03/01/2010 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HCR19 | |
| HB253 | |
| HB287 | |
| HB282 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 253 | TELECONFERENCED | |
| *+ | HB 282 | TELECONFERENCED | |
| *+ | HB 287 | TELECONFERENCED | |
| += | HCR 19 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 1, 2010
3:26 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Mike Chenault
Representative Bob Lynn
Representative Tammie Wilson
Representative Robert L. "Bob" Buch
Representative Lindsey Holmes (via teleconference)
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE CONCURRENT RESOLUTION NO. 19
Urging the Alaska Industrial Development and Export Authority to
present a business case to the Alaska State Legislature that
includes a method for financing, a plan to solicit proposals for
a public and private venture, and an analysis of the economic
feasibility of a state-built and privately operated fuel storage
facility that would serve the public interest by providing
Alaskans with a reliable source of jet fuel, diesel, and
gasoline at competitive prices.
- MOVED HCR 19 OUT OF COMMITTEE
HOUSE BILL NO. 253
"An Act relating to the time periods affecting certain liens
related to providing labor, material, service, or equipment to
real property, including buildings and other improvements."
- MOVED HB 253 OUT OF COMMITTEE
HOUSE BILL NO. 287
"An Act relating to the adoption of the Uniform Disclaimer of
Property Interests Act, and to the disclaimer of property rights
under the Uniform Probate Code."
- MOVED HB 287 OUT OF COMMITTEE
HOUSE BILL NO. 282
"An Act relating to naturopaths and to the practice of
naturopathy; establishing an Alaska Naturopathic Medical Board;
authorizing medical assistance program coverage of naturopathic
services; amending the definition of 'practice of medicine'; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HCR 19
SHORT TITLE: AIDEA REPORT ON IN-STATE FUEL STORAGE
SPONSOR(s): REPRESENTATIVE(s) RAMRAS
01/27/10 (H) READ THE FIRST TIME - REFERRALS
01/27/10 (H) L&C, FIN
02/22/10 (H) L&C AT 3:15 PM BARNES 124
02/22/10 (H) -- Meeting Postponed to 02/24/10 --
02/24/10 (H) L&C AT 3:15 PM BARNES 124
02/24/10 (H) Heard & Held
02/24/10 (H) MINUTE(L&C)
03/01/10 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 253
SHORT TITLE: MECHANIC/MATERIALMEN LIENS
SPONSOR(s): REPRESENTATIVE(s) RAMRAS
01/08/10 (H) PREFILE RELEASED 1/8/10
01/19/10 (H) READ THE FIRST TIME - REFERRALS
01/19/10 (H) L&C, JUD
03/01/10 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 287
SHORT TITLE: UNIFORM ACT: PROPERTY INTEREST DISCLAIMER
SPONSOR(s): REPRESENTATIVE(s) RAMRAS, GRUENBERG
01/15/10 (H) PREFILE RELEASED 1/15/10
01/19/10 (H) READ THE FIRST TIME - REFERRALS
01/19/10 (H) L&C, JUD
03/01/10 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 282
SHORT TITLE: NATUROPATHS
SPONSOR(s): REPRESENTATIVE(s) MUNOZ
01/15/10 (H) PREFILE RELEASED 1/15/10
01/19/10 (H) READ THE FIRST TIME - REFERRALS
01/19/10 (H) L&C, HSS, JUD, FIN
01/25/10 (H) JUD REFERRAL REMOVED
03/01/10 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE JAY RAMRAS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HCR 19 as prime sponsor of the
resolution.
JEFF COOK, Director
External Affairs
Flint Hills Resources Refinery (Flint Hills)
North Pole, Alaska
POSITION STATEMENT: Testified during the discussion of HCR 19.
KIRK PAYNE, Vice President of Supply and Logistics
Delta Western, Inc. (Delta Western)
Anchorage, Alaska
POSITION STATEMENT: Urged passage of HCR 19 since it is just a
study.
JIM HEMSATH, Deputy Director- Development
Alaska Industrial Development & Export Authority (AIDEA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HCR 19.
TED LEONARD, Executive Director
Alaska Industrial Development & Export Authority (AIDEA)
Anchorage, Alaska.
POSITION STATEMENT: Answered questions during the discussion of
HCR 19
REPRESENTATIVE JAY RAMRAS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 253 as the prime sponsor of
the bill.
SANDRA HEMBREE, Owner
Alaska Best Plumbing and Heating
North Pole, Alaska
POSITION STATEMENT: Testified during the discussion of HB 253.
ROCKY PAVEY, Owner
Rocky's Heating Service
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 243.
WAYNE LONG, Owner
Wayne's Air Supply
Fairbanks, Alaska
POSITION STATEMENT: Urged support for HB 253.
REPRESENTATIVE MAX GRUENBERG
Alaska State Legislature
Juneau Alaska
POSITION STATEMENT: Presented HB 287 as prime sponsor and
answered questions during the discussion of HB 287.
TERRY THURBON, Delegate
National Conference of Commissioners on Uniform State Laws
(NCCUSL)
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 287.
MICHAEL KERR, Legislative Director
Uniform Law Commission
National Conference of Commissioners on Uniform State Laws
(NCCUSL)
Chicago, Illinois
POSITION STATEMENT: Testified during the discussion of HB 287.
DAVID SHAFTEL, Attorney
Shaftel Law Offices, PC
Anchorage, Alaska
POSITION STATEMENT: Presented the section-by-section analysis
and answered questions during the discussion of HB 287.
KENDRA KLOSTER, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 282 on behalf of the prime
sponsor, Representative Cathy Munoz.
ACTION NARRATIVE
3:26:32 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:26 p.m. Representatives Buch,
Chenault, Holmes, Neuman, T. Wilson, and Olson were present at
the call to order. Representative Lynn arrived as the meeting
was in progress.
HCR 19-AIDEA REPORT ON IN-STATE FUEL STORAGE
3:26:53 PM
Chair Olson announced that the first order of business would be
HOUSE CONCURRENT RESOLUTION NO. 19, Urging the Alaska Industrial
Development and Export Authority to present a business case to
the Alaska State Legislature that includes a method for
financing, a plan to solicit proposals for a public and private
venture, and an analysis of the economic feasibility of a state-
built and privately operated fuel storage facility that would
serve the public interest by providing Alaskans with a reliable
source of jet fuel, diesel, and gasoline at competitive prices.
3:26:57 PM
REPRESENTATIVE JAY RAMRAS, Alaska State Legislature, speaking as
the prime sponsor, related that Mr. Leonard advises that the
Alaska Industrial Development and Export Authority (AIDEA) is
viewed as a project component, but is acting in an advisory
capacity and as a consultant for the proposed resolution he
sponsored. If the business case that is developed supports the
project moving forward, the AIDEA would transition to a de facto
proponent as a potential owner of the asset, seeking an entity
to operate the proposed "tank farm." In the event that the free
market works, that the storage is developed, and refineries drop
prices, the third party could cover their costs and reimburse
AIDEA. Mr. Hemsath and Ted Leonard are available to answer
questions on behalf of AIDEA.
REPRESENTATIVE RAMRAS related that a question arose as to
whether the proposed expansion of the Port of Anchorage, or the
"tank farm" would compete with the North Pole refinery. He
stated that the proposed tank storage is not a refinery. A
simple answer is that the only thing that competes with a
refinery is a refinery. AIDEA is being asked to build a
business case for a fee market alternative to price gouging
legislation that would benefit consumers and offer a return to
AIDEA if they participate in building a business case. This
resolution does not lead to a funding request or financing, but
just to construct a business case.
3:29:59 PM
REPRESENTATIVE BUCH asked for the inception of the proposed
project resolution.
REPRESENTATIVE RAMRAS responded that the timeframe for the
project is unknown since AIDEA's role is to determine the
viability of the project. Several years ago the answer would
have been that the project is not viable since the storage was
not available. He elaborated that if the business case is
strong, and the Port of Anchorage is ready, that the tentative
timetable would include bonding in 2011, construction in 2012,
and operational in 2013. He stated the timeframe is currently
undefined.
3:31:46 PM
REPRESENTATIVE NEUMAN assumed that the intent of this resolution
is to take advantage of the free enterprise to create storage
facilities.
REPRESENTATIVE RAMRAS answered yes. Two refineries, the Tesoro
Nikiski Refinery that produces 85 percent of the gasoline
consumed in the state, and Flint Hills Resources Refinery (Flint
Hills) that produces 15 percent of the gasoline. Most of the
jet aviation fuel has been produced at Flint Hills Refinery, but
due to the recession and a slowdown in demand at the Ted Stevens
International Airport, Flint Hills closed one of its towers and
at certain times an inadequate supply of jet fuel has been
available. Some air flights have bypassed the airport or have
had to pay a premium price on the spot market for jet fuel. The
same thing is true for low-sulphur diesel, which is being
produced at the Petro Star Refinery in Valdez, but not being
produced at its North Pole Refinery. Flint Hills may or may not
be in business in the next few years due to concerns previously
expressed. Consumers do not want to spend $.90 per gallon
higher than the "rack fuel" price. That is the reason for
competition, and if the case can be made to offer liquid storage
it would be preferable to him over the price gouging
legislation, which is not moving.
CHAIR OLSON agreed that the price gouging legislation is not
moving.
3:34:40 PM
REPRESENTATIVE NEUMAN recalled that the United Parcel Service
(UPS) also brought in a barge load of fuel.
REPRESENTATIVE RAMRAS stated he was unsure.
3:35:08 PM
REPRESENTATIVE NEUMAN confirmed that UPS brought up fuel to
assist with the aviation fuel shortage.
REPRESENTATIVE RAMRAS agreed.
REPRESENTATIVE NEUMAN stated that UPS was trying to address the
concern of inadequate supplies of fuel. He thought it would be
good in the future to ask AIDEA to also consider Gas to Liquids
(GTL), which could happen in the future.
3:35:51 PM
REPRESENTATIVE RAMRAS remarked that he shares that conviction.
3:36:03 PM
REPRESENTATIVE T. WILSON wondered if the legislature should wait
for the private sector to address the issue of gas shortage.
REPRESENTATIVE RAMRAS answered that the purpose is to attract a
private sector to be the lessee, with AIDEA as the potential
lessor. He inquired as to whether she was asking whether an
entity would be willing to make $100 million investment in a
"tank farm." He stated that the answer would likely be borne
out during the AIDEA process, with AIDEA possibly participating
as a lender. The idea is to bring relief to the Alaskan
consumers and honor the mission statement of AIDEA.
REPRESENTATIVE T. WILSON related that AIDEA's mission specifies
that is not to compete with the private sector.
REPRESENTATIVE RAMRAS suggested if the AIDEA was building a
business case to build a competing refinery, he would agree with
her. However, this resolution is for tank storage and the
refineries can participate as tenants of the tank storage.
AIDEA finances hotels, too. He disclosed that he holds a
relationship with AIDEA in that regard. He recalled that AIDEA
testified that it is to abide by own mission statement. He
acknowledged that he views this differently.
3:38:26 PM
REPRESENTATIVE T. WILSON posed a scenario in which the proposed
project is built. If so, outside firms would provide gasoline
or jet fuel, but would not pay the costs Flint Hills must pay
since it does not have natural gas to use as an operating fuel.
She suggested that the outcome would result in cheaper fuel
until facilities such as Flint Hills are put out of business.
She asked what would happen to prices.
REPRENTATIVE RAMRAS responded that he is not dealing with
hypothetical situations, but wants to address a statewide
perspective. He stated that he is not "a big fan of the price-
gouging legislation" that has moved through the legislature for
the past 18 months. He stated that allowing the free market to
work can create an alternative to refineries that brings a lower
cost fuel into Alaska. The free market can punish in-state
businesses, but we will not know that until the business case is
made. He stated that he is not talking about the traditional
spread of fuel in Alaska which ranged from $.10 to $.20 per
gallon, but a $.90 per gallon price disparity in gasoline
prices. He emphasized the importance of this legislature to
demonstrate elasticity to consider a business case. He restated
that this is not a funding request, just a request to consider
whether the "tank farm" storage is worthwhile.
3:40:36 PM
REPRESENTATIVE CHENAULT commented that Tesoro spent $100 million
on low-sulphur fuel so most of the low-sulphur fuel is produced
at the Tesoro Refinery.
REPRESENTATIVE RAMRAS stated that he stands corrected.
REPRESENTATIVE CHENAULT asked whether AIDEA is given a date to
respond.
REPRESENTATIVE RAMRAS deferred to Ted Leonard, AIDEA, to answer
questions.
3:41:23 PM
REPRESENTATIVE NEUMAN shared his concern about gas supplies in
Alaska. Certainly no one wants Flint Hills to shut down,
leaving only one refinery to provide for Alaska's needs and to
protect our military bases and missile defense system. He
characterized that as a critical issue. He surmised that would
be a huge catastrophe. Alaska needs storage facilities to
provide for Alaska's needs if something were to happen to
Alaska's refineries.
REPRESENTATIVE RAMRAS shared his concern. He related that Flint
Hill's management indicated to the legislature on numerous
occasions that its refinery business is in a precarious
position. He surmised that it could close its plant with 30
days notice. The Ted Stevens International Airport and the
military network is critical the state's economy. It would be
helpful for the state to develop a contingency plan. He stated
that he was raised in Fairbanks and has been involved in
discussions with Flint Hills. He offered his belief that Alaska
will be lucky if Flint Hills is in business in 1,000 days. He
emphasized the importance of the state in preparing a
contingency plan. He acknowledged that Flint Hills is
efficient, but did not think it has made long term decisions and
commitments to the state. He related that he is an advocate of
Flint Hills, and has toured the plant as well as well as others
including the Tesoro Nikiski plant. He highlighted the
precarious infrastructure of the industry.
3:45:20 PM
CHAIR OLSON remarked that AIDEA envisioned that anyone could use
the facility.
REPRESENTATIVE RAMRAS agreed. He elaborated that large
retailers, including Fred Meyer, and Costco and others with
unbranded gasoline could benefit. He surmised that the rural
areas of the state would potentially benefit. The international
airport system must be competitive so it does not lose jet
service. He said, "Again, I just come back to the notion that
it probably is in our best interest to at least visit and
develop a contingency plan, and build a business case. It is
not a funding request for AIDEA. That's a battle to be fought
later, but it is an opportunity to develop a business case."
3:46:43 PM
REPRESENTATIVE T. WILSON asked whether Flint Hills may or may
not have the ability to make more fuel.
JEFF COOK, Director, External Affairs, Flint Hills Resources
Refinery (Flint Hills), stated that currently the "crude three
unit" is down. He asked to clarify some of the comments. He
said, "We have met all the contractual obligations we have for
jet fuel at the Ted Stevens Anchorage International Airport and
actually have gone beyond that." He related that Flint Hills
brought up a barge load of fuel at Thanksgiving to help. The
issue resulted as the airlines must nominate the jet fuel, and
the estimates were off, and they did not nominate enough jet
fuel. The Flint Hills refinery did not want to tie up its
working capital by storing fuel without the demand for it. He
stated that 23,000 barrels of jet fuel was made today, and Flint
Hills could make 40,000 barrels per day if necessary. He
related that as the economy picks up, that Flint Hills can
provide more. He offered that crude prices have helped, that
Flint Hills hired six people in the past month, and it plans on
a $12 million turnaround beginning April 27, 2010. He
emphasized the Flint Hills does want a long term presence, but
obviously having a cheaper fuel such as natural gas would be a
benefit. He said:
No matter what happens, we've got 720,000 barrels of
storage at the Port of Anchorage. That's not going to
go away. That's going to be available whether it is a
Delta Western, a Crowley, or some other private
enterprise that if the advantage and the necessity is
there, they can go out and have the ability to do the
business case.
3:49:35 PM
REPRESENTATIVE T. WILSON asked what impact that HCR 19 would
have on his business.
MR. COOK answered that he was unsure of the impact. He stated
that if it is not fully amortized and not fully operated on a
business basis, it could have an advantage. However, it is hard
to tell. He stressed that if a business case is to be made,
there are numerous companies that have the ability to make it.
CHAIR OLSON asked whether Flint Hills would use the Port of
Anchorage facility if it was built.
MR. COOK related that Flint Hills already has 720,000 barrels of
storage in Anchorage, a similar amount in Fairbanks, as well as
some rolling cars with the Alaska Railroad Corporation so he did
not see the need in near future to use the facility.
3:50:39 PM
KIRK PAYNE, Vice President of Supply and Logistics, Delta
Western, Inc. (Delta Western), explained that Delta Western has
been serving Alaska for over 25 years, delivering fuel to places
between Kivalina and Ketchikan, which places them in many
communities throughout Alaska. He stated that although some
fingers have been pointed at them, they have had the opportunity
to work with the legislature to improve the process. Recently
AIDEA and the administration asked Delta Western to develop a
white paper on the process. The framework was based on the
Attorney General's 2008 Alaska Gasoline Pricing Investigation.
The structural characteristics of Alaska's petroleum products
market contributed to unusually high prices. Thus, Delta
Western considered ways to fix the problem. He offered that in
reviewing historical prices, the supply and demand for petroleum
productions was basically balanced.
MR. PAYNE stated that in 2006, the Environmental Protection
Agency (EPA) mandated a shift to lower-sulfur fuels, which
resulted in an imbalance in supply and demand. It resulted in a
reduction in state petroleum production, clean fuels
essentially. The question is how to fill the gap. Currently,
the infrastructure is lacking to bring in fuel, or to store
fuel, or for refiners to sell at off-season demand, in which
Delta Western would buy when refineries are not running at peak
demand. Thus, the idea was to build storage, find someone to
lease it, obtain some market participants to store product in
the storage facilities. Delta Western believes that this
approach, sponsored by AIDEA, will help solve some of these
issues. The project provides the ability to buy product from
refineries at off-peak seasons. He urged members to pass the
resolution since it is just a study. If it makes sense, the
legislature can discuss whether to fund the facilities. He
said, "I believe that this is a viable solution for a lot of
Alaskans, a lot of Alaskan businesses, as well as communities.
We're finding it harder and harder to buy in state production
and that doesn't bode well for local businesses and local
communities."
3:54:22 PM
JIM HEMSATH, Deputy Director - Development, Alaska Industrial
Development & Export Authority (AIDEA), recalled a comment made
by Representative T. Wilson, with respect to awaiting the
private sector to build this project. He suggested that she has
identified an important question. Private industries, such as
Costco or Safeway, have not proceeded with this project because
they do not view the value for their companies. The AIDEA study
can demonstrate the business case for the private sector. Thus,
AIDEA can demonstrate to industry the opportunities for them to
be involved. Perhaps someone would become a consolidator of
fuel needs, if any exist. The point of the proposed study is to
examine the questions, identify the facts, fiction, and the
overall fuel system. The process of making the business case
would create a total picture for the legislature to formulate
its decisions.
3:56:13 PM
REPRESENTATIVE T. WILSON referred to a page in the AIDEA
handout, titled "AIDEA's Role," which states that AIDEA will
present a business case to the Alaska State Legislature that
includes a method for financing a plan to solicit proposals for
a public and private venture. She asked whether the proposed
project would be completed only with public funding, and that
more favorable financing would be available with public funding.
MR. HEMSATH said he thought his answer is yes. He elaborated
that part of the business case is to explore costs and
financing. The AIDEA finances through project ownership, which
is the development project model. One key in an AIDEA model is
to find the operator of a facility. He stated that if a
business offered to invest in this project and asked for
financing, AIDEA would do so.
3:57:41 PM
REPRESENTATIVE T. WILSON recalled that Fairbanks Natural Gas
asked AIDEA for help in trucking in the gas, and proposed
biomass projects in other areas. She did not think those types
of projects would compete with Alaskan businesses She asked for
the reason that AIDEA is placing its efforts on a project that
she believes competes with private businesses instead of biomass
or other alternate energy projects.
MR. HEMSATH offered that the Fairbanks Natural Gas LNG study is
similar in that the business approached AIDEA to explore the
viability of owning $250 million in facilities with part of the
analysis including discussions with Flint Hills. At the time,
due to the crude oil prices and other factors, no overriding
business case existed to make that project viable. At the time
the two major natural gas customers in the Fairbanks area both
declined. He related that in the event that a business case was
made to use willow, fish oil, or other biomass products, and a
business case could be made to build a biomass facility, AIDEA
could be a financier and could support the project. Similarly,
if natural gas were available from a pipeline with the potential
for a GTL storage facility, AIDEA could also consider the
project. He related that the business case must be made,
including that revenues must be sufficient to pay AIDEA's cost
of debt and cost of service. Thus, AIDEA would consider any
projects that can do so. AIDEA's primary goals are economic
development, job growth, job retention, and diversification in
the state.
4:00:37 PM
REPRESENTATIVE T. WILSON asked who will pay for this study.
MR. HEMSATH responded that the preliminary study will be funded
in part by the Department of Law, who is financing Econ One
through the market analysis, and AIDEA would finance the cost
estimate by the engineering contractor. Thus, the proposed
project will be an internally-funded feasibility study to
examine the viability of a potential project.
MR. HEMSATH, in response to Chair Olson estimated the timeline,
including Econ One at approximately 30 days.
4:01:51 PM
TED LEONARD, Executive Director, Alaska Industrial Development &
Export Authority (AIDEA), introduced himself.
4:02:35 PM
REPRESENTATIVE NEUMAN asked whether a Gas-to-Liquids (GTL)
project would be beneficial and economical.
MR. LEONARD answered that in the event that an in state pipeline
is built, that a GTL facility would be one of the major
industrial participants. He stated that AIDEA would be
available to provide analysis and potential funding for a
proposed GTL facility.
REPRESENTATIVE NEUMAN asked whether he could provide a "10,000
foot view".
4:03:48 PM
MR. HEMSATH responded that he was uncertain. The current study
provides that Econ One is analyzing the need and demand for jet
fuel. The military has indicated that by 2015, it would like to
have a 50 percent synthetic fuel. This proposed tank farm could
be part of fuel storage. However, to review the GTL
technologies and capital cost is beyond the AIDEA's funding at
this time. However, he stated that the analysis needs to be
done. In further response to Representative Neuman, he agreed
that the analysis needs to be done.
4:05:07 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HCR 19.
4:05:16 PM
REPRESENTATIVE T. WILSON offered her belief that this resolution
represents direct competition to the private sector. Currently,
refineries are producing gas and diesel in the state. She
expressed concern that the proposal discusses bringing in fuel
from other states. This could jeopardize the Tesoro or Flint
Hills refineries and without them, the prices could increase.
She viewed this proposal as problematic. Price gouging was
examined but could not be proved. This resolution would
indicate to the public that price gouging occurs in Alaska.
Ultimately, the state should not compete with private business.
If the private sector wants to invest the $100 million, as
Tesoro did, that would be fine, but the state should not be
involved.
4:06:15 PM
REPRESENTATIVE RAMRAS emphasized that this resolution supports
building a business case. He pointed out that the proposed tank
farm would represent about 15 percent of the state's usage and
is not a cure all.
REPRESENTATIVE T. WILSON understood that this resolution
supports a study, but the state could use the funding for other
purposes such as a bullet line or biomass that avoids
competition.
REPRESENTATIVE RAMRAS explained that residents and consumers
think $.90 per gallon over the "rack rate" in Seattle is too
much. He said, "I've never been afraid to have a discussion or
look at competitive opportunity. Competition makes us all
stronger and we can't be afraid to look at options. That's what
we're here for is to look out for 700,000 Alaskans."
REPRESENTATIVE T. WILSON agreed. However, she did not think
this proposal is responsible if the ultimate consequence will be
for local businesses to close and Alaskans ending up completely
dependent on the Lower 48 for necessities. She said, "Although
everything is started with just a study, I've always found it is
better to stop it on this level than try to do it later on."
4:08:30 PM
CHAIR OLSON offered that he has spent considerable time with the
DOL on two issues. One question investigated excessive pricing
and discovered that while prices were excessive, nothing illegal
transpired. What led to the DOL's office involvement with this
as an alternative, even though it only represents 10 to 15
percent of the market, is that the proposed project could have
an impact on gasoline prices but fuel supplies going to rural
Alaska. This could have a stabilizing effect. While he
expressed mixed feelings on this resolution, he offered that it
offers the potential for a positive outcome for the overall good
of the state.
REPRESENTATIVE T. WILSON remarked that if everyone could stay in
business that would be true. She maintained her concern about
out of state businesses adversely impacting local businesses to
the extent that fuel prices for all Alaskans could cost the same
as in rural Alaska.
CHAIR OLSON related that Econ One is within a month of
completing its work. He recalled that the committee has worked
extensively with Econ One in the past.
4:10:18 PM
REPRESENTATIVE NEUMAN offered his belief that HCR 19 is exactly
the approach to address the concerns that Representative T.
Wilson has with the refineries, such as Flint Hills and Tesoro.
Storage facilities for fuel can help reduce the dependence on
Lower 48 fuel in Western Alaska. Fuel storage would enhance the
ability of Alaska refineries to provide fuel for Alaskans. When
oil prices are low, the refineries could produce more fuel for
storage to supply Alaska's needs for fuel. He characterized
this as a "win win situation." He said, "I wholeheartedly
support this."
4:12:05 PM
REPRESENTATIVE NEUMAN moved to report HCR 19 out of committee
with individual recommendations and the accompanying fiscal
notes.
REPRESENTATIVE T. WILSON objected.
A roll call vote was taken. Representatives Chenault, Lynn,
Buch, Neuman, and Olson voted in favor of moving HCR 19 out of
committee. Representative T. Wilson voted against it.
Therefore, HCR 19 was reported out of the House Labor and
Commerce Standing Committee by a vote of 5-1.
4:13:20 PM
The committee took an at-ease from 4:13 to 4:15 p.m.
HB 253-MECHANIC/MATERIALMEN LIENS
4:15:59 PM
CHAIR OLSON announced that the next order of business would be,
HOUSE BILL NO. 253, "An Act relating to the time periods
affecting certain liens related to providing labor, material,
service, or equipment to real property, including buildings and
other improvements."
4:16:16 PM
REPRESENTATIVE JAY RAMRAS, Alaska State Legislature, speaking as
the sponsor of HB 253, prefaced his presentation by stating that
those living in a diesel-dependent community have more boiler
work done than those who have access to natural gas. Often
boiler work is done in the middle of the night after the boiler
fails during cold weather. He disclosed that his heating
contractor is Rocky's Heating, who brought forth the issue. He
paraphrased the sponsor's statement for HB 253, which read
[original punctuation provided]:
Under current law, contractors, material suppliers,
and service people who have not been paid by property
owner for labor or goods have 90 days from the date of
completion of the work, or from the date the service
ceases, to file a lien on the property to secure
payment of that debt. See AS 34.35.068 (a).
House Bill 253 merely extends the time within which to
file a lien to 120 days. This extra time will give
contractors, material suppliers, and service people an
additional 30 days to work with property owners to
secure payment or to negotiate a reasonable payment
plan between a creditor and debtor. The need for this
bill was brought to Representative Ramras' attention
by small business owners who suggested that it usually
takes two billing cycles to discover that a property
owner may not pay his or her debt, and another billing
cycle to see if a payment plan or other compromise is
working as planned.
All contractors and suppliers are entitled to payment
for services and goods delivered, yet recording a lien
on property is a severe remedy that encumbers a
property owner's interest and that can be costly for
the contractor or supplier to execute. HB 253 affords
more time for the parties to negotiate before this
remedy is employed.
REPRESENTATIVE BUCH thanked the sponsor for bringing this
forward.
4:20:03 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 253.
4:20:06 PM
The committee took an at-ease from 4:20 p.m. to 4:26 p.m.
4:26:52 PM
CHAIR OLSON reopened public testimony on HB 253, and apologized.
He stated that due to technical difficulties with the
teleconference network he previously could not hear testifiers
at the Legislative Information Offices. He noted this glitch
has been resolved and began to take public testimony.
SANDRA HEMBREE, Owner, Alaska Best Plumbing and Heating, stated
that Alaska Best Plumbing and Heating is a residential
contractor that provides service, often to provide service on
"frozen houses" and frequently involving insurance situations.
Customers cannot always pay at the time of service and as a
courtesy to their customers her business would like to extend
the customer billing options. This is difficult due to the
current billing cycles. Sometimes, when a customer does not pay
their bill, it is necessary to threaten customers with a lien or
to actually file a lien to ensure receipt of payment. This
situation is damaging to customers and adversely affects their
relationship with customers. This bill would allow businesses
to extend credit to customers for 120 days, instead of the
current 90 days, which will be helpful.
4:29:09 PM
ROCKY PAVEY, Owner, Rocky's Heating Service, outlined a
situation that has arisen during the billing cycle. He stated
that in instances in which work is performed for customers at
the beginning of the month, the customer would receive their
statement at the end of the month. Many customers believe they
have an additional 30 days to make the payment, but in reality
waiting 30 days places them at a timeframe of 60 days from the
date the service was performed. If a customer then experiences
unexpected expenses and cannot pay within the month they will be
delinquent by 90 days. Liens must be filed within a 90-day
period of service. However, filing a lien can damage the
customer's credit history and creates an adversarial
relationship with the customer. Adding an extra 30 days to the
allowable time would extend the lien filing period to 120 days,
which could assist customers and businesses that perform
plumbing and heating services. He said that 120 days would
allow him to "weed out" the good customers, who intend to pay
their bill, from those who do not. He offered his belief that
the current timeframe of 90 days is simply too short, and the
businesses must either file a lien or risk not getting paid. He
strongly encouraged members to support HB 253.
4:32:48 PM
WAYNE LONG, Owner, Wayne's Air Supply, stated he has been in
business for 19 years. He described an instance in which he did
not file a lien, but realizes that he risks not being paid. He
urged members to support HB 253.
MS. HEMBREE asked to point out one additional circumstance that
happens. One of the instances that her company routinely
encounters is "frozen houses." Her company works with insurance
companies, insurance adjusters, and mortgage companies to repair
the damage to the home. She described the process, which she
said is fraught with delays. Her business makes the repairs,
waits for an inspection and for the inspector to send reports to
the insurance company, who then issues the check. Often the
check is made payable to the lien holder, who must then re-
inspect the property. The entire process takes between 60 - 90
days to complete. When the insurance company issues the check
to the homeowner, her business must wait for the payment. She
explained that 90 days is simply not enough to complete this
process. Although infrequent, in instances in which the
homeowner does not pay, her business can suffer losses ranging
from $20,000 - $30,000. She asked members to consider this
matter when deliberating on HB 253.
4:35:31 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 253.
4:35:44 PM
REPRESENTATIVE LYNN moved to report HB 253 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, HB 253 was reported from the House
Labor and Commerce Standing Committee.
4:36:10 PM
The committee took an at-ease from 4:36 p.m. to 4:37 p.m.
HB 287-UNIFORM ACT: PROPERTY INTEREST DISCLAIMER
4:37:39 PM
CHAIR OLSON announced that the next order of business would be
HOUSE BILL NO. 287, "An Act relating to the adoption of the
Uniform Disclaimer of Property Interests Act, and to the
disclaimer of property rights under the Uniform Probate Code."
4:37:45 PM
REPRESENTATIVE MAX GRUENBERG, Alaska State Legislature, speaking
as one of the joint prime sponsors, stated that this bill will
update the Uniform Disclaimer of Property Interests Act. A
provision in the Uniform Probate Code is repealed and is
replaced with the Act. The purpose of the Act is to set out the
rules for a disclaimer, a concept that is used in probate of
estates and trusts. He related that if someone inherits money,
or money is placed in a trust for the person, the party may
decide not to take money and suffer the tax consequences. In
that instance, the money will go to the next person in line,
usually a person in the family. He identified that this is
called a disclaimer. This bill is fairly technical and updates
or modernizes the disclaimer. The bill has been drafted by the
Commissioners on Uniform State Laws. The Alaska trust attorneys
have made some changes to comport with Alaska law. He suggested
one amendment will be offered in the next committee of referral,
the House Judiciary Standing Committee. He referred to page 4,
lines 16-19, will be replaced by the Uniform Acts provision. He
paraphrased from the sponsor statement, which follows [original
punctuation provided]:
HB 287 is a comprehensive collection of rules
outlining the types of property interests eligible for
disclaimer, the process by which property interests
may be disclaimed, and the effect of a disclaimer on
the interest itself.
The Uniform Disclaimer of Property Interests Act was
promulgated in 1999 and has already been adopted in 16
other states. There do not appear to be any reported
court cases construing this Act. There have been
several law review articles discussing the pros and
cons of the Uniform Act.
4:40:36 PM
TERRY THURBON, Delegate, National Conference of Commissioners on
Uniform State Laws (NCCUSL), Juneau Alaska, clarified that she
is testifying today on behalf of the Uniform Law Commission, not
on behalf of her position with the State of Alaska. She
explained that the state sends delegates to the NCCUSL to work
on Uniform Acts, and bring back Acts for consideration. The
changes made by the sponsors and the Alaska attorneys, who are
experts in this area, have been approved by the national
organization, with the one exception which will be offered as an
amendment in the House Judiciary Standing Committee. She
related that if the bill moves forward that it would be
considered substantially similar to Uniform Act.
4:42:29 PM
REPRESENTATIVE GRUENBERG related that the commissioners of the
NCCUSL have allowed this to be considered a Uniform Act and will
set out the differences between the Alaska version and the
Uniform Act.
4:43:21 PM
MICHAEL KERR, Legislative Director, Uniform Law Commission,
National Conference of Commissioners on Uniform State Laws
(NCCUSL), thanked the committee for hearing the bill.
4:44:10 PM
DAVID SHAFTEL, Attorney, Shaftel Law Offices, PC, stated that he
is an attorney and a member of an informal group of trust
officers. The language in this bill was initially introduced
several sessions ago, but the legislature did not have time to
consider. The same bill was reintroduced this legislative
session, but the Alaska group has recommended a number of minor
changes, which were previously addressed, and are all acceptable
by the NCCUSL.
4:45:34 PM
MR. SHAFTEL provided a section-by-section analysis of HB 287, as
follows:
Section 13.70.020 is a default statute as other law
will supplement this bill. This section basically
provides that if matters are not covered in the
instrument, including the will, trust, or other
instrument, these provisions will apply.
Section 13.70.030 covers the power to disclaim, and
provides the general rules about a disclaimer. When a
person disclaims something, they basically say that
they do not want it. In those instances the person
would be treated as though he/she has predeceased the
benefactor, and it reverts to the instrument, and the
inheritance is distributed according to directions in
the instrument, or default rules apply.
Section 13.70.040 covers the basic rules if a
disclaimer is made.
Section 13.70.050 establishes rules for disclaiming
interests in jointly held property, which was an area
of controversy for many years in the tax law. This
statute helps significantly in this area.
Section 13.70.060, allows for a disclaimer of a
survivorship interest in property held as a tenancy by
the entirety. A number of states have this provision,
which is limited to married couples.
Section 13.70.065 addresses the disclaimers of
interest by trustees and when a trustee may disclaim.
Section 13.70.070 establishes general rules for
disclaimers of a powers of appointment, which are
often used and really means a person may draft a will
or trust, but the person may give their spouse or
child the power to make changes. Those powers of
appointment can be disclaimed.
Section 13.70.080 similarly addresses disclaimer by
the object of a power of appointment.
Section 13.70.090 indicates when a disclaimer takes
effect if a fiduciary disclaims a power held in a
fiduciary capacity. A trustee or personal
representative will have powers that perhaps for tax
reasons are harmful, and this allows the trustee to
disclaim powers.
4:49:14 PM
MR. SHAFTEL continued providing a section-by-section
analysis, by stating:
Section 13.70.100 deals with how notice of the
disclaimer is given and [whom] it should be given to
and provides helpful rules for notice. He offered
that it may be a complex provision, but it is very
helpful.
Section 13.70.110 pertains to when a disclaimer is
permitted or not permitted. For example, if a person
is given property and accepts the property, the person
can no longer disclaim, since that must happen prior
to acceptance.
Section 13.70.120 pertains to tax qualified
disclaimers. The Internal Revenue Code deals
explicitly with disclaimers and are often used to
correct situations and establishes a nine month limit,
but relaxes some provisions.
Section 13.70.130 relates to recording the disclaimer.
Section 13.70.140 relates to the application of this
statute to existing situations.
Section 13.70.190 provides helpful definitions.
4:51:10 PM
MR. SHAFTEL related that considerable time has been made to
consider changes for Alaska. Speaking for his informal group,
he asked to recommend this bill for members' serious
consideration as it will help all Alaskans.
4:51:45 PM
REPRESENTATIVE CHENAULT referred to proposed Section 13.70.030,
which allows a parent to disclaim for a child. He asked for an
example.
MR. SHAFTEL offered that a classic example would be a situation
in which a child wants to disclaim so the assets would then go
to the surviving parent who needs them.
4:53:49 PM
REPRESENTATIVE CHENAULT suggested a grandparent leave $1 million
to grandchild; by this provision would that allow the parent to
disclaim the interest and receive the $1 million.
MR. SHAFTEL stated no, only if parent received the interest,
then it would go to the grandchild.
REPRESENTATIVE CHENAULT expressed concern that if the money went
to the parent the grandchild would not receive the inheritance.
4:55:17 PM
REPRESENTATIVE CHENAULT, in response to Mr. Shaftel, clarified
that he was not referring to the bill but to the November 30,
2009 letter from Shaftel Law Offices, P.C, which was in members'
packets.
4:55:43 PM
MR. SHAFTEL then referred to page 2, lines 15-21 of HB 287,
which read:
(2) in the absence of a court appointed guardian a
natural guardian may disclaim on behalf of a minor
child of the natural guardian, in whole or in part,
any interest in or power over property, including the
power of appointment, that the minor child is to
receive solely as a result of another disclaimer, but
only if the interest or power disclaimed by the
natural guardian does not pass to or for the benefit
of the natural guardian as a result of the disclaimer.
MR. SHAFTEL explained that this means the guardian can disclaim
for the minor child, when the minor child receives an interest
as a result of another disclaimer. Most often that is the
interest of a parent. He described an instance in which this
paragraph would apply, such as when a minor child has received
an interest since someone else, the primary beneficiary said, "I
don't want it." Usually, that person is the parent, but it
might be someone else. He described another scenario in which
he would leave $100,000 to his brother, but if his brother
disclaims, or has predeceased him, the interest would go to his
sister's minor child. However, his sister could disclaim. His
brother may have disclaimed because he thought the inheritance
should go to Dave's wife since she needs the $100,000. Normally
if the brother disclaimed, the $100,000 would go to his sister's
child, but his sister, who is the natural guardian of the minor
child could then disclaim, because she believes it should go
back to Dave's surviving spouse.
4:58:22 PM
REPRESENTATIVE CHENAULT expressed concern if the parent has
disclaimer rights over their child that the parent could bypass
the child. He asked whether he is talking about two different
things.
MR. SHAFTEL agreed that those would be two different things.
4:59:22 PM
MR. KERR commended the sponsor for bringing this forward. He
related that this set of amendments is largely in response to
changes since the Act was first promulgated in 1999. The
Internal Revenue Code, Section 25.18 clarified the rules for a
qualified disclaimer and these amendments ensure that "people
don't get trapped." He urged approval of HB 287.
5:00:27 PM
REPRESENTATIVE GRUENBERG referred to the language on page 2,
lines 15-25, and to Representative Chenault's question. He
asked whether this language was provided by the Alaskan
attorneys reviewing the suggested updates to the Uniform Act,
but is not in the Uniform Act.
MR. KERR agreed that is correct.
MR. KERR, in response to Representative Gruenberg, agreed that
the Uniform Law Commission does not have any objection to the
change. He referred to the top of page 4 of the bill, and
stated this language is only applicable when it is the result of
another disclaimer. So this answers the earlier question, which
asked whether "this is two different situations." It is not as
though the parent can disclaim on behalf of the child and then
receive the inheritance or interest. Because of that and since
the term "natural guardian" comes from Alaskan practice, the ULC
does not envision a problem.
5:02:19 PM
REPRESENTATIVE GRUENBERG pointed out that a natural guardian has
a fiduciary duty to the child and cannot steal from the child.
Thus, if the guardian is misusing the trust, the child would be
able to maintain a cause of action against the natural guardian,
which is the protection for the child.
MR. SHAFTEL answered yes, that was his understanding.
5:02:56 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 287.
5:03:07 PM
REPRESENTATIVE CHENAULT asked for a layman's definition of a
natural guardian.
REPRESENTATIVE GRUENBERG believed that the rules to determine
who is the natural guardian of a child are located on page 2,
lines 22-31, and page 3, lines 1-7.
5:04:22 PM
REPRESENTATIVE CHENAULT asked whether that also would apply to
adoption.
REPRESENTATIVE GRUENBERG stated that if a person adopts a child
that person, he/she becomes the legal mother and father. He
referred to Page 2, lines 24-25 of HB 287, and clarified that
the legal mother and father would be the birth mother and father
or an adoptive mother and father. In further response to
Representative Chenault, he pointed out that the provisions that
apply are contained in the adoption code, which states that the
effect of the adoption decree is to provide all the rights and
responsibilities of a birth parent.
5:05:57 PM
REPRESENTATIVE T. WILSON moved to report HB 287 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 287 was reported from the
House Labor and Commerce Standing Committee.
5:06:46 PM
The committee took an at-ease from 5:06 p.m. to 5:08 p.m.
HB 282-NATUROPATHS
5:08:18 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 282, "An Act relating to naturopaths and to the
practice of naturopathy; establishing an Alaska Naturopathic
Medical Board; authorizing medical assistance program coverage
of naturopathic services; amending the definition of 'practice
of medicine'; and providing for an effective date."
KENDRA KLOSTER, Staff, Representative Cathy Munoz, Alaska State
Legislature, briefly presented HB 282, on behalf of the prime
sponsor, Representative Cathy Munoz. She explained that HB 282
would establish an Alaska Naturopathic Medical Board. She
paraphrased the sponsor statement, which read [original
punctuation provided]:
House Bill 282 creates a Naturopathic Medical Board
for the purpose of expanding allowed practices and
procedures of Naturopathic Doctors (NDs) and regulates
the practice of naturopathic medicine. The board will
consist of three naturopaths, one licensed pharmacist,
and one public member. The board will work with the
Division of Occupational Licensing to issue licenses,
and will have authority to investigate and discipline
as required. In addition, the state will authorize
prescription endorsement which will be offered for the
first time for NDs who have practiced for five years;
participated in 60 hours of pharmacology education
from an approved program; and met all the requirements
relating to administration and prescription of drugs,
vaccinations, hormones, and medical devices. The
prescription endorsement must be renewed every two
years. The bill mandates continuing medical education
of 35 hours biannually, 15 of which must be in
pharmacy education.
Prescribing authority will give flexibility to NDs to
provide necessary medical treatment to patients.
Prescription rights, which are already permitted for
advanced nurse practitioners, will allow access to a
range of commonly prescribed medicines that can be
used in correlation with naturopathic treatment to
improve patient care.
HB 282 will align the definition of a naturopathic
physician with the U.S. Department of Labor which
released a new definition of naturopathic physician to
include job titles of "Naturopathic Doctor, Physician,
and Doctor of Naturopathic Medicine." This is an
important step in recognizing NDs as qualified doctors
and primary care physicians.
Naturopathic doctors are highly trained medical
professionals. NDs attend a four-year postgraduate
professional naturopathic medical program and are
educated in the same basic sciences as conventional
medical students. Studies concentrate on holistic and
traditional approaches to therapy with a strong
emphasis on disease prevention and optimization of
wellness. Naturopathic doctors take similar rigorous
professional board exams for licensure and continue
educational training each year.
As Alaska continues to face shortages in the
healthcare professions, HB 282 provides an avenue to
help fill the gap of primary care physicians. This
bill will reasonably expand the services of
naturopaths and follow the responsibilities set forth
by the board while providing the important services
for keeping Alaskans healthy.
MS. KLOSTER commented that Emily Kane, Naturopathic Doctor (ND),
just brought to her attention an excerpt from the California
Bureau of Naturopathic Medicine, which states that the
California Bureau contacted the licensing agencies for each
state that allow ND's to prescribe. None of these states
reported any patient harm or disciplinary action due to an ND
prescribing medications. In addition, these states were not
aware of any civil actions against ND's for prescribing
medications.
CHAIR OLSON announced that HB 282 would be held over.
5:11:54 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:11 p.m.