
who   uses  the   owner's  or   tenant's  own   employees  to   do                                                              
maintenance,   repair,  and   alteration  work   on  [UPON]   that                                                              
property;"  and asked  whether this  provision  leaves a  loophole                                                              
for commercial work  to be done by owners and if  the work will be                                                              
limited  by  a  certain  dollar   threshold  to  alter  or  repair                                                              
commercial  properties.   He  was  curious why  there  would be  a                                                              
loophole for commercial but not residential properties.                                                                         
                                                                                                                                
3:51:29 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  suggested he  discuss  this  further with  the  bill                                                              
sponsor, but noted his point made sense.                                                                                        
                                                                                                                                
MR.  PERISICH  remarked   it  might  leave  a   loophole  for  the                                                              
commercial industry  since some commercial owners  have very large                                                              
properties  so  the  amount  of   work  they  could  do  would  be                                                              
substantial.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON  offered  a  willingness  to  discuss  this                                                              
provision further after the hearing.                                                                                            
                                                                                                                                
REPRESENTATIVE  LEDOUX   pointed  out  that  paragraph   (10)  was                                                              
existing law and this bill makes a small editorial change.                                                                      
                                                                                                                                
3:52:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   COLVER  suggested   that  the   intent  of   this                                                              
provision  in  existing  law  was   to  allow  owners  to  perform                                                              
maintenance and  minor alterations  on their commercial  property,                                                              
but  it does  not include  major maintenance  since that  activity                                                              
would necessitate  using a licensed  contractor.  He  offered that                                                              
any  commercial   electrical  work  will  require   an  electrical                                                              
administrator's approval  since the standards are  much higher for                                                              
commercial  electrical  and  plumbing.   He  concluded  that  this                                                              
language  refers to minimal  minor maintenance  rather than  major                                                              
maintenance.                                                                                                                    
                                                                                                                                
MR.  PERISICH  suggested   imposing  a  dollar  limit   for  minor                                                              
alterations on commercial property.                                                                                             
                                                                                                                                
3:54:02 PM                                                                                                                    
                                                                                                                                
GREY  MITCHELL,  Director,  Central   Office,  Division  of  Labor                                                              
Standards &  Safety, Department of  Labor & Workforce  Development                                                              
(DLWD),  with  respect  to  an  earlier  question  on  enforcement                                                              
activity,  responded  that  investigator Al  Nagel  reported  that                                                              
since  fiscal  year  (FY)  2011   the  department  has  issued  30                                                              
administrative  fines for owner/builder  violations and  issued 16                                                              
fines in  FY 11.  These were  violations associated with  a person                                                              
building  more than  one structure  within a  two-year period,  he                                                              
said,  which is  what the  bill would  address.   This bill  would                                                              
clarify that the  department can investigate when  it appears that                                                              
homes are  being sold  by unlicensed  contractors  and not  by the                                                              
homeowners.                                                                                                                     
                                                                                                                                
3:56:01 PM                                                                                                                    
                                                                                                                                
MR. MITCHELL referred  to page 2, line 10, to paragraph  10, of HB                                                              
81 which read, "(9)  [(10)] a person working on  that person's own                                                              
property,  whether occupied  by the  person or  not, and a  person                                                              
working  on that  person's  own residence,  whether  owned by  the                                                              
person or  not."  Although this  is existing law that  provides an                                                              
exemption  from contractor  licensing, the  division has had  some                                                              
situations  arise, he said.   He  stated that previous  testifiers                                                              
identified   instances   when  the   attorney   general   reviewed                                                              
violations  and found  some vagueness  to the  law that  precluded                                                              
enforcement.   The department  has interpreted  this paragraph  to                                                              
apply  to  people  working  on  their  own  property  on  existing                                                              
structures,  rather  than "ground  up"  or brand  new  structures;                                                              
however,  the language does  not clearly  provide the  legislative                                                              
intent  nor does a  regulation further  define  it.  He  suggested                                                              
one remedy  would be  to add  "existing structures"  to avoid  any                                                              
ongoing  confusion   about  owner-builders  building   new  houses                                                              
versus working on existing homes.                                                                                               
                                                                                                                                
3:58:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked  for further  clarification that  the                                                              
aforementioned   provision    made   the   two-year    restriction                                                              
unenforceable  as interpreted  by the  attorney general's  office.                                                              
If   the  language   was   tightened   up  by   adding   "existing                                                              
structures,"  he  wondered  whether  it would  be  an  enforceable                                                              
statute with the  prohibition of a two-year waiting  period for an                                                              
owner/builder  -  without  adding   the  department's  review  and                                                              
consideration of the  factors that led to the sale.   He expressed                                                              
concern  about   involving  more  government  and   asked  whether                                                              
compliance  can  be  achieved  by tightening  up  that  clause  in                                                              
existing statute.                                                                                                               
                                                                                                                                
MR.   MITCHELL   offered  that   clarifying   the   aforementioned                                                              
paragraph  (9) would go  a long  way to  resolve the loophole  for                                                              
owner-builders;  however, at  the same  time, testimony  indicates                                                              
problems  exist with owner-builders  putting  up "for sale"  signs                                                              
during construction  or immediately  after finishing  their homes.                                                              
Currently there  isn't a clean way  to say the  owner-builders are                                                              
competing with licensed  contractors.  Thus he  suggested the need                                                              
exists for both changes.                                                                                                        
                                                                                                                                
4:00:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER  recalled  earlier testimony  about  carbon                                                              
monoxide in  a Wasilla home that  led to tragic deaths.   He asked                                                              
if  it would  be possible  to  get the  facts  in this  case.   He                                                              
related  his understanding  that the  homeowner changed  something                                                              
such as the air intake in his home.                                                                                             
                                                                                                                                
MR. MITCHELL  replied that  he was  unsure because  owner-builders                                                              
can make  changes to their  property, so  that type of  case would                                                              
not typically be  something the department will  investigate since                                                              
homeowners have an  exemption from contractor licensing.   He said                                                              
it was  a tragedy  when work  is not performed  correctly  and the                                                              
department  hopes that  owner-builders  do the  work properly  and                                                              
get the guidance to do so.                                                                                                      
                                                                                                                                
4:01:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked  whether he wrote  the language  with                                                              
respect to department waivers.                                                                                                  
                                                                                                                                
MR. MITCHELL answered  no.  He recalled his earlier  question with                                                              
respect  to  how  standards  will  be  established  and  that  the                                                              
Department of Commerce,  Community & Economic  Development (DCCED)                                                              
responded by  suggesting regulations might  be the way  to address                                                              
the  standards.   A  common sense  approach  might be  to look  at                                                              
whether there is  any evidence to demonstrate  that owner-builders                                                              
were  acting  as  contractors,  for example,  a  history  of  past                                                              
violations of contractor  licensing requirements, or  of acting as                                                              
owner-builders  on multiple  projects.   Thus  the department  can                                                              
still conduct an  investigation, but the owner-builders  also have                                                              
an  opportunity  to  provide  legitimate   reasons  why  they  are                                                              
selling their homes.   However, owner-builders would  only need to                                                              
demonstrate proof  if the department  was pursuing  an enforcement                                                              
action.   These owner-builders  could counter enforcement  actions                                                              
by  indicating they  have reasons  to  sell their  homes, such  as                                                              
medical  situations, family  emergencies, divorces  or lost  jobs.                                                              
Certainly, if the  reasons make sense, the department  will accept                                                              
them.   In addition,  parties  receiving administrative  penalties                                                              
still have the  ability to request hearings and  supply the facts.                                                              
For example,  if the  home was the  fourth house an  owner-builder                                                              
built in the last  three years, it will likely result  in the type                                                              
of  action  to  stop the  owner-builder  from  using  a  homeowner                                                              
exemption   and   require   the  owner-builder   to   obtain   the                                                              
appropriate contractor license.                                                                                                 
                                                                                                                                
4:04:17 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after first  determining no  one wished to  testify,                                                              
closed public testimony on HB 81.                                                                                               
                                                                                                                                
[HB 81 was held over.]                                                                                                          
                                                                                                                                
4:04:38 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:04 p.m. to 4:12 p.m.                                                                       
                                                                                                                                
               HB 9-PRIVATE INVESTIGATORS/AGENCIES                                                                          
                                                                                                                                
4:12:02 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the final  order of business  would be                                                              
HOUSE  BILL  NO.  9,  "An Act  providing  for  the  licensing  and                                                              
regulation  of  private  investigators  and  private  investigator                                                              
agencies; and providing for an effective date."                                                                                 
                                                                                                                                
4:12:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES,  speaking   as  prime  sponsor  of  HB  9,                                                              
presented HB  9.  She acknowledged  she introduced a  similar bill                                                              
to license  private investigators  last year  when it was  brought                                                              
to her  attention that a  felon could get  a business  license and                                                              
operate as  a private  investigator.  She  related a  situation in                                                              
which  a family  lost a  daughter and  was approached  by such  an                                                              
unscrupulous  individual.   She emphasized  that a presumption  of                                                              
authority  exists when  someone  identifies  himself/herself as  a                                                              
private investigator.   In  those instances  citizens might  offer                                                              
the  private investigator  personal  information  that they  might                                                              
not  otherwise give  out.   She offered  her belief  that this  is                                                              
something that  should be addressed.   She described  her approach                                                              
to curb  this activity was  not to create  a costly board,  but to                                                              
pattern  private investigator  licensing  after other  professions                                                              
licensed  by the division.   Finally,  since the  fiscal note  for                                                              
licensing private  investigators quadrupled from one  the division                                                              
proposed last  year, she  has questions  for the department  about                                                              
the fiscal note, she stated.                                                                                                    
                                                                                                                                
4:14:49 PM                                                                                                                    
                                                                                                                                
GINGER  BLAISDELL, Staff,  Representative  Shelley Hughes,  Alaska                                                              
State Legislature,  on behalf  of the  prime sponsor, presented  a                                                              
section-by-section analysis  of HB 9.   She stated that  Section 1                                                              
would  include  private  investigators  as one  of  the  specified                                                              
professions licensed  under the Department of  Commerce, Community                                                              
&  Economic  Development  (DCCED)  and  Section  2  would  require                                                              
private  investigators  to  be  licensed   in  the  state.    This                                                              
provision  clearly states  that person  may  not practice  private                                                              
investigating unless  licensed under  this chapter or  exempt from                                                              
being licensed,  noting a  number of exemptions  exist.   A person                                                              
may not  use the title  of or practice  as a private  investigator                                                              
unless the  person is registered  with the department or  it could                                                              
result in a misdemeanor.                                                                                                        
                                                                                                                                
4:15:55 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL  referred  to  page  2,  line  4,  of  proposed  AS                                                              
08.85.110  that  outlines  the  scope   of  practice  for  private                                                              
investigators,   including   investigating    criminal   offenses,                                                              
obtaining information  from individuals, or gathering  evidence to                                                              
be used  in court.   Private  investigators working  in the  state                                                              
have  advised  the  sponsor  that  if  someone  has  not  received                                                              
adequate training,  the collection of evidence may  not admissible                                                              
in court.                                                                                                                       
                                                                                                                                
4:16:59 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL  referred  to  page  2, line  19,  of  proposed  AS                                                              
08.85.120  that outlines  the general requirements  for a  private                                                              
investigator.   She related that in  order to obtain a  license as                                                              
a private  investigator, an  applicant must  be a citizen,  cannot                                                              
have been  convicted of  a felony  in the prior  10 years  or been                                                              
convicted of a  crime of dishonesty or sexual  misconduct, or have                                                              
received  a dishonorable  discharge  from  the military,  or  have                                                              
been determined  to  be mentally  incompetent by  a court of  law.                                                              
Further an applicant  cannot currently be on probation  or parole,                                                              
she said.                                                                                                                       
                                                                                                                                
4:17:51 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL  referred  to  page  3, line  15,  of  proposed  AS                                                              
08.85.130,  which would  create  two classes  of  license, with  a                                                              
class  A license  being  a  more  advanced professional  level  of                                                              
private  investigator  and  a  class  B  license  an  entry  level                                                              
position,  such   as  an  apprentice   who  may   need  additional                                                              
experience or training  to become a class A  private investigator.                                                              
She directed  attention to  page 4, lines  21-31, through  page 6,                                                              
line 12 of  HB 9 to language  that identifies the  information for                                                              
the   license  application,   including   providing  the   typical                                                              
standard  information,   plus  providing   criminal  history   and                                                              
conviction record,  employment records,  and a statement  that the                                                              
applicant is  free from  mental illness.   Applicants must  submit                                                              
fingerprints  and  fees for  the  criminal history  record  check,                                                              
letters of recommendations  from three citizens without  any prior                                                              
felony convictions,  and  the application  must be notarized,  she                                                              
said.                                                                                                                           
                                                                                                                                
4:19:41 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL  referred  to  page  6, line  13,  of  proposed  AS                                                              
08.85.170 that  would allow the  department to conduct  background                                                              
investigations of  applicants.  She directed attention  to page 6,                                                              
lines  19-28, which  would create  provisions  for reciprocity  to                                                              
allow  private  investigators  licensed  in  another  state,  with                                                              
comparable qualifications, to become licensed in Alaska.                                                                        
                                                                                                                                
4:20:28 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  asked  how many  states  currently  license  private                                                              
investigators.                                                                                                                  
                                                                                                                                
MS. BLAISDELL  answered that  she was unsure.   She recalled  that                                                              
approximately 109  Alaskans have identified themselves  as private                                                              
investigators  and approximately  40  out-of-state  investigators.                                                              
In further response,  she answered that she was not  sure how many                                                              
other states currently license private investigators.                                                                           
                                                                                                                                
MS. BLAISDELL  clarified  that proposed AS  08.85.200 would  allow                                                              
Alaska  to  recognize  private  investigators  licensed  in  other                                                              
states, but  she wasn't  certain how  many states would  recognize                                                              
Alaska's  private  investigators  for  reciprocity.    In  further                                                              
response,  she related  that a  wide range  of licensure  programs                                                              
exist  in other  states.   She recalled  that four  states do  not                                                              
license private  investigators, but some states  provide municipal                                                              
oversight, although others have statewide laws.                                                                                 
                                                                                                                                
4:21:41 PM                                                                                                                    
                                                                                                                                
MS. BLAISDELL  referred  to page  6, lines 29-31  through page  7,                                                              
line 12,  of proposed  AS 08.85.210,  noting the department  would                                                              
issue  an   identification  card   that  will  list   the  private                                                              
investigator's  license number,  which must  be carried while  the                                                              
investigator is performing private investigator duties.                                                                         
                                                                                                                                
MS. BLAISDELL  directed attention to  page 7, lines  12-31 through                                                              
page 8, line 15  of proposed AS 08.85.220, to  the requirement for                                                              
a private investigator  agency certificate, noting  the department                                                              
will  issue  a private  investigator  agency  certificate  if  the                                                              
primary employee  meets the requirements  of possessing a  class A                                                              
license and  the agency is  insured and  bonded.  She  referred to                                                              
page  8, 1ines  16-31  through  page 9,  line  2, of  proposed  AS                                                              
08.85.230  related to  license renewal  and nontransferability  of                                                              
licenses.   She  related that  a private  investigator license  is                                                              
not   transferable,  but   can   be  renewed   as   long  as   the                                                              
qualification  criteria  is still  valid;  however,  approximately                                                              
every  five  years  a  licensee   must  submit  to  an  additional                                                              
background check.                                                                                                               
                                                                                                                                
4:22:43 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL  directed  attention  to  page 9,  lines  3-11,  of                                                              
proposed AS 08.85.240,  which pertains to firearms  training.  She                                                              
explained  this   provision  was  added  to  ensure   that  people                                                              
entering  into  high  risk  situations   would  have  successfully                                                              
completed firearms training.                                                                                                    
                                                                                                                                
MS. BLAISDELL  directed attention  to page  9, lines 12-17,  which                                                              
provides  confidentiality   of  licensees'  personal   identifying                                                              
information.  Under  proposed AS 08.85.260,  prohibited practices,                                                              
licensees cannot  collect information for illegal  purposes.  This                                                              
provision  also  prevents  people  from  impersonating  a  private                                                              
investigator by carrying  a badge or uniform, or  display flashing                                                              
vehicle lights.                                                                                                                 
                                                                                                                                
4:24:20 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL, referring  to  page  10, line  24  of proposed  AS                                                              
08.85.270,  explained that  this basically  states that an  action                                                              
may  not be  brought against  a person  who files  a complaint  in                                                              
good  faith  against  a  licensee.    She  surmised  that  private                                                              
investigators  may  encounter  some   people  who  might  wish  to                                                              
complain  about the legitimate  activities  of a licensed  private                                                              
investigator.   Thus  a  private investigator  can't  be sued  for                                                              
damages because  he/she located the  person he was hired  to find.                                                              
She  next  referred to  page  10,  lines  27-28, noting  that  the                                                              
regulations  will be  conducted  by administrative  procedures  by                                                              
the department.                                                                                                                 
                                                                                                                                
MS. BLAISDELL  directed attention  to the exemptions  beginning on                                                              
page 10,  lines 29-31  through page  12, line  13, that  lists the                                                              
types  of  people   who  are  exempt  from   private  investigator                                                              
licensure,    including    people   who    perform    professional                                                              
investigative services  in their  normal course of  business, such                                                              
as attorneys,  law  enforcement officers,  insurance agents,  bank                                                              
employees,   forensic   scientists,    fire   investigators,   and                                                              
paralegals,  while acting  within the scope  of their  employment.                                                              
She   characterized  these   exemptions   include   a  number   of                                                              
professions  that  do  not  require   additional  licensure  as  a                                                              
private investigator.                                                                                                           
                                                                                                                                
4:26:12 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL stated  the bill  contains a  few definitions,  and                                                              
transitional  provisions  that  allow  someone  who  has  met  the                                                              
requirements  of  this  chapter  who is  operating  as  a  private                                                              
investigator  to continue  to  do so  until  the business  license                                                              
renewal.   She  related that  the effective  date of  the bill  is                                                              
July  2015, although  the department  would like  to postpone  the                                                              
effective date to allow time to adopt regulations.                                                                              
                                                                                                                                
4:26:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES   emphasized  that  private   investigators                                                              
cannot wear  any type of  badge that attempts  to portray  them as                                                              
law  enforcement  officers  or  some  type  of  state  or  federal                                                              
officials.                                                                                                                      
                                                                                                                                
4:27:37 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked for clarification on the fiscal note.                                                                         
                                                                                                                                
MS. BLAISDELL  deferred to  the department  to discuss  the fiscal                                                              
note;  however,  she  pointed  out the  fiscal  note  in  members'                                                              
packets  refers to House  Bill 253,  which was  a bill  introduced                                                              
last legislature  to license private investigators,  which did not                                                              
pass.   She included  a fiscal  note for  the aforementioned  bill                                                              
since it provides  a basis for discussion for the  fiscal note for                                                              
HB 9.                                                                                                                           
                                                                                                                                
4:28:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  referred   to  page  3,  lines  13-14,  to                                                              
subsection  (c),  which  seems  overly vague  for  a  conflict  of                                                              
interest.   She suggested  it may  give the department  unfettered                                                              
authority  to  establish a  conflict  of  interest as  opposed  to                                                              
specifying circumstances.                                                                                                       
                                                                                                                                
MS. BLAISDELL stated  that this bill was patterned  after Colorado                                                              
law.  She  said that the applicant  may not be  currently employed                                                              
in a  position the department  determines to represent  a conflict                                                              
of  interest  for   the  prospective  licensee.     The  provision                                                              
specifically  restricts licensees  from  being currently  employed                                                              
as a peace  officer or federal,  state or local government  in the                                                              
capacity of  law enforcement.  She  suggested that a  person might                                                              
be  employed in  a  profession that  could  create  a conflict  of                                                              
interest,  such as someone  who is  a human  resource officer  who                                                              
has access to  more information.  She suggested  there will always                                                              
be odd  circumstances and questions  as to whether  the department                                                              
should have the discretion.                                                                                                     
                                                                                                                                
4:31:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX interjected  that  she feels  uncomfortable                                                              
with [the department determining any conflict of interest].                                                                     
                                                                                                                                
REPRESENTATIVE  HUGHES  welcomed  suggestions  in  improving  that                                                              
provision.                                                                                                                      
                                                                                                                                
4:31:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  referred to page 2 of HB  9 to the scope                                                              
of practice  for investigators.   He wondered whether  proposed AS                                                              
08.85.110   would  cover   all  the   activities   of  a   private                                                              
investigator and  if the activities  listed were based on  a model                                                              
bill.                                                                                                                           
                                                                                                                                
MS. BLAISDELL  explained that  the private investigator  licensing                                                              
bill used Colorado's  law, which was tweaked by  Legislative Legal                                                              
to comport with other statutory provisions.                                                                                     
                                                                                                                                
REPRESENTATIVE  HUGHES reminded  members  that  the previous  bill                                                              
had input  and review  from private  investigators so she  thought                                                              
the   private   investigators   would   have   pointed   out   any                                                              
investigative activities that were missing.                                                                                     
                                                                                                                                
4:33:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  referred to page 7, to  subparagraph (A)                                                              
to errors and omissions  insurance.  He asked what  is known about                                                              
private  investigator   negligence.     He  stated  that   private                                                              
investigators  could  be liable  for  errors  and he  wondered  if                                                              
private  investigators  can obtain  insurance.    He said  he  has                                                              
never heard of  any insurance being offered, but  wondered whether                                                              
private investigators  could be sued for such  things as reporting                                                              
that adultery occurred when it actually didn't occur.                                                                           
                                                                                                                                
MS. BLAISDELL  answered that  the bill  requires surety  bonds and                                                              
errors and omissions  insurance, which was set at  $100,000 at the                                                              
recommendation of  a private investigator.  She  reported that the                                                              
surety  bond is  standard  practice, that  the  City of  Fairbanks                                                              
requires  licensing   for  private   investigators,  as   well  as                                                              
requiring  a surety  bond of $10,000,  or $20,000  if the  private                                                              
investigators  are  licensed  in two  or  more  states.   She  was                                                              
unsure about  the errors and  omissions insurance, but  offered to                                                              
research this for the committee.                                                                                                
                                                                                                                                
4:35:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON   referred  to  the   concealed  handgun                                                              
provisions and  asked whether any second amendment  constitutional                                                              
issues exist.                                                                                                                   
                                                                                                                                
MS.  BLAISDELL  replied  that she  asked  for  clarification  from                                                              
Legislative  Legal Services  in terms  of  the permit  to carry  a                                                              
concealed handgun.   She reported  the legislative  legal drafters                                                              
advised that Alaska  law does not prohibit anyone 21  years of age                                                              
or  older  who may  legally  possess  a  firearm from  carrying  a                                                              
concealed  weapon.   Thus, anyone  can carry  a concealed  firearm                                                              
without a  special permit or  training.  Further,  Alaska provides                                                              
that a  person may  obtain permit  to carry  a concealed  handgun,                                                              
with  the primary  reason to  obtain an  Alaska concealed  handgun                                                              
permit  is to  be  able  to carry  a  concealed handgun  in  other                                                              
states.   She stated that in  order to obtain a  concealed handgun                                                              
permit,  a  person   is  required  to  successfully   complete  an                                                              
approved handgun  course under  AS 18.65.715, typically  conducted                                                              
by  the Alaska  State  Troopers or  by several  private  entities.                                                              
Last year during  discussions on the previous bill,  it was deemed                                                              
important  that  if  private  investigators   were  to  carry  any                                                              
weapons  while  encountering  higher-risk  situations,  that  some                                                              
type of training should be required.                                                                                            
                                                                                                                                
4:38:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked whether the penalties  for failure                                                              
to comply  with the investigator  certificates [under  proposed AS                                                              
08.85.220   (e)]  was   consistent   with   violations  of   other                                                              
professions,  for example,  if someone calls  themselves a  nurse,                                                              
but he/she  is not one, whether the  person is subject  to a class                                                              
A  misdemeanor.    He  pointed out  some  of  the  violations  are                                                              
technical  such  as  in  [subsection   (c),  paragraph  (5)]  that                                                              
requires notifying  the department  within 30  days of  any change                                                              
in the agency's officers, directors, or partners.                                                                               
                                                                                                                                
REPRESENTATIVE  LEDOUX  referred  to  the  extensive  list  of  18                                                              
exemptions  and wondered why  so many  exemptions were  allowed if                                                              
horrendous   things    can   happen   with    unlicensed   private                                                              
investigators.   She asked why the  bill was only  concerned about                                                              
people  conducting   investigations  with  their   own  individual                                                              
business,  but  not  for  those working  for  an  attorney  or  an                                                              
insurance agent.                                                                                                                
                                                                                                                                
REPRESENTATIVE HUGHES  stated that in many of  the exemptions, the                                                              
professionals conduct  investigations as part of  their duties and                                                              
they have some  oversight, whereas private investigators  are sole                                                              
practitioners.  She  suggested that some of the  other professions                                                              
require their own licensing.                                                                                                    
                                                                                                                                
4:41:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  referred to page  10, line 31  through page                                                              
11,  line  2,   which  read,  "(1),  a  person   who  is  employed                                                              
exclusively or  regularly by  one employer that  is not  a private                                                              
investigator  agency and  who  performs investigations  solely  in                                                              
connection with  the affairs of that  employer."  She  offered her                                                              
belief that could be someone working for an insurance company.                                                                  
She offered her  belief that if licensing is going  to be required                                                              
for investigators, that it should cover everyone.                                                                               
                                                                                                                                
MS. BLAISDELL responded  that the business license  classification                                                              
for   investigations   was   very   broad,  and   the   types   of                                                              
investigators who  seek licensure tend  to be the ones who  are in                                                              
business   for   themselves   with  broad   access   to   database                                                              
information.   Typically, insurance  adjusters work for  insurance                                                              
agencies, and if  someone has a concern, he/she  could contact the                                                              
employer.                                                                                                                       
                                                                                                                                
4:44:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX argued  that these  investigators could  be                                                              
hired   by  an   insurance   company   or  an   attorney   seeking                                                              
information.  She  expressed concern that the  investigators might                                                              
misidentify  themselves just  to obtain the  information,  but the                                                              
employers  might not  be concerned  since  their goal  is to  hire                                                              
investigators to find out.                                                                                                      
                                                                                                                                
REPRESENTATIVE  HUGHES  suggested   that  it  isn't  necessary  to                                                              
license  everyone  who puts  on  Band-Aids as  licensed  practical                                                              
nurses, that  there must be  a limit.   She explained  that people                                                              
working  under these  exemptions  have  employers.   Although  she                                                              
understood the  concern, she  suggested there  must be a  limit as                                                              
to who  needs licensure.  She  maintained that the  exemptions are                                                              
for  people who  work for  employers  so they  have oversight  and                                                              
likely  work under  a  set of  requirements  in their  professions                                                              
that may address the concerns.                                                                                                  
                                                                                                                                
4:45:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   LEDOUX   agreed    the   employers   might   have                                                              
requirements,  but she  is not  sure that  they do,  which is  her                                                              
concern.                                                                                                                        
                                                                                                                                
REPRESENTATIVE HUGHES  suggested that  the division might  be able                                                              
to provide  a response on  the exemptions for professions  covered                                                              
by licensure.                                                                                                                   
                                                                                                                                
CHAIR OLSON asked to discuss the fiscal note.                                                                                   
                                                                                                                                
4:46:26 PM                                                                                                                    
                                                                                                                                
SARA  CHAMBERS,   Acting  Director,   Division  of   Corporations,                                                              
Business,  and  Professional Licensing,  Department  of  Commerce,                                                              
Community, &  Economic Development  (DCCED), said the  fiscal note                                                              
reflects the level  of staffing and costs to start  a new program,                                                              
for  licensure costs  and  enforcement.   The  licensing  examiner                                                              
would need  to compile information  and determine  eligibility and                                                              
the   division's   investigators   would   need  to   review   the                                                              
information  to determine  if  it  is true  and  accurate and  the                                                              
applicant  was not  withholding information  that  will keep  them                                                              
from  meeting  the  threshold  for   licensure.    Certainly,  the                                                              
division would  not expect 100  percent of the licensing  examiner                                                              
or  investigator's  time  to  be   charged  back  to  the  private                                                              
investigator licensing  program.  Last year the  division received                                                              
three new  licensing programs as  well as a significant  expansion                                                              
of a  program, but  failed to  ask for  additional support  within                                                              
the division.   This resulted  in the division  not being  able to                                                              
absorb  the  costs,  therefore;  the  division  will  request  the                                                              
minimum staff  it needs  for any  new programs.   She related  her                                                              
understanding  that a  portion  of the  licensing  staff might  be                                                              
charged to other licensing programs.                                                                                            
                                                                                                                                
4:50:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON said  it sounds  like the division  will                                                              
be  shifting  some  of the  burden  of  the  private  investigator                                                              
licensing program  to some  of the other  new programs.   However,                                                              
it doesn't seem  fair for the private investigators  to absorb the                                                              
2014 new  licensing program  costs.  He  wondered if  the division                                                              
must  explain  to  the  other programs  why  their  fees  will  be                                                              
increased or whether he is missing the point.                                                                                   
                                                                                                                                
MS.  CHAMBERS explained  that the  division puts  forth a  certain                                                              
level  of  service  regardless  of  the  number  of  staff,  which                                                              
depends on  the length of  the lag time  to process  new licenses,                                                              
for example,  if applicants must  wait three weeks, six  weeks, or                                                              
a  year  for licensure.    Thus  the volume  doesn't  reflect  the                                                              
activity, but the  level of service can be provided.   She did not                                                              
necessarily think  there will be  additional costs for  a specific                                                              
program,  but the  division desires  to  provide a  high level  of                                                              
service  to the  state.   For example,  the  Alaska State  Medical                                                              
Board  just  completed its  renewal  period  at  a time  when  the                                                              
division   experienced  an   influx  of   applications.     Having                                                              
additional  staff available  allows  the division  to  temporarily                                                              
assign licensing  examiners to programs  that need  seasonal help,                                                              
in this instance,  to assist the medical board  license doctors to                                                              
ensure that  hospitals were  fully staffed  and able to  function.                                                              
In fact,  Alaskans have  a high  expectation for  service and  the                                                              
division can  experience a need for  help in any of  its licensing                                                              
programs, she said.                                                                                                             
                                                                                                                                
4:52:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  expressed concern that the  fiscal note was                                                              
nearly  quadruple  of the  fiscal  note  on  a similar  bill  last                                                              
legislative  session.  She  recalled during  the presentation  for                                                              
the Division of  Corporations, Business & Professional  Licensing,                                                              
that  Ms. Chambers  reported  the  range for  license  fees was  a                                                              
minimum  of  $50 for  some  professions  to $1,700  for  midwives.                                                              
However, she  reported that page  3 of the  fiscal note for  HB 9,                                                              
lists   an  estimated   license   fee   of  $2,900   for   private                                                              
investigators.  She  questioned the figures since  the fiscal note                                                              
to  license private  investigators  last  year was  $60,000  total                                                              
instead  of $230,000.    She  wondered why  private  investigators                                                              
were  being asked  to help  cover the  expenses for  the error  of                                                              
licensing  costs  for  three  new  professions  last  year.    She                                                              
explained  that it was  not her  intent to  create a  bureaucracy.                                                              
She further  questioned the  need for  1.5 licensing examiners  to                                                              
license  a potentially  140 private  investigators  in the  state.                                                              
She stated  that this program  was patterned after  some processes                                                              
in place  for other  professions, including  fingerprinting.   She                                                              
expressed concerned  about the proposed  costs to  license private                                                              
investigators as well as their proposed biennial fees.                                                                          
                                                                                                                                
MS. CHAMBERS  replied that  she did not  anticipate the  1.5 staff                                                              
positions proposed  for the  program to charge  all of  their time                                                              
to the private  investigator program.  It's possible  the proposed                                                              
private  investigator  licensing  program  might need  a  fulltime                                                              
investigator  for a  month,  or 80  percent  of an  investigator's                                                              
time  for three  months, or  perhaps  60 percent  for six  months.                                                              
After  the initial  licensure period,  the investigator's  ongoing                                                              
commitment could be  reduced to 30 percent, she  said, noting that                                                              
the  fiscal note  anticipated the  absolute  worst case  scenario,                                                              
and  took into  account  the number  of  exemptions  that must  be                                                              
considered  as well  as potential  complaints.   However, at  this                                                              
point the  division doesn't  know how  many private  investigators                                                              
will apply for  licensure.  She described the  fee setting process                                                              
as  being very  dynamic,  one that  depends  a  number of  factors                                                              
outside the  division's control.   It is more likely  that private                                                              
investigators will pay  fees closer to those of  midwives, but the                                                              
projected $2,900  in biennial fees  were based on  the information                                                              
the division  has today.  Any portion  of staff time not  used for                                                              
the  private  investigator  program  will be  charged  to  another                                                              
program.  For  example, if the licensing examiner  assigned to the                                                              
private  investigator program  was  temporarily  assigned to  help                                                              
medical  board  process  applications  or  license  renewals,  the                                                              
examiner's time will be charged to that program, she said.                                                                      
                                                                                                                                
4:57:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  questioned the ratio of 1.5  staff for this                                                              
program.   She asked  for further clarification  on the  number of                                                              
staff assigned  to other non-board  professions of similar  size -                                                              
with 150 licensees - since 1.5 staff seems very high.                                                                           
                                                                                                                                
MS.  CHAMBERS  answered that  it  depends  on  the program.    She                                                              
explained  that  some  programs   with  under  100  licensees  are                                                              
assigned  one fulltime  staff; however,  other  programs may  have                                                              
several thousand  licensees but their profession  requires minimal                                                              
requirements for  licensure, with little need  for investigations.                                                              
Thus, those professions  may be assigned one-half  or one fulltime                                                              
licensing examiner.   Certainly, at times the  division may assign                                                              
multiple  investigators to  work on one  investigation.   However,                                                              
for  this  program,  the  division  envisions  that  investigating                                                              
licensees and  reviewing the  allowable exemptions will  initially                                                              
require  quite a  bit  of "hands  on" effort.    It seemed  highly                                                              
unlikely  the  private  investigator licensees  would  be  charged                                                              
$2,900  in biennial  fees  or  that it  would  take  1.5 staff  to                                                              
maintain the  program.  The division  will employ the  practice of                                                              
positive  timekeeping.  She  emphasized that  the division  cannot                                                              
absorb these  program costs  so it anticipated  the costs  for the                                                              
proposed program.                                                                                                               
                                                                                                                                
4:59:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HUGHES   maintained    her   concern   over   the                                                              
"quadrupled"  fees reflected  in the  fiscal note.   She said  she                                                              
did  not  wish  to  have  the  fiscal  note  reiterated,  but  she                                                              
expressed concern  that the  bill will not  pass with  the current                                                              
fiscal note  attached.  In fact,  she said she will pull  the bill                                                              
rather than add to the bureaucracy in the division.                                                                             
                                                                                                                                
[HB 9 was held over].                                                                                                           
                                                                                                                                
5:00:50 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:01 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB81 ver A.pdf HL&C 2/11/2015 3:15:00 PM
HB 81
HB81 Sponsor Statement.pdf HL&C 2/11/2015 3:15:00 PM
HB 81
HB81 Fiscal Note-DCCED-CBPL-02-06-15.pdf HL&C 2/11/2015 3:15:00 PM
HB 81
HB81 Fiscal Note-DOLWD-MI-02-06-15.pdf HL&C 2/11/2015 3:15:00 PM
HB 81
HB81 Supporting Documents-Letter Jess Hall 2-10-2015.pdf HL&C 2/11/2015 3:15:00 PM
HB 81
HB9 ver A.pdf HL&C 2/11/2015 3:15:00 PM
HB 9
HB9 Sponsor Statement.pdf HL&C 2/11/2015 3:15:00 PM
HB 9
HB9 Sectional Analysis.pdf HL&C 2/11/2015 3:15:00 PM
HB 9
HB9 Fiscal Note-DCCED-CBPL-02-06-15.pdf HL&C 2/11/2015 3:15:00 PM
HB 9
HB9 Supporting Document-Email Habeger 09-09-2013.pdf HL&C 2/11/2015 3:15:00 PM
HB 9
FOR REFERENCE ONLY-HB253 Fiscal Note-DCCED-CBPL-03-21-2014.pdf HL&C 2/11/2015 3:15:00 PM
HB 9
HB9 Opposing Documents-Letter Frank Wake 2-07-2015.pdf HL&C 2/11/2015 3:15:00 PM
HB 9