02/08/2008 03:00 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB297 | |
| HB340 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 297 | TELECONFERENCED | |
| *+ | HB 340 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 8, 2008
3:04 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Jay Ramras
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 297
"An Act relating to the practice of veterinary medicine."
- MOVED CSHB 297(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 340
"An Act establishing the Alaska capstone avionics revolving loan
fund and relating to the fund; and providing for an effective
date."
- MOVED HB 340 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 297
SHORT TITLE: PRACTICE OF VETERINARY MEDICINE
SPONSOR(s): REPRESENTATIVE(s) NEUMAN
01/11/08 (H) PREFILE RELEASED 1/11/08
01/15/08 (H) READ THE FIRST TIME - REFERRALS
01/15/08 (H) L&C
02/08/08 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 340
SHORT TITLE: CAPSTONE AVIONICS FUND/LOANS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/25/08 (H) READ THE FIRST TIME - REFERRALS
01/25/08 (H) L&C, FIN
02/08/08 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
DR. STEVEN TORRENCE, DVM, Chair
Board of Veterinary Examiners
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community, & Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on HB 297.
JENNIFER STRICKLER, Chief
Professional Licensing
Division of Corporations, Business, and Professional Licensing
Juneau Office
Department of Commerce, Community, & Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 297.
DR. PAM TUOMI, DVM
Alaska Sealife Center
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 297.
DR. ROBERT GERLACH, State Veterinarian
Office of the State Veterinarian
Division of Environmental Health
Department of Environmental Conservation (DEC)
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 297.
FRANK RICHARDS
Deputy Commissioner
Office of the Commissioner
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on HB 340.
GREG WINEGAR, Director
Division of Investments
Department of Commerce, Community, & Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on HB 340.
LEONARD KIRK, Assistant Director; Capstone Coordinator
University of Alaska Anchorage(UAA)
Aviation Technology Division
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions on HB 340.
PATRICK THURSTON, Director of Operations
Hageland Aviation
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 340.
WILFRED RYAN, President
Alaska Air Carriers Association (ACCA);
Alaska Airmen's Association, Inc.
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 340
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:04:59 PM. Representatives Buch,
Gardner, Neuman, and Olson were present at the call to order.
Representatives Gatto, LeDoux, and Ramras arrived as the meeting
was in progress.
HB 297-PRACTICE OF VETERINARY MEDICINE
3:05:37 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 297, "An Act relating to the practice of
veterinary medicine."
REPRESENTATIVE NEUMAN, testifying as prime sponsor of HB 297,
said that the Board of Veterinary Examiners (BVE) statutes were
last updated in 1998. This bill, he explained, will would allow
fourth year veterinary students to work in Alaska under the
supervision of a licensed veterinarian. This internship would
allow the student, including Alaska residents, to experience the
practice of veterinary medicine in Alaska. This bill would also
provide exemptions for veterinary medical officers from
governmental agencies and veterinarians licensed in another
state or country to work as consultants in Alaska, coordinated
by the Department of Commerce, Community, & Economic Development
(DCCED) and the Board of Veterinary Examiners (BVE).
3:07:19 PM
DR. STEVEN TORRENCE, DVM, Chair, Board of Veterinary Examiners
(BVE), said that the board is requesting several changes to its
statutes, which have not been updated since 1998. Currently
fourth year students cannot work as technicians in the state
since they do not have the training or licensure required to do
so. Although students can observe, they can do little more than
that, he opined. Veterinary students must leave the state to
attend a four-year veterinary program. Allowing students the
opportunity to work in an established hospital will help them
segue to potential jobs in Alaska. At the same time, HB 297
provides licensed veterinarians an opportunity to exchange ideas
such as new practices in veterinary medicine with a potential
employee in a professional setting. Safeguards, such as
limiting a veterinary practice to host a maximum of two interns
and limiting a single veterinarian to one intern under his/her
supervision helps ensure a quality experience for student
interns. In fact, monitoring and supervising of an intern is a
significant time commitment for the practicing veterinarian.
However, the commitment is worthwhile for veterinary medicine in
Alaska due to the opportunities it presents to bring fourth year
students to Alaska.
3:11:00 PM
DR. TORRENCE said that proposed AS 08.98.250(5) would amend the
definition of "practice of veterinary medicine" by deleting "for
compensation" to curb unlicensed activity such as veterinary
hospitals operating without licensure. Currently, the DCCED's
investigator must issue a cease and desist order in order to
halt the illegal practice. When someone claims a certain level
of expertise in veterinary medicine, it can be harmful or
disastrous. Under HB 297, the board could take action against
the person claiming expertise who did the harm. Dr. Torrence
pointed out that nothing in HB 297 would prevent a person from
acting in a "Good Samaritan" situation, such as a neighbor
helping a neighbor or a person treating his/her own animals.
3:15:49 PM
REPRESENTATIVE GARDNER inquired as to the difference between a
veterinary program and a veterinary school.
DR. TORRENCE answered that he was not sure. He pointed out that
most veterinary colleges are referred to as schools, whereas
programs might be offered outside a college by organizations.
REPRESENTATIVE GARDNER surmised then that the University of
California would be the school offering the veterinary program
at the Davis campus location.
3:18:49 PM
DR. TORRENCE, in response to Representative LeDoux, answered
that a lay vaccinator program administered by the Section of
Epidemiology, Department of Health and Social Services (DHSS),
provides for administration of the rabies vaccine for lay people
in rural areas.
3:19:20 PM
REPRESENTATIVE LEDOUX made a motion to adopt Amendment 1 for
purposes of discussion, labeled 25-LS0357\E.1, Bullard, 3/11/08,
which read:
Page 3, line 13:
Delete "and"
Page 3, line 14, following "(9)":
Insert "a person approved by the Department of
Health and Social Services to administer rabies
vaccine to animals;
(10)"
REPRESENTATIVE NEUMAN noted that the rabies vaccine has to be
handled properly and so the Section of Epidemiology, DHSS,
currently certifies individuals to administer rabies vaccine.
He pointed out that nothing in HB 279 prohibits people from
administering other vaccines.
REPRESENTATIVE LEDOUX recalled that until this past summer
people in rural areas administered vaccines. She asked whether
Amendment 1 would reinstate that practice.
DR. TORRENCE offered that the Section of Epidemiology, DHSS,
developed a course to train and certify lay vaccinators to
administer rabies vaccine to dogs and cats throughout Alaska.
Last year, due to an incidence of 12 cases of rabies in dogs in
Bethel, the DHSS temporarily dismantled the program to
investigate what had happened.
REPRESENTATIVE LEDOUX inquired as to the effect of Amendment 1
on the lay vaccinator program, if it is currently "alive and
well."
DR. TORRENCE answered that rabies vaccine has to be in
possession of or be administered by a veterinarian. Since some
areas of the state do not have a veterinarian, the state
certifies lay vaccinators to administer rabies vaccine to dogs
or cats in these regions. Under the program, rabies vaccine is
purchased by the state and distributed free of charge along with
tags and the standard certificates to all lay vaccinators and to
all private veterinarians.
3:24:22 PM
JENNIFER STRICKLER, Chief, Professional Licensing, Division of
Corporations, Business, and Professional Licensing, Juneau
Office, Department of Commerce, Community, & Economic
Development (DCCED), in response Representative LeDoux, said
that the statute currently lists the acts of veterinary
practice, but requires that veterinary practice must be "for
compensation." Removing "for compensation" from HB 297 allows
the lay vaccinator program to continue. The effect of HB 297 is
to exempt lay vaccinators from the practice of veterinary
medicine, she said.
MS. STRICKLER clarified that a different statute allows village
police officers or public health officers to euthanize animals
and is not affected by HB 297. In response to an earlier
question, she said that the change in HB 297 from "school" to
"program" was made to address how foreign programs are
accredited by the American Veterinary Association. The Board of
Veterinary Examiners identified some foreign programs that are
not equivalent to doctorate programs in the United States. The
Board of Veterinary Examiners would like to review programs for
equivalency to programs in the United States. She related that
the DCCED fully supports HB 297.
3:27:35 PM
REPRESENTATIVE GARDNER inquired as to the reason for removing
language on page 4, line 14, proposed AS 08.98.250(1), which
reads: "[AND CONFORMS TO THE STANDARDS REQUIRED FOR
ACCREDITATION BY THE AMERICAN VETERINARY MEDICAL ASSOCIATION]".
MS. STRICKLER answered that while the American Veterinarian
Association sets the standards for the program, the division
supports giving the BVE authority to determine which programs
should be accepted.
3:28:32 PM
REPRESENTATIVE GARDNER inquired as to why compensation is being
removed on page 5, line 9.
MS. STRICKLER answered that "for compensation" is being removed
because under current statute a person practices veterinary
medicine only if the individual is paid. The Board of
Veterinary Examiners maintains that when a person treats an
animal that the person is practicing veterinary medicine whether
or not it is for compensation.
3:29:34 PM
REPRESENTATIVE GARDNER referred to page 5, lines 10-27, proposed
AS 08.98.250(5)(D), which is being deleted in HB 297. She
inquired as to why artificial insemination is being removed from
the practice of veterinary medicine.
MS. STRICKLER answered that the artificial insemination
exemption is now addressed on page 3, lines 11-12, in proposed
AS 08.98.125(7).
3:30:41 PM
CHAIR OLSON asked if there were any further questions on
Amendment 1. There being no further questions and no objection,
Amendment 1 was adopted.
3:31:06 PM
DR. TORRENCE noted that most veterinarians in the state do not
have expertise on artificial insemination. Since expertise is
available in the Lower 48 by those who routinely perform the
procedures, some changes were made in HB 297 to allow Alaskans
to utilize that expertise.
3:32:08 PM
DR. PAM TUOMI, DVM, Alaska Sealife Center, said that about three
years ago she began to notice deficiencies in the definition of
veterinary medicine, in particular, for agencies involved in
wildlife research projects. The current statutes hindered
veterinarians from using out-of-state experts. The Board of
Veterinary Examiners interpreted that experts would need to
obtain temporary licenses. However, the time, cost, and
paperwork involved in obtaining a temporary license meant
expending research funds to do so. Since qualified
veterinarians in the state could not cover all of the project
needs, in 2005 the veterinarians petitioned the board for
relief. Thus, the definition of the practice of veterinary
medicine was broadened to allow the use of consultants by
practicing veterinarians. She expressed support for the change
to HB 297 that will allow the lay vaccinator program to
continue. She said she supports passage of HB 297.
3:34:59 PM
DR. ROBERT GERLACH, State Veterinarian, Office of the State
Veterinarian, Division of Environmental Health, Department of
Environmental Conservation, noted that the practice of
veterinary medicine is growing and expanding into new
specialties and avenues of research. He stressed the importance
of educational resources to veterinarians in the state.
Veterinarians are not just involved with health and protection
of animals, but also with the development of health and food
safety, he said. Veterinarians who practice in specialized
areas of veterinary medicine can benefit from access to other
specialists in the Lower 48, he opined. He stressed that
updating standards of practice of veterinary medicine helps to
ensure the performance of quality veterinary medicine for wild
and domestic animal resources for Alaska's public health and
food safety.
3:36:35 PM
CHAIR OLSON, after first determining no one else to wished
testify, closed public testimony on HB 297.
3:36:41 PM
REPRESENTATIVE LEDOUX expressed concern about removing the
language "for compensation". She posed a scenario in which an
owner with a sick dog consults his/her neighbor who offers
advice and asked if the neighbor would be practicing veterinary
medicine without a license under HB 297.
DR. TORRENCE replied that it would not be the practice of
veterinary medicine because it would fall under the Good
Samaritan provisions, which veterinarians encourage. He related
that a person can have someone act as an agent so long as their
actions do not go against the intent of statute, such as mushers
who routinely use other people to perform tasks to care for
their sick or injured dogs.
DR. TORRENCE, in response to Representative LeDoux, answered
that the Board of Veterinary Examiners would not have an
interest in neighbor-to-neighbor consultations which are
considered expressing opinions.
REPRESENTATIVE LEDOUX asked for a specific cite for the
exemption to allow that activity.
3:39:29 PM
DR. TORRENCE referred to page 2, line 25-27, proposed AS
08.98.125(2), which read: "a person who provides emergency care
without remuneration to an injured or ill animal that reasonably
appears to the person to be in immediate need of emergency aid
to avoid serious harm or death;". He further referred to page
3, line 14, under proposed AS 08.98.125(9), which read: "a
person or employee of a person who, without compensation, treats
only animals belonging to that person ..."
REPRESENTATIVE LEDOUX specified that the exemptions mentioned
would not apply to the scenario posed since the owner is not
treating his/her own animal and the neighbor is not an employee
of the person.
DR. TORRENCE offered that a diagnosis is a medical opinion based
on fact, training, and experience rather than a lay opinion.
REPRESENTATIVE NEUMAN reiterated that HB 297 refers to the
practice of veterinary medicine and not neighbors helping
neighbors.
REPRESENTATIVE LEDOUX noted her agreement with the intent of HB
297, but maintained her concern.
3:41:48 PM
MS. STRICKLER referred to page 5, line 8, proposed AS
08.98.250(5)(C) which read: " ...is qualified or licensed to do
any act in (A) of this paragraph ...". She pointed out if the
neighbor is offering an opinion, the person is not practicing
veterinary medicine unless that person is qualified or licensed
to do so.
REPRESENTATIVE NEUMAN drew attention to the title of HB 297:
"An Act relating to the practice of veterinary medicine."
REPRESENTATIVE LEDOUX noted that proposed AS 08.98.250(5)(A)-(C)
does not have any "ands" or "ors." She opined that a person
would have to do all three - diagnose, represent, and be
qualified - in order to be practicing veterinary medicine.
MS. STRICKLER noted her agreement.
3:44:20 PM
REPRESENTATIVE NEUMAN moved to report HB 297, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes.
3:44:42 PM
REPRESENTATIVE GATTO objected. He referred to page 5, lines 3-
5, in proposed AS 08.98.250(5)(B) which read: "[MEANS] to
represent, directly or indirectly, publicly or privately, an
ability or willingness to do an act in (A) of this paragraph
[FOR COMPENSATION];" He expressed concern that under this
provision someone with an ability to suture or administer pills
could be construed as practicing veterinary medicine.
MS. STRICKLER specified that the language under question in
proposed AS 08.98.250(5)(B) is current statute.
REPRESENTATIVE LEDOUX expressed agreement, but pointed out that
the current statute also includes, "for compensation."
REPRESENTATIVE GATTO offered his concern that removing "for
compensation" language has changed the meaning of practicing
veterinary medicine.
REPRESENTATIVE BUCH inquired as to whether [proposed AS
08.98.250(5)(B)] should read, "is inclusive."
REPRESENTATIVE NEUMAN offered that HB 297 has been reviewed by
many professionals including BVE board members. He reiterated
that the intent of HB 297 is to update the practice of
veterinary medicine.
3:50:06 PM
The committee took an at-ease from 3:50 p.m. to 3:51 p.m.
3:51:02 PM
REPRESENTATIVE GATTO removed his objection.
REPRESENTATIVE LEDOUX referring to page 5, line 5, pointed out
that adding an "and" would connect the three subparagraphs.
DR. TORRENCE suggested the committee consider an "or" instead of
the "and". He recalled that someone could start a veterinary
practice without ever furnishing a copy of his/her diploma or
license.
REPRESENTATIVE LEDOUX noted her agreement. She maintained
concern that an owner and neighbor could inadvertently practice
veterinary medicine.
DR. TORRENCE explained that the practice of veterinary medicine
extends beyond providing care to animals. He related aspects of
the practice of veterinary medicine that go beyond experience.
3:56:15 PM
REPRESENTATIVE GATTO maintained his concern. Under HB 297,
those in rural areas without access to veterinary care might be
prohibited from caring for their dog, he said.
CHAIR OLSON inquired as to whether Representative Gatto's
concern would fall under the Good Samaritan provisions of
statute.
MS. STRICKLER replied yes. She said that DCCED's intent is not
to criminalize the owner of an animal or to prevent someone from
helping that person care for a sick or injured animal. She
referred to page 2, line 25, proposed AS 08.98.125 (2) which
reads: "a person who provides emergency care without
remuneration to an injured or ill animal that reasonably appears
to the person to be in immediate need of emergency aid to avoid
serious harm or death;".
4:00:36 PM
REPRESENTATIVE BUCH mentioned that some of the discussion has
been in regard to animal husbandry. He asked for clarification
between those licensed to provide veterinary practice versus
those engaged in animal husbandry and whether the current
definitions in statute address their differences.
MS. STRICKLER answered that the term animal husbandry was
defined in statute, but was replaced with an exemption on page
3, line 14, of proposed AS 08.98.125(9), which read: "a person
or employee of a person, who, without compensation, treats only
animals belonging to that person, unless ownership is
transferred for the purpose of avoiding this chapter ...".
REPRESENTATIVE LEDOUX referred to the example of an emergency
situation which she opined would be exempted under HB 297. She
posed a scenario of an owner taking a sick animal to a neighbor,
but your mother-in-law, who is a village health aide, for
advice. She expressed a concern that under the bill that person
would be in violation of the statute. She opined that person
would not be exempt under the bill.
DR. TORRENCE said he frequently receives calls of this nature.
One often cannot define what constitutes an emergency. When an
animal is sick in a rural area without veterinary care basically
constitutes an emergency, he said. He further noted his
agreement that people will seek the most qualified help when
veterinary care is not available and in doing so, without
remuneration, does not present a problem.
REPRESENTATIVE LEDOUX maintained her concern that people living
in rural areas would be precluded from consulting neighbors
about their sick or injured animals without specific language in
the bill.
REPRESENTATIVE GARDNER noted her agreement. She related that
someone might help a neighbor and pull out quills from a dog
that had encountered a porcupine. That person would not be
exempted from the practice of veterinary medicine since the
situation does not constitute an emergency.
REPRESENTATIVE NEUMAN, as sponsor of bill, explained that HB 297
adopts recommendations that Dr. Torrence and the Board of
Veterinary Examiners requested. He pointed out Dr. Torrence and
the board have the expertise and ability to discern what
constitutes an emergency situation, or a Good Samaritan
situation with respect to veterinary practice. He stressed his
full support HB 297.
4:10:04 PM
DR. TORRENCE suggested that the committee might consider
deleting "emergency" from proposed AS 08.98.125(2).
REPRESENTATIVE NEUMAN made a motion to adopt Conceptual
Amendment 2, as follows:
Page 2, line 25, following, "a person who provides":
Delete, "emergency"
4:11:36 PM
REPRESENTATIVE LEDOUX objected.
REPRESENTATIVE LEDOUX made a motion to amend Conceptual
Amendment 2, as follows:
Page 2, line 26:
Delete "immediate"
Page 2, line 27:
Delete "emergency"
REPRESENTATIVE GARDNER suggested a second amendment to
Conceptual Amendment 2, as follows:
Page 2, line 27"
Delete "to avoid serious harm or death".
REPRESENTATIVE GARDNER explained people frequently offer help to
treat someone else's animal, and often there is not risk of
serious harm or death and the situations are not emergency
situations.
CHAIR OLSON referred to page 2, line 27, and suggested that the
committee consider deleting "serious".
REPRESENTATIVE GATTO reminded the committee that [Conceptual]
Amendment 2 and an amendment to [Conceptual] Amendment 2 are
pending.
REPRESENTATIVE LEDOUX asked if the adoption of Conceptual
Amendment 2 would result in proposed AS 08.98.125(2) reading, as
follows: "a person who provides care without remuneration to an
injured or ill animal that reasonably appears to the person to
be in need of aid"
REPRESENTATIVE GARDNER noted her agreement.
CHAIR OLSON reiterated his suggestion to amend Conceptual
Amendment 2, such that the term "serious" on page 2, line 27, is
deleted.
4:14:26 PM
REPRESENTATIVE NEUMAN made a motion to withdraw Conceptual
Amendment 2. There being no objection, Conceptual Amendment 2
was withdrawn.
REPRESENTATIVE NEUMAN made a motion to adopt a new Conceptual
Amendment 2"
Page 2, line 25:
Delete "emergency"
Page 2, line 26:
Delete "immediate"
Page 2, line 27:
Delete "emergency" and "to avoid serious harm or
death".
4:15:50 PM
REPRESENTATIVE GARDNER made a motion to amend new Conceptual
Amendment 2:
Page 2, line 27:
Replace the "." with a ";"
[The committee treated the amendment to new Conceptual Amendment
2 as adopted].
There being no objection, new Conceptual Amendment 2, as
amended, was adopted.
4:16:04 PM
REPRESENTATIVE NEUMAN moved to report HB 297, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, the CSHB 297(L&C) was
reported from the House Labor and Commerce Standing Committee.
4:16:13 PM
The committee took an at-ease from 4:16 p.m. to 4:18 p.m.
HB 340-CAPSTONE AVIONICS FUND/LOANS
4:18:36 PM
CHAIR OLSON announced that the next order of business would be
to take up HOUSE BILL NO. 340, "An Act establishing the Alaska
capstone avionics revolving loan fund and relating to the fund;
and providing for an effective date."
4:18:48 PM
FRANK RICHARDS, Deputy Commissioner, Office of the Commissioner,
Department of Transportation & Public Facilities (DOT&PF),
explained that the purpose of HB 340 is to increase aviation
safety in Alaska by offering low interest loans for the purchase
and installation of capstone avionics equipment. He explained
capstone avionics is the next generation of technology to
improve flight safety and community access in Alaska. The
technology, called automatic dependent surveillance broadcast
(ADSB), allows aircraft equipped with avionics to interact with
ground infrastructure and satellite stations to provide pilots
with their exact location: latitude, longitude, altitude, air
speed, rate of ascent and descent, surrounding terrain
information, and location of other aircraft equipped with
capstone avionics in real time weather. The Federal Aviation
Administration (FAA) sponsored this technology and tested
capstone avionics initially in the lower Yukon Kuskokwim Delta
(YK) near Bethel and later in Southeast Alaska. The results for
aircraft equipped with capstone avionics are a 47 percent
reduction in accidents and a 33 percent reduction in fatalities.
The FAA would like to expand capstone avionics technology
throughout the state with a goal of equipping 4,000 of the 6,500
aircraft in Alaska with capstone avionics.
4:21:01 PM
MR. RICHARDS further explained that HB 340 would create a low
interest loan program within the DCCED to provide aircraft
owners a low interest loan for the initial purchase cost of
capstone avionics rather than incur out-of-pocket expenses. He
said DOT&PF supports HB 340.
GREG WINEGAR, Director, Division of Investments, Department of
Commerce, Community, & Economic Development (DCCED), said that
capstone avionics has shown the potential to save lives and
reduce accidents. He offered that the division has administered
loan programs since the early 70s. The division offers
experience, expertise, and the infrastructure to administer the
capstone avionics program proposed in HB 340. In fact, the
capstone avionics program in HB 340 is patterned after other
loan programs administered by the division. The loan program is
structured for aircraft owners to purchase avionics through a
revolving fund and as repayments are received, the Division of
Investments can make additional loans to other aircraft owners.
This bill would stipulate loans for up to 80 percent of the cost
and installation of the capstone avionics. The interest rate is
set at 4 percent for loans for up to 10 years. Terms for
repayment of an average $12,000 loan would be $122 per month or
$1,480 per year annually, he opined. The division's goals for
the capstone avionics terms were to provide aircraft owners a
manageable repayment schedule, cover the expenses of the
program, allow future loans, and return the initial capital to
the general fund. The fiscal note requires a $4.8 million
general fund appropriation, which would allow the division to
make 400 loans in the first year and 60 loans each year
thereafter. The program would sunset in 2020, at which time any
unexpended funds and earnings would revert to the general fund.
The division is requesting two new positions for the program, a
loan officer, and a loan closer. The positions would only be
filled if sufficient loan activity warranted the positions and
current staff could not absorb the additional workload. He
noted the division recently upgraded its computer software,
which he anticipated will gain efficiencies and allow the
division to absorb the accounting necessary for the capstone
avionics program. He related that the Division of Insurance
strongly supports HB 340.
4:24:31 PM
CHAIR OLSON inquired as to whether the capstone avionics program
would be structured similar to the Commercial Fishing and
Agriculture Bank (CFAB) loan program.
MR. WINEGAR answered that the capstone avionics loans would be
different in that CFAB is a cooperative that handles fishing
related loans, whereas the capstone avionics loans would be
similar to the division's other revolving loan funds.
4:24:48 PM
REPRESENTATIVE RAMRAS expressed his support for HB 340. He
related his understanding that HB 340 would incrementally equip
4,000 Alaska-based aircraft with capstone avionics in order to
qualify for federal funding and improve aircraft safety. He
inquired as to whether the capstone avionics technology is
subject to improve or if it is static. He further inquired
whether the aircraft initially equipped will require updates as
the state moves towards the target of equipping 4,000 aircraft.
MR. RICHARDS answered that those who initially purchase capstone
avionics or any technology-based product are purchasing what is
currently available in the market. He offered his understanding
that the prototypes for capstone avionics tested in Bethel saved
lives. By the time the testing began in Southeast Alaska, the
technology evolved to what is probably the second generation of
capstone avionics. While the "shelf life" for any technology is
short, it does not mean that the initial generation of the
technology is obsolete, he opined. He offered that any capstone
avionics captures and presents information to the pilot. He
also noted that some aircraft the division hopes to equip date
from 1940 to 1960, yet the aircraft is still operating. The
ultimate goal is to help provide pilots with information on
weather conditions and terrain, he opined.
REPRESENTATIVE RAMRAS asked what level of federal funding is
available for the capstone avionics project.
MR. RICHARDS answered that the actual FAA capital infrastructure
investment will be approximately $125 million of which $25
million is budgeted this year for the corridors between
Anchorage and Fairbanks and from Nome to Kotzebue. The
remaining [$100] million will provide the infrastructure for the
rest of the state. The FAA anticipates that the ongoing
operational cost will be in the hundreds of millions of dollars,
he said.
4:29:45 PM
MR. RICHARDS, in response to Representative Ramras, specified
that in order to access the federal funding, the FAA would
require certain benchmarks. Still about 800 commercial aircraft
will be the first aircraft equipped.
REPRESENTATIVE RAMRAS highlighted the importance of air safety.
He inquired as to whether the state should offer partial grants
to encourage early adoption of capstone avionics to ensure
enough aircraft owners participate in the program so that the
state will qualify for the federal funding.
MR. RICHARDS answered that the administration believes that the
low interest loan program will encourage participation in the
capstone avionics program. He suggested that the legislature
could decide whether or not to offer grants as further
incentives to equip aircraft with capstone avionics.
MR. WINEGAR, in further response to Representative Ramras, said
that the interest rate had been developed to ensure a low rate
and, at same time, cover program expenses, provide the ability
for future loans, and return the initial capitalization of the
program.
4:31:36 PM
REPRESENTATIVE GATTO related that he previously inquired as to
whether a [Bellanca] Citabria would qualify for the capstone
avionics. He further inquired as to whether an ultralight,
glider, or home-built plane would also qualify.
MR. RICHARDS said he was not certain whether experimental kit
planes, gliders, and ultralights would qualify for the program.
He offered that the FAA is currently targeting fixed-wing and
rotary-type airplanes.
REPRESENTATIVE BUCH surmised that the FAA part 135 would cover
some of the types of planes that had been mentioned, although
ultralights would not likely fit.
4:34:13 PM
MR. RICHARDS, in response to Representative Gardner, answered
that capstone is the term that was used during the pilot
project, and the term remained so that the technology is now
referred to as "capstone avionics." In further response to
Representative Gardner, Mr. Richards said that more than one
manufacturer offers the technology and more than one private-
sector installer is knowledgeable about capstone avionics
technology.
4:35:34 PM
REPRESENTATIVE NEUMAN acknowledged the value and importance of
the capstone avionics. He expressed concern that the operating
costs for two employees are set at $117,000, which will continue
to rise. He inquired as to whether some mechanism could be
built into the loan program to ensure that the capstone avionics
program is self-sustaining.
MR. RICHARDS noted his agreement conceptually with
Representative Neuman. He explained the program costs would be
paid out of revolving-loan fund. The capstone avionics program
is based on projections of 400 loans in the first year with an
additional 60 loans in subsequent years. The variable trigger
in whether to fill the two positions requested in the fiscal
note is loan demand. Unless there is enough loan demand to
warrant hiring, the division will absorb the program tasks with
its existing staff. In 2020, the earnings will revert back to
the general fund. If demand fell off prior to that date, the
division and the legislature could revisit the matter.
4:39:05 PM
REPRESENTATIVE GATTO inquired as to whether the capstone
avionics program staff are required to be state employees.
MR. WINEGAR said the Division of Investments already has the
infrastructure in place so it would be difficult to provide for
such a small program in the private sector for the same
administrative costs. The private sector would pay a much
higher interest rate than the state does, he noted.
4:42:36 PM
REPRESENTATIVE RAMRAS offered his understanding that 4 percent
of $4.8 million would generate about $170,000 per year, such
that the receipts would appear to offset the administrative
costs. He noted the economic multiplier since installations of
capstone avionics will be performed by the private sector. The
intent of HB 340 is to qualify for $99 or $125 million initially
and for several hundred million in federal funds, with the
aggregated purpose to make aviation safer in the state.
MR. RICHARDS noted his agreement.
4:43:42 PM
LEONARD KIRK, Assistant Director; Capstone Coordinator,
University of Alaska Anchorage (UAA), Aviation Technology
Division, University of Alaska informed the committee that UAA
developed and delivered training for phase one and two of the
capstone avionics pilot program. He said that UAA has been
involved in performing safety and access studies and has found a
48 percent reduction in aviation accidents due to capstone
avionics. Additionally, capstone avionics affords pilots
extended flying hours for more days of the year and during hours
of darkness. Therefore, the overall effect has been a 50
percent reduction in accidents in the rural communities served
by aircraft equipped with capstone avionics. The capstone
avionics equipment is well accepted and also performs well, he
opined. The University of Alaska has campuses throughout the
state and would like to participate in training to accrue access
and safety benefits for all Alaskans, he noted.
4:45:43 PM
MR. KIRK, in response to Representative Gardner, said that he
cannot provide specific numbers for the percentage of accidents
reduced. However, prior to capstone avionics the state averaged
a fatal accident every 29 days, but since the advent of capstone
avionics the state has experienced no aviation fatalities for 26
consecutive months. He further noted that prior to initiating
capstone avionics, the accident rate in the Yukon-Kuskokwim
Delta was four times higher than the rest of the state. By
2003, the Yukon-Kuskokwim Delta had the lowest accident rate in
the state. He recalled statistics that revealed approximately
124 lives were saved during phases one and two of the pilot
program.
4:46:54 PM
PATRICK THURSTON, Director of Operations, Hageland Aviation,
said that his company is the largest user of capstone avionics
equipment in Alaska. He offered that Hageland Aviation has used
the capstone avionics technology since its first experimental
stage and the results show unequivocally that this technology is
here to stay. The state needs the capstone avionics program so
the rest of the state can enjoy the benefits of increased
aviation safety, he opined. At the level where the "rubber
meets the road" his pilots find capstone avionics technology is
as fundamental as the gas in the tanks, he opined. He recalled
positive feedback from passengers traveling with Hageland
Aviation, who often must fly in harsh conditions. He noted that
their passengers are aware of the technology employed and
appreciate the increased safety. He noted that Hageland
Aviation has 42 planes, but only 2 do not yet have the
technology. He expressed strong support for [the proposed
capstone avionics program] in HB 340 for his company's use and
for the safety benefits it provides for passengers in the state.
4:48:37 PM
REPRESENTATIVE NEUMAN inquired as to how the Division of
Investments would prioritize applications if more than 400
applicants applied for the program and how the division would
prioritize between commercial and private pilot requests for
capstone avionics.
MR. WINEGAR answered that in other division programs
applications are typically processed on a first-come basis. He
said it depends on how fast loans are processed and how quickly
payments revolve back to the fund. He surmised that the
division will assess demand for the program after the first
year. If there is a greater demand than anticipated, the
division may need to seek additional funding from the
legislature or find another funding source, he opined. He noted
that one unknown factor is how many applications the division
will receive and whether companies and pilots will choose to
install capstone avionics in their planes without using the
capstone avionics program.
4:50:36 PM
WILFRED RYAN, President, Alaska Air Carriers Association (ACCA);
Alaska Airmen's Association, Inc., noted the presence of several
aviation personnel. He explained that his remarks are
consolidated remarks from Jim Cieplak, a representative from the
Alaskan Aviation Safety Foundation, and Mike Stedman, Wings of
Alaska, who also serves as the Vice-President of the Alaska Air
Carriers Association to save time for the committee. However,
they are both present today to answer any questions that may
arise. In response to an earlier question, he noted that Alaska
has approximately 10,000 total aircraft, of which 6,500 are
active aircraft that would be eligible to be equipped with
capstone avionics. While the current equipment [for capstone
avionics] is expensive, over time the cost will subside, he
opined.
MR. RYAN said that without an incentive program such as the one
proposed in HB 340, owners would likely wait until the price of
the equipment went down. Thus, the state could lose out on
federal dollars. The FAA is poised to distribute roughly $306
million to Southeast Alaska, Anchorage, Fairbanks, Nome, and
Kotzebue. Alaska could potentially lose a $187 million federal
investment if it does not meet the threshold outlined by the
Memorandum of Agreement with the FAA, he said. The
organizations that are represented here today support Governor
Palin's announcement concerning the aviation safety initiative
to help Alaska's pilots obtain state of the art capstone
avionics. He echoed earlier testimony that capstone is a
trademark name that was coined during the research and
development phases of the program, which represents a joint
effort between the industry and the FAA to improve Alaska
Aviation safety. He offered statistics such as that more than
90 percent of Alaska is accessible only by air and that Alaska
has the highest aviation accident rate in the nation. Thus, an
expedited statewide capstone avionics is essential for future
air travel in Alaska, he opined.
MR. RYAN said that the aviation industry is currently working to
ensure that HB 340 meets the accelerated installation of
capstone avionics needed to secure substantial benefits for
Alaska. The FAA has forecasted a public benefit of $824 million
over the next 27 years, with a 33 percent reduction in aircraft
fatalities, improved search and rescue operations, improved
medical evacuations, reduced aircraft accidents, and enhanced
access to rural communities, he said. If 4,000 aircraft are
equipped with capstone avionics, it would provide safety for 90
percent of the flight hours and 90 percent of the area in the
state, he opined. He offered support for HB 340 from the ACCA,
which represents more than 150 air carriers and suppliers of
aviation products and services. He also offered support from
the Alaska Airmen's Association, Inc., which represents more
than 2,000 private pilots and mechanics, and individuals
interested in flight safety. Finally, the Alaskan Aviation
Safety Foundation, an organization dedicated to improving
aviation safety in Alaska, supports HB 340, he related.
4:55:59 PM
REPRESENTATIVE GARDNER inquired as to the timeline in the
Memorandum of Agreement with the FAA. She further asked Mr.
Ryan to elaborate on the projected result to equip 4,000
aircraft with capstone avionics.
MR. RYAN answered that the Memorandum of Agreement with the FAA
covers a five-year timeline. During that time, the FAA will
expend $100 million in ground-based infrastructure and
simultaneously 4,000 aircraft would be equipped with the
capstone avionics. He clarified that the 90 percent of the
flight hours mentioned are based on a projection of the hours
flown by 4,000 aircraft, whereas the 90 percent of the area
represents the current areas where accidents have occurred.
4:57:32 PM
MR. RYAN, in response to Representative Gatto, said that there
has been little or no opposition to HB 340.
REPRESENTATIVE RAMRAS expressed interest in early adoption of
the capstone avionics in aircraft so that the state would
qualify for the federal funding. He inquired as to how many of
the 4,000 planes that are targeted for capstone avionics
equipment are commercial, and therefore would also be eligible
for depreciation and federal benefits to reduce cost. He
further inquired as to whether the cost is scaled depending on
whether the plane is small or large.
MR. RYAN speculated that there will be a tremendous cost for
early adoption due to the overall cost of the technology. He
related that to equip a Piper PA-18 "supercub" or a Cessna 180
is projected at $12,000, but that it could cost $70,000 to equip
a commercial Instrument Flight Rules (IFR) equipped aircraft
such as single turbine Otter or the twin-engine turboprop Beech
1900. Currently, there are 600 commercial aircraft statewide,
and of those 375 are equipped with capstone avionics and most of
the planes are located in the Yukon Kuskokwim Delta area and
Southeast Alaska. The remaining commercial aircraft probably
will use the capstone avionics program offered in HB 340, he
opined. He noted that his company has five twin-turbine
aircraft equipped with phase one capstone avionics and with the
passage of HB 340, he said he hopes to use the revolving-loan
program to update the equipment.
MR. RYAN, in response Representative Ramras, stated that about
20 percent of the aircraft in the state are commercial aircraft.
REPRESENTATIVE RAMRAS suggested that the committee move HB 340
to the next committee. He suggested that the sponsor and
industry work with the Department of Transportation & Public
Facilities (DOT&PF) to reduce the rate of interest for private
aircraft to offer an inducement of 4 percent. He surmised that
the capstone avionics would lower premiums. He maintained his
interest in providing an additional inducement for private
aircraft early adopters of capstone avionics, such as to reduce
the rate to 1 per cent or less. He noted that commercial
carriers have the advantage to deduct the interest rate and
depreciate the cost of the capstone avionics products. Thus,
increasing the number of private pilots that could use the
capstone avionics program could help the industry reach the goal
of equipping 4,000 aircraft with the capstone avionics
technology.
MR. RYAN said industry has an outstanding relationship with
DOT&PF. He clarified that only one company currently
manufactures the universal access transceiver, multiple
companies produce the multi-function display, and by contract
there is only one provider for the ground based infrastructure.
5:04:55 PM
MR. RYAN, in response to Representative Gatto, answered that the
presence of capstone avionics alone does not impact insurance
rates. However, because the aviation industry has created an
Alaska-based insurance pool and because the accident rate has
been reduced in the past 8 years the industry enjoys a 25
percent reduction in aircraft hull and liability premiums.
MR. RYAN, in response to Representative Gatto, answered that the
25 percent represents a combined total reduction for hull and
liability insurance. In response to Representative Gardner, Mr.
Ryan answered that all of the 375 commercial aircraft equipped
with capstone avionics counts toward the FAA requirement of
4,000 planes, but only a handful of private pilots have capstone
avionics installed due to the high cost of installation.
5:06:42 PM
CHAIR OLSON closed public testimony on HB 340.
5:06:49 PM
REPRESENTATIVE NEUMAN moved to report HB 340 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 340 was reported from the
House Labor and Commerce Standing Committee.
5:07:19 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:07 p.m.
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