Legislature(2003 - 2004)
05/16/2003 08:00 AM House STA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
May 16, 2003
8:00 a.m.
MEMBERS PRESENT
Representative Bruce Weyhrauch, Chair
Representative Jim Holm, Vice Chair
Representative Nancy Dahlstrom
Representative Bob Lynn
Representative Paul Seaton
Representative Harry Crawford
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 272
"An Act relating to motor vehicle dealers."
- MOVED HB 272(STA) OUT OF COMMITTEE
HOUSE BILL NO. 158
"An Act eliminating the longevity bonus program and making
related conforming changes; and providing for an effective
date."
- MOVED HB 158 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 272
SHORT TITLE:MOTOR VEHICLE DEALERS
SPONSOR(S): REPRESENTATIVE(S)WEYHRAUCH
Jrn-Date Jrn-Page Action
04/16/03 1009 (H) READ THE FIRST TIME -
REFERRALS
04/16/03 1009 (H) L&C, STA
04/28/03 (H) L&C AT 3:15 PM CAPITOL 17
04/28/03 (H) Scheduled But Not Heard
04/30/03 (H) L&C AT 3:15 PM CAPITOL 17
04/30/03 (H) Scheduled But Not Heard
05/01/03 (H) STA AT 8:00 AM CAPITOL 102
05/01/03 (H) Scheduled But Not Heard --
05/05/03 (H) L&C AT 3:15 PM CAPITOL 17
05/05/03 (H) Heard & Held
MINUTE(L&C)
05/07/03 (H) L&C AT 3:15 PM CAPITOL 17
05/07/03 (H) <Bill Hearing Postponed to
Fri. 5/9/3>
05/09/03 (H) L&C AT 3:15 PM CAPITOL 17
05/09/03 (H) Moved CSHB 272(L&C) Out of
Committee
MINUTE(L&C)
05/12/03 1560 (H) L&C RPT CS(L&C) 6DP 1AM
05/12/03 1560 (H) DP: LYNN, GATTO, CRAWFORD,
DAHLSTROM,
05/12/03 1560 (H) ROKEBERG, ANDERSON; AM:
GUTTENBERG
05/12/03 1560 (H) FN1: ZERO(LAW)
05/13/03 (H) STA AT 8:00 AM CAPITOL 102
05/13/03 (H) Heard & Held
MINUTE(STA)
05/14/03 (H) STA AT 8:00 AM CAPITOL 102
05/14/03 (H) Moved Out of Committee
MINUTE(STA)
05/15/03 (H) STA AT 8:00 AM CAPITOL 102
05/15/03 (H) Heard & Held
MINUTE(STA)
05/16/03 1732 (H) STA RPT CS(STA)FORTHCOMING
3DP 1NR 3AM
05/16/03 1732 (H) DP: CRAWFORD, LYNN,
WEYHRAUCH;
05/16/03 1732 (H) NR: HOLM; AM: DAHLSTROM,
GRUENBERG,
05/16/03 1732 (H) SEATON
05/16/03 1732 (H) FN1: ZERO(LAW)
05/16/03 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 158
SHORT TITLE:ELIMINATING LONGEVITY BONUS PROGRAM
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/05/03 0427 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0427 (H) STA, FIN
03/05/03 0428 (H) FN1: (ADM)
03/05/03 0428 (H) GOVERNOR'S TRANSMITTAL LETTER
03/11/03 (H) STA AT 8:00 AM CAPITOL 102
03/11/03 (H) Heard & Held
MINUTE(STA)
05/15/03 (H) STA AT 8:00 AM CAPITOL 102
05/15/03 (H) Heard & Held -- Recessed to a
call of the Chair --
MINUTE(STA)
05/16/03 1731 (H) STA RPT 1DP 5DNP 1NR
05/16/03 1731 (H) DP: WEYHRAUCH; DNP: SEATON,
GRUENBERG,
05/16/03 1731 (H) DAHLSTROM, CRAWFORD, LYNN;
NR: HOLM
05/16/03 1731 (H) FN1: (ADM)
05/16/03 1731 (H) REFERRED TO FINANCE
05/16/03 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
LINDA SYLVESTER, Staff
to Representative Bruce Weyhrauch
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Summarized the intent of the proposed
legislation on behalf of Representative Weyhrauch, sponsor,
during the hearing on HB 272.
CLYDE (ED) SNIFFEN, JR., Assistant Attorney General
Fair Business Practices Section
Civil Division (Anchorage)
Department Of Law
Anchorage, Alaska
POSITION STATEMENT: Answered question during the hearing on HB
272.
CHIP WAGONER, Lobbyist
for Pioneers of Alaska
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 158 to
suggest a compromise to the bill that would benefit seniors.
MARIE DARLIN, Coordinator
Capital City Task Force
AARP
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 158 to
propose a compromise to the bill.
PAT LUBIE, Legislative Representative
for AARP
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 158, and
asked the committee to consider a compromise to benefit seniors.
ACTION NARRATIVE
TAPE 03-68, SIDE A
Number 0001
CHAIR BRUCE WEYHRAUCH called the House State Affairs Standing
Committee meeting back to order at 8:00 a.m. [The previous
meeting on 5/15/03 was recessed to a call of the chair at 11:27
p.m.] Representatives Dahlstrom, Lynn, Crawford, Gruenberg, and
Weyhrauch were present at the call to order. Representatives
Seaton and Holm arrived as the meeting was in progress.
HB 272-MOTOR VEHICLE DEALERS
Number 0010
CHAIR WEYHRAUCH announced that the committee would return
attention to HOUSE BILL NO. 272, "An Act relating to motor
vehicle dealers."
[Although an objection to moving proposed committee substitute
(CS), Version 23-LS0975\H, Bannister, 5/14/03, before the
committee was still pending from the Thursday, May 15, 2003
House State Affairs Standing Committee meeting, Version H was
treated as before the committee.]
CHAIR WEYHRAUCH announced that public testimony was closed.
Number 0220
LINDA SYLVESTER, Staff to Representative Bruce Weyhrauch, Alaska
State Legislature, noted that every state in the country takes
special care to articulate in statute the relationships between
[car] manufacturers, [car] dealers, and consumers. Last year,
she said, Alaska, after four years of consideration, passed a
25-page omnibus motor vehicle dealer bill. She reminded the
committee that [in previous days' hearings] it had heard
testimony on the consumer protection statutes regarding brokers
of motor vehicles from 1993.
Number 0333
MS. SYLVESTER said that the government is concerned, because a
vehicle is the second-most expensive purchase a person in the
U.S. will make. Another reason that the government is "very
interested," she indicated, is: "The franchise agreements that
a manufacturer has with their chosen agents of their product are
unilateral agreements and, as such, the franchises are in a very
precarious situation, dealing with the manufacturers."
MS. SYLVESTER said that HB 182, which passed out of the House
Labor and Commerce Standing Committee [during the Twenty-Second
Alaska State Legislature], has "oddball things" such as where a
manufacturer can establish "a new dealership - a new franchised
dealer." She explained that that's a protection for the
franchised dealer. She said, "This legislature has taken a lot
of interest in establishing whether that range should be 14
miles, 20 miles, 30 miles, a city, or what." The legislature
finally decided on a 14-mile range, which she explained means
that, by statute - not through a manufacturer's franchise
agreement - manufacturers may not establish a new dealership
[within 14 miles of] an existing franchise.
MS. SYLVESTER clarified that what is being discussed is new
vehicles, not used. She said that HB 272 defines what is a new
versus a used vehicle. She noted that some previous testimony
stated that what makes a used vehicle is when the manufacturer's
certificate of origin is converted into a title. Different
states consider that, she said; however, Alaska doesn't.
Alaska, she said, "talks about a current model year." A current
model year is "kind of a squishy term," Ms. Sylvester said,
because "that could be 14 or 15 months, depending." She added,
"So we've taken care to establish what a used vehicle is."
MS. SYLVESTER said that a consumer doesn't expect all of the
perks and "neat treats" that come with a new vehicle to come
with a used vehicle. She said that everyone has heard of the
problems that used vehicles have, and she said, "And that's
where the consumer protection angle comes in." She continued as
follows:
So what we're talking about here is whether or not a
broker of used vehicles is allowed to sell a new
vehicle. It's not [that] we contest a vehicle that
has just simply had a title conversion with 20 miles.
What we're saying is that it's the current model year,
with some caveats. ... AS 45.25.180 establishes these
guidelines for relevant market areas for the new
vehicles and used vehicles.
... The manufacturer gives his dealer a ... relevant
market range. ... Whether we're talking about
Canadian vehicles, [or] vehicles that are being
illicitly unloaded by a dealer in another state and
given to a broker in Alaska at a reduced cost - what
happens is, there's a loophole that's been
established, where the ... new cars have been
converted, and they come in under the wire that Alaska
statute has established and that supports the
manufacturers' ... agreement[s] with it's franchises.
The issue is: Currently, the Canadian market vehicles
or these gray-market vehicles are what's happening
now; but what we're talking about is an illicit
transaction. And it violates not only the franchise
agreement, it violates the spirit of our statutes.
And it's a clarification that we need to make. And
that is the issue. It's not [North American Free
Trade Agreement] (NAFTA) - it's not restraint of
trade. We're expanding the trade potential that's
available for used car dealers and brokers. But we're
also clarifying what a new vehicle is.
You've heard testimony ... that should be compelling
and convincing, that a vehicle, however it gets to
Alaska, if it's got 20 miles on it, it's not a ...
used vehicle, it's a new vehicle. And it's a slight
of hand. And if it's not illegal in Canada, then that
... it just simply doesn't relate here. The vehicle
was acquired through some kind of fraud. Otherwise,
the dealers would turn these vehicles right over to
the car brokerage or the auction (indisc.) in
Washington State. They don't do that. It was
illicit, it's unethical, and it doesn't change the
fact that it's unethical when they're being sold in
the states underneath the wire and ... contrary to the
spirit of our statutes.
Number 0801
REPRESENTATIVE GRUENBERG said he is looking at AS 45.25.180. He
said that it seems to him that it involves new motor vehicle
dealers alone. He asked Ms. Sylvester if that is correct.
MS. SYLVESTER concurred. She confirmed that that statute
addresses current-year vehicles, not used vehicles. She said,
"These are new vehicles, and these are the impediments that
franchised dealers are required to adhere to." She continued as
follows:
This is relevant, because ... in close proximity to
the franchised dealers, you have a car brokerage that
... is selling new vehicles acquired through illicit
means. So, ... if you, Representative Gruenberg, ...
wanted to set up a franchise - if you wanted ... do a
Ford dealership, you would not be able to. If you
wanted to acquire the Ford product through illicit
means through Canada, you would be able to, because
our statute has a loophole that we're seeking to
close. And again, it doesn't' matter if the vehicles
come from Canada or if they come from some other
illicit source, the fact is, they don't come from the
manufacturer directly to the franchise of the new
vehicles.
Number 0930
REPRESENTATIVE GRUENBERG noted that AS 08.66.015 refers not only
to new vehicles, but also current model motor vehicle. He said,
"Had they intended to include current model motor vehicle in AS
45.25.180, they would have clearly stated that, wouldn't they?"
He clarified that he was suggesting that it was a definite
legislative determination not to include current model motor
vehicle in the new dealership statute.
MS. SYLVESTER stated her belief that Mr. Sniffen, who drafted HB
182, would be the person to "answer that question." She added,
"And I believe that both of these things stand on their own."
Number 1046
REPRESENTATIVE LYNN referred to an advertisement [which is part
of a 5-page handout in the committee packet, apparently provided
by the Mendenhall Auto Center in Juneau, Alaska]. The
advertisement was about vehicles priced to save the consumer
money and "all with warranties." Representative Lynn stated his
understanding that a warranty comes from the manufacturer and is
built into the price of the [vehicle], while a service contract
is something that consumers purchase on their own, sometimes to
extend beyond a warranty. He asked if the warranties offered in
the advertisement are paid for in addition to the price of the
vehicles being sold, or if they are paid for by the dealer who
advertised.
Number 1135
MS. SYLVESTER stated her understanding that "those are not paid
for independently." She referred to the Heritage
[Administration Services, Inc., new vehicle limited warranty]
form [included in the committee packet, attached to a six-page
handout, the first page of which is from the State of Alaska
Department of Law]. On the form, she noted, there is an option
for deductibles. She said, "So you ... can have different
versions of the deductibles." She deferred further comment to
Mr. Lyberger, Mr. Allwine, or Mr. Sniffen.
REPRESENTATIVE LYNN asked, if he were to buy one of the
advertised automobiles, would he have the warranty/service
contract as part of the deal, or would he have to buy it as an
additional fee.
MS. SYLVESTER responded, "These are things that Mr. Lyberger is
providing." She stated her understanding that other brokerages
that have the Canadian market vehicles where the manufacturer
has not extended a warranty are not required to have warranties.
Mr. Lyberger, she said, does [have the warranties] to compete
within his market. In response to a follow-up question by
Representative Lynn, she concurred that if he were to go down
the block to buy the vehicle, it may not have that warranty.
She offered the following clarification:
When a vehicle comes into the country, is imported
legally, when it's acquired illicitly from the
franchise, turned over to the importer, and is
imported legally into the United States, the importer
must ... - and this is a federal requirement - ...
place a bond on the vehicle ... to cover any recalls.
And the registered importer tracks the vehicles that
way.
MS SYLVESTER stated that that's the only requirement. She said
that the registered importer retains that responsibility of
keeping the bond for any safety recall.
Number 1270
REPRESENTATIVE LYNN asked if he could take the vehicle back to
the new car dealer to get a [part on his] vehicle fixed if the
manufacturer had a recall [on that part], for example.
MS. SYLVESTER answered that the responsibility is with the
registered importer, and she stated her belief that the
Department of Transportation regulates that very carefully. The
importer would contact Representative Lynn, for example, and
arrange for the recall to be satisfied, she said. She added,
"But ... that's the only requirement. They're not required to
... substitute service contracts in place of warranties.
Warranties are something that the manufacturers do, because they
believe in their vehicle."
Number 1365
REPRESENTATIVE GRUENBERG referred to page 1, line 9, of
Version H. He asked what the purpose was of eliminating the
words "new or".
Number 1430
CLYDE (ED) SNIFFEN, JR., Assistant Attorney General, Fair
Business Practices Section, Civil Division (Anchorage),
Department Of Law, in response to Representative Gruenberg's
question, referred to the [proposed] changes to AS 08.66.015 as
a whole, and noted that the current statute is set up into two
[subsections] (a) and (b). It read as follows:
Sec. 08.66.015. Sale of motor vehicle.
(a) A person who does business as a dealer in the
state may not offer to sell or sell a motor vehicle as
a new or current model motor vehicle unless the motor
vehicle retains the manufacturer's certificate of
origin.
(b) A person who does business as a dealer in the
state may not offer to sell or sell a motor vehicle as
a new or current model motor vehicle having a
manufacturer's warranty unless
(1) the dealer has a current sales and service
agreement with the manufacturer and the agreement
requires the dealer, upon demand of the motor vehicle
buyer, to perform or arrange for, within a reasonable
distance of the dealer's place of business in the
state, the repair and replacement work required of the
manufacturer under the warranty; or
(2) the dealer offers to give the buyer a rebate
to cover the repair and replacement work that the
dealer cannot perform or arrange for within a
reasonable distance of the dealer's place of business.
MR. SNIFFEN noted that the proposed Version H would remove the
"current model" language from [subsection] (a). The result
would be that a motor vehicle with very low miles on it that
does not have a certificate of origin cannot be sold as a new
car, but would have to be sold as a used car. Furthermore, he
noted, Version H would change the stipulations in [subsection]
(b) for selling a current model motor vehicle.
REPRESENTATIVE GRUENBERG stated that he does not question the
change to subsection (a); however, regarding subsection (b), he
asked what possible harm there could be to making the
requirement concerning the manufacturer's warranty also apply to
new vehicles. He said, "It seems to me to be under-inclusive,
and it may conceivably deny some consumers of new vehicles the
protection of subsection (b). He asked Mr. Sniffen if he would
have a problem with keeping "new" vehicles in that subsection.
Number 1572
MR. SNIFFEN responded that in his brief immediate review of
Version H, he doesn't see a problem with that. He asked
Representative Gruenberg to clarify that he meant he wants the
warranty requirement left in for new cars, as well.
REPRESENTATIVE GRUENBERG said yes. He explained that his next
line of questioning was going to be to ask why the language on
page 1, line 10, "[HAVING A MANUFACTURER'S WARRANTY UNLESS]",
couldn't be left in, as well as the language on page 1,
beginning on line 12, to page 2, line 1, which read as follows:
[AND THE AGREEMENT REQUIRES THE DEALER, UPON DEMAND OF
THE MOTOR VEHICLE BUYER, TO PERFORM OR ARRANGE FOR,
WITHIN A REASONABLE DISTANCE OF THE DEALER'S PLACE OF
BUSINESS IN THE STATE, THE REPAIR AND REPLACEMENT WORK
REQUIRED OF THE MANUFACTURER UNDER THE WARRANTY]; [OR]
REPRESENTATIVE GRUENBERG offered his understanding that that
would provide a warranty protection; in addition to the warranty
protections under the uniform commercial code, which apply to
the manufacturer, it would also add - as a matter of state law -
a dealer's warranty. He opined that that's an important
additional protection to have the dealer's warranty, as well as
the manufacturer's warranty.
Number 1733
MR. SNIFFEN offered his understanding that the initial reason
the new car dealers wanted to remove that language was to clean
up the statute. He said, "I believe they didn't have that
concern; if in fact the used car dealers weren't selling these
current model motor vehicles, this becomes much less of a
concern. Only in the event that they are allowed to continue
those sales would that issue be a concern." He said that he
doesn't have a problem leaving that language in there, if that's
the will of the committee.
Number 1773
REPRESENTATIVE GRUENBERG said he is beginning to understand the
problems between "these two types of businesses," and he is not
looking at the issue from either profession's point of view, but
rather from the point of view of the Alaskan car buyer.
Number 1810
REPRESENTATIVE CRAWFORD reiterated the question he had asked Mr.
Allwine during the May 15, 2003 meeting, regarding whether the
language covers "lease fleet vehicles," or if that language
should be added to [paragraph] (3) [on page 2, lines 7-8, in
Version H].
MR. SNIFFEN said he thinks Mr. Allwine was correct in that the
language probably covers those transactions, but he added that
he doesn't think it would hurt to clarify that in [paragraph]
(3). In response to a question by Chair Weyhrauch, he suggested
that perhaps the term "at the end of a lease term" could be
added to [paragraph] (3). He said he would have to give it some
thought to come up with the appropriate language.
Number 1895
REPRESENTATIVE LYNN asked what is wrong with the language the
way it is.
Number 1925
MR. SNIFFEN opined that there is probably not much wrong with it
the way it is; however, he commented that there is a "little
gray area" on the lease issue, because all the exceptions [in
Version H] deal with transactions that arguably could exclude,
for example, a situation where a dealership may have leased a
vehicle and the lease had expired. In that case, he explained,
"they're technically not purchasing the vehicle back from the
consumer, it's not a repossession, it's not in service with a
rental fleet, [and] it hasn't been purchased from an auction, so
that kind of transaction is sort of excluded from any of those
exceptions." He suggested an exception to the effect that "if
the vehicle is returned to the dealer at the end of a bona fide
lease from the dealer", then that might cover that transaction
if it's a concern.
Number 1970
REPRESENTATIVE CRAWFORD said he thinks that some people turn
their vehicles in without fulfilling the lease terms. He asked,
"Does that language actually take care of it?"
MR. SNIFFEN responded that he is trying to think as fast as he
can and he is not sure. He proffered, "If you have a bona fide
lease with a dealer and the vehicle comes back to the dealer,
I'm trying to determine if there's some way that a Canadian
vehicle would be leased from the dealer in this way." He
explained that that's why he's having trouble deciding if that
language is really necessary. He revealed that he does not know
of many transactions where the current model Canadian vehicles
coming back from a consumer under a lease are really going to be
a problem. If they are, he added, it would require,
essentially, that a dealer be in possession of one of these
Canadian vehicles, which, theoretically, they shouldn't be; so,
they wouldn't be in a position to lease these vehicles.
However, he gave an example where a consumer leases a vehicle in
Canada, or from another dealer who "had one of these vehicles,"
and the lease term expires. He said it would just go back the
dealer who actually leased the vehicle. He said, "And if you
want to include those transactions in the types of transactions
that we want to allow under this statute, it might bear specific
attention."
Number 2055
REPRESENTATIVE CRAWFORD said that he is not familiar with
leases, but knows that he would like for legitimate lease
vehicles to be covered in the bill. He added that his concern
is not so much whether the vehicles are Canadian or for sale in
the U.S., but that he wants to ensure that [the legislature]
isn't leaving legitimate business out of the list of exceptions.
Number 2104
REPRESENTATIVE GRUENBERG offered an example whereby a motor
vehicle dealer leases a three-year leased vehicle to "Joe
Consumer," and the vehicle is turned back, or it's at the end of
the lease term. At that point, he noted, that vehicle would not
be for sale, unless the owner of the vehicle, who would probably
be the dealer, wanted to sell it. He asked for confirmation
that the purchaser who had been the lessee doesn't have any
right to sell it, because he's just renting it.
MR. SNIFFEN answered that he thinks that's correct. In any
event, he added, that type of transaction wouldn't fall under
the language of [AS 09.66.015], because it would no longer be a
new or current model motor vehicle.
REPRESENTATIVE GRUENBERG suggested that if it was a new vehicle
that was leased and it was turned back within a couple of
months, it would still be a current year model vehicle. But the
lessee, he reiterated, would not have any right to sell it,
because he/she doesn't own the vehicle.
MR. SNIFFEN confirmed that that is correct.
Number 2233
REPRESENTATIVE GRUENBERG stated that he is going to offer an
amendment as follows: on page 1, line 9, add back in the words
"new or"; on page 1, line 12, to page 2, line 1, add back the
language "and the agreement requires the dealer, upon demand of
the motor vehicle buyer, to perform or arrange for, within a
reasonable distance of the dealer's place of business in the
state, the repair and replacement work required of the
manufacturer under the warranty; or".
REPRESENTATIVE GRUENBERG indicated that he didn't want to
formally offer the amendment until he had talked to Mr. Sniffen.
Number 2316
REPRESENTATIVE GRUENBERG turned attention to Amendment 1, which
read as follows:
Page 2, lines 2 - 3:
Delete "received as a trade-in"
Insert "manufactured for sale in the United
States and acquired by the dealer"
Page 2, line 6:
Delete ";"
Insert "; or"
Page 2, lines 7 - 10:
Delete all material and insert:
"(3) the vehicle is a current model used vehicle
not manufactured for sale in the United States, the
dealer acquired the vehicle in the normal course of
business, and the dealer complies with AS 45.25.470."
Page 5, following line 19:
Insert a new bill section to read:
"* Sec. 5. AS 45.25.470 is amended to read:
Sec. 45.25.470. Sales of vehicles manufactured
for sale in a foreign country. Before sale of [,] a
motor vehicle not manufactured for sale in the United
States, a motor vehicle dealer shall disclose to the
consumer in writing, in addition to any other
disclosures required for the sale of a used [WHETHER A
MOTOR] vehicle, [WAS ORIGINALLY MANUFACTURED FOR SALE
IN CANADA OR ANOTHER FOREIGN COUNTRY]
(1) that the vehicle was originally
manufactured for sale in Canada or another specified
foreign country;
(2) if applicable, that the vehicle was
originally sold new in the specified foreign country
identified under (1) of this section and imported into
the United States;
(3) that the vehicle's odometer was
converted from kilometers to miles, and shall provide
the consumer with a legal vehicle title, an odometer
verification certificate, or another document that
verifies the mileage reading after the conversion;
(4) if applicable, that the vehicle does
not have a manufacturer's warranty; and
(5) any other information required by
regulations adopted by the attorney general."
Renumber the following bill sections accordingly.
REPRESENTATIVE GRUENBERG noted that if Amendment 1 is not
adopted, then the language on page 2, lines 7-10, of Version H,
would not be deleted. The language read as follows:
(3) the vehicle has been purchased directly
from a consumer in the United States for purposes of
resale;
(4) the vehicle has been in service with a
bona fide rental fleet for at least five months;
REPRESENTATIVE GRUENBERG said that the term "five months" may be
hard on people in Fairbanks and the north part of the state,
because the rental season there is less than five months long.
He commented that there have been suggestions to [change the
language in the bill] to "three months" or "four months", so
that the vehicle could be sold after one rental season. He said
he would probably leave Amendment 1 for Representative Holm to
offer, or at least for him to be present, because he represents
Fairbanks.
Number 2390
REPRESENTATIVE GRUENBERG began discussion of what later was
labeled Amendment 5, which read as follows [original punctuation
provided]:
Page 2, lines 27-28:
Delete "represent that a savings occurs at a
lower [HAVE OCCURRED AT THAT] price."
Insert "represent that a buyer would save money
by paying a [HAVE OCCURRED AT THAT] price that is
lower than the "manufacturer's suggested retail
price," "MSRP," or "list price"."
REPRESENTATIVE GRUENBERG referred to page 2, lines [24-28 of
Version H], which read as follows:
(3) whenever using the term "manufacturer's
suggested retail price," "MSRP," or "list price," the
dealer [SHALL PROVIDE IN THE ADVERTISEMENT A CLEAR AND
CONSPICUOUS DISCLOSURE THAT STATES THAT A SALE] may
not represent that a savings occurs at a lower [HAVE
OCCURRED AT THAT] price.
REPRESENTATIVE GRUENBERG offered his understanding that the
problem that [paragraph] (3), on page 2, lines 24-28, is
designed to cure is the fact that very few vehicles are actually
sold at manufacturer's suggested retail price (MSRP), but
generally are sold at a lower price, and customers don't know
that. He asked if "that whole part of the bill" was designed to
require dealers to let customers know that usually vehicles are
sold at lower prices.
Number 2448
MR. SNIFFEN answered, "In part, yes." He said there has been a
practice in the past where dealers will run advertisements
comparing prices to MSRP, or other prices. He said a new auto
dealer Act was structured under AS 45.25 to prohibit price
comparison advertisement, except with MSRP prices, which he said
are such nationally known numbers that often are seen on
television. He said that a price [on a vehicle] that is lower
than the MSRP gives the impression to consumers that they are
receiving some kind of a savings, when in fact the vehicle may
have never been sold at the MSRP price, but may have been higher
or lower. He said, "We had put that section in here,
Representative Gruenberg, to make it clear to consumers that
when they see those kinds of advertisements, ... they may not
actually be saving money."
REPRESENTATIVE GRUENBERG stated that although it seemed to him
that the purpose of the amendment in [Version H] was to clarify
the language, he thought that Amendment [5] would make it even
clearer. He asked Mr. Sniffen if he agreed.
Number 2600
CHAIR WEYHRAUCH questioned Mr. Sniffen to find out which
amendments he had received by facsimile.
CHAIR WEYHRAUCH mentioned issues that had been raised by Mr.
Coffey at a previous hearing on HB 272. He asked if Mr. Sniffen
had any comments in that regard.
Number 2627
MR. SNIFFEN prefaced his comments by opining that Mr. Coffey is
an excellent lawyer who is representing the interests of Mr.
Lyberger well. Notwithstanding that, he stated that he thinks a
lot of the concerns that Mr. Coffey has are "just not
substantiated." He continued as follows:
The "takings issue" is really nothing that I think has
any merit to it for ... one simple reason: We have a
law that's been in place since 1993, that already
prohibits the conduct that's currently going on, and
Mr. Lyberger, for example, opened his shop after that
law was in place and knew of the law when he engaged
in his business. I don't think a "taking claim" would
survive very long, under those facts.
He also mentioned some concerns with NAFTA, and I am
by no means a NAFTA expert. And I have looked through
the provisions of NAFTA, and I find it curious that no
one - Ms. Urban, Mr. Coffey, no one - has pointed to
any specific provision of that agreement that this
legislation could possibly violate. I haven't seen a
citation to, you know, Chapter 3, Section 1.65, that
says the legislature in the state shall not do this.
And no one's been able to point me to any of those
provisions, so I'm skeptical that there are any NAFTA
concerns at all. The provision I looked at in NAFTA
didn't seem to indicated that there was a problem.
And, if there was a problem, it's a problem that
already exists under our current law. So, nothing
that HB 272 does could possibly be any worse than what
we currently have.
So, these NAFTA concerns and these competition
concerns, and our trust concerns are really
irrelevant, because if there are concerns, then we
already have them, and this bill isn't going to change
that. If anything, this bill relaxes those concerns
to the extent that it carves out these exceptions now
that everyone can use to transact in certain types of
vehicles. So, in that sense this is a pro-competitive
piece of legislation, because it's opening up the
markets for new and used car dealers to sell certain
kinds of cars that are already prohibited from being
sold.
So, I don't have the concerns for NAFTA, or the anti-
trust concerns, or these "taking concerns" that I've
heard raised. Our supreme court might disagree with
me down the road on that, but our review of these
issues just doesn't warrant that kind of concern.
Number 2764
REPRESENTATIVE SEATON stated that he has some concerns regarding
NAFTA. He said the entire idea of NAFTA, whether "we" agree
with it or not, was to open trade between "the countries." When
[the legislature] says it's going to restrict that trade to
certain individuals, he said he thinks there are possibilities
of problems. He added, "And definitely it seems to be a
restriction in the philosophy of where the country has gone and
is continuing to go since we've given the president the
authority to negotiate on ... other free trade agreements." He
said that he doesn't know that there are any particular
provisions of NAFTA that are being considered for change;
however, he commented that, basically, what is being discussed
is a restriction of sales between Canada and the U.S., by saying
that the trade between the U.S. and Canada could only be through
certain individuals for a certain period of time each year. He
concluded that that's his concern with the interaction with
NAFTA.
Number 2830
MS. SYLVESTER proffered that NAFTA is irrelevant for the
following reason: The methods through which a broker can
acquire a used vehicle are itemized. Excluded are new vehicles
illicitly acquired from a manufacturer. She indicated that, for
example, a franchised dealer in California or Washington State
who has a deal with a broker and is selling "these new vehicles"
to the broker at a cut rate would be excluded as well, because
"it's not acquired in these same ways." Currently, she said,
there's a market condition based on the favorable exchange rate,
coupled with recent changes and modifications, that made it much
cheaper for Canadian market vehicles to be converted "to
American standards." She added, "There's no guarantee that's
going to stay." She explained that that just happens to be the
current popular source of the illicit vehicles that are required
outside of the manufacturer's franchise agreement with the
dealers. She added, "And that's something that Alaska law, and
every ... state in the U.S. supports." She concluded, "In no
way are we saying that NAFTA is intended to protect illicit
trade."
REPRESENTATIVE SEATON stated the following:
I am quite opposed to the characterization of this,
because these vehicles are legally imported into the
U.S. by registered importers that are ... certified by
the Department of Transportation. So, you are going
back and presuming a method of something that's
happening in Canada before the vehicles are legally
imported into the U.S. And so, to say that these are
[fraudulent] or illegal actions is totally incorrect,
because everything that is happening in the U.S. --
now it may be in violation, possibly, between some
manufacturer and their own personal agreements with
people they sell their cars to; however they're
continuing to sell those cars to those people.
We had testimony yesterday from the importers that
said that these were fleet sales that are done
legally. I haven't seen anything other than just
postulations that college students are buying this.
We haven't seen anybody refute that these fleet deals
that give extreme discounts and then are imported -
that those are illegal in our country. So, I get
disturbed when we say that these are illegal, when we
have legal importers that are licensed and that are
bringing these in, and that people can buy them --
unless we want to make them illegal. But of course,
under Alaska law, it's illegal for the franchised
dealers to buy them, as well; it's illegal for anybody
right now.
TAPE 03-68, SIDE B
Number 2985
MR. SNIFFEN concurred that the importation process itself
perhaps is legitimate, legal, and in accordance with federal and
state requirements. He noted that the idea of a registered
importer sounds more grandiose than it actually is. He said it
is probably easier to become a registered importer than to
become a car dealer in Alaska. He added, "You fill out an
application and you post a bond." He noted that there's no
training or text, for example, and no other requirement other
than perhaps a background check. He continued as follows:
And it would be curious to get a national highway
traffic safety administration person familiar with the
import issues to testify before this committee, and I
would suspect you would find that there is a
tremendous amount of import fraud that takes place.
And I'm not sure that just saying, "Well, these are
legally imported, ... direct to some of these consumer
concerns" -- although I cannot deny that there's a lot
of truth to that: that the conduct that perhaps is
illicit is something that's occurring outside of
Alaska and Canada. And you know, perhaps that's
conduct that we should be concerned with.
Number 2900
MR. SNIFFEN referred to the previous testimony of "Ms. Urban"
[on May 15, 2003] that there are 210,000 Canadian vehicles
legally imported. He said he would be curious to find out how
many of those were current-model vehicles with less than 150
miles on them, for example. He said he bets a majority of those
vehicles with less than 150 miles on them have come into
possession of the importers in some "interesting ways." He
added, "And I'm not going to say illegal, or even illicit; it's
just [that] we've heard testimony from other folks about that,
and we haven't done an investigation in our office to verify any
of those things, so we can't speak with any authority on it -
only what we've heard."
CHAIR WEYHRAUCH returned the committee's attention to a portion
of Representative Gruenberg's possible amendment, to leave the
words "new or" on page 1, line 9.
MR. SNIFFEN said he doesn't know if that would violate some of
the intent that the new car dealers "were thinking of by
removing that language," but he said he can't see any problem
with that [amendment, if proposed].
Number 2843
REPRESENTATIVE SEATON said he wasn't sure why "or current model"
is in there. He offered his understanding that the desire is to
prevent someone from offering to sell a motor vehicle as new [if
it isn't].
Number 2831
REPRESENTATIVE GRUENBERG returned attention to Amendment [5].
He referred to the added language in Version H on page 2,
line 27, which read, "represent that a savings occurs at a
lower". He clarified that with Amendment [5], [page 2], lines
27-28 of Version H would read as follows [punctuation as
stated]:
may not represent that a buyer would save money by
paying a price that is lower than the "manufacturer's
suggested retail price", "MSRP," or "list price".
REPRESENTATIVE GRUENBERG suggested the foregoing is more clearly
written and asked Mr. Sniffen his opinion.
MR. SNIFFEN answered that he believes it sounds fine.
Number 2728
REPRESENTATIVE GRUENBERG asked why Section 3 is in the bill. He
said the current [statutory] language looks good to him and
covers both new and used vehicles as well as related goods or
services. It is a much broader protection.
MR. SNIFFEN replied:
We had modified that section because I don't know that
anyone could come up with a really good definition for
"related goods". And the intention of this section
was to make sure dealers weren't advertising for a
whole bunch of cars when, in fact, they only had one
at that price. You might have seen advertisements in
the past that would lead a consumer to suggest, "Hey,
Cal Worthington has 55 Ford Explorers at this price."
And you would go down there and they'd say, "Oh, no,
that was ... one car at ... this particular
configuration, and we don't have that one anymore; it
sold a week ago. But, hey, we have these other 45
Explorers that are kind of the same."
Number 2663
REPRESENTATIVE GRUENBERG said Mr. Sniffen had convinced him to
limit it to the vehicles themselves. He asked whether his
feeling is that these used vehicles are a little different from
each other and hence this should be limited to new vehicles.
MR. SNIFFEN answered in the affirmative. He added that used
vehicles, by their nature, are unique; having an expected
quantity of specific used vehicles didn't make any sense.
Number 2632
REPRESENTATIVE GRUENBERG turned attention to Section 4,
[paragraph (1)], found on page 3, lines 7-13, of Version H.
Noting that the current [statutory] language appears to require
advertisements to include "taxes and everything else," he
offered his understanding that the proposed legislation would
eliminate this requirement because it is "too variable."
MR. SNIFFEN cited variability and that the language is very
confusing. He offered his belief that the new language
accomplishes exactly the same thing but is much easier to read.
REPRESENTATIVE GRUENBERG said he didn't have a problem with
that. Continuing with Section 4, he drew attention to
[paragraph (10)], found on page 4, lines 21-23, of Version H.
He said he gathers that it isn't really a problem, "people
passing things off as being offered by a private party." He
added that he doesn't know what a "motor vehicle agent" is.
MR. SNIFFEN explained that the language is being excluded from
current law because "we didn't really know that it added
anything to the revised version." He added that the intent is,
if a vehicle is to be offered for sale or lease, "you have to
include ... your name if you are a dealer."
Number 2535
REPRESENTATIVE GRUENBERG responded that he didn't have a problem
with that. He then surmised that the reason for eliminating
[paragraph (11)] on page 4, lines 25-29, of Version H is that
sometimes sales are extended longer than was originally thought.
MR. SNIFFEN affirmed that and explained:
We found that there were some promotional deals
offered by manufacturers to dealers that did not
really have an ending date; they would be very open-
ended. So if the end of the month came along and you
had an advertisement that said, "Hey, come in until
March 30th to take advantage of this deal," and then
the manufacturer called you up and said, "Well, we're
extending this promotion for another 15 days," you as
a dealer wouldn't be able to participate in that
extended promotion because you've already advertised
and you had to do it within a certain timeframe.
Number 2501
REPRESENTATIVE GRUENBERG turned attention to [paragraph (12),
beginning on page 4, line 30, of Version H]. He asked why the
current [statutory] language isn't being retained, since it
seems to protect consumers against unscrupulous people who would
require the purchase of not only the vehicle, but also features
that are added at the dealership.
MR. SNIFFEN answered:
We couldn't come up with a good situation that
actually was occurring in the normal practice of
selling cars where a buyer wouldn't know what was on a
vehicle when they went into a car dealer to purchase
it. And the example that I like to use is that block
heaters in Alaska, which are very common, if a
customer came into a dealership and said, "I want this
car, but I see you've installed a block heater, and
that's not something that was installed by the
factory, I want you to take it off," it would require
the dealer to take that off. Sometimes these cars
come in and dealers will put accessories on them -
sometimes spoilers or mud flaps or little things - and
this language required dealers to actually go in and
disassemble those things if they weren't installed by
the factory.
And there are some things that come, actually, with
the vehicles, that the factory asked the dealer[s] to
install themselves. And there was an argument to be
made that if it didn't come off the barge with [these]
things ... on there from the factory, that ... if a
consumer wanted to force the issue, they could make
you take those things off before they took delivery of
the vehicle -- and it wouldn't make the car any
cheaper; it would just mean that these things would
have to come off. And we didn't see any practical
application for that in the normal transaction between
a dealer ... and a consumer.
REPRESENTATIVE GRUENBERG surmised that it wasn't as much of a
problem as it might appear to be to a layperson like himself.
He said he was willing to bow to Mr. Sniffen on that issue. He
announced that this completed his questions on Section 4.
Number 2374
REPRESENTATIVE GRUENBERG turned attention to Section 5.
Referring to existing language on page 5, lines 24-25, he asked
why this is limited to the sale of new motor vehicles. He
suggested striking "new" and providing this protection for the
sale of all motor vehicles.
MR. SNIFFEN answered that this relates to when a new motor
vehicle comes in off a barge with some damage that is repaired
by the dealer and hence the consumer doesn't know that the
vehicle wouldn't be in new condition without this repair.
Number 2377
REPRESENTATIVE GRUENBERG said that answered his question. He
then expressed concern about the following proposed phrase on
page 5, line 28: ", or $1,000, whichever amount is greater".
He said it seems to be lessening consumer protection, because
$1,000 is 5 percent of a vehicle costing $20,000. If the
vehicle is being sold for less - $15,00 for example - that
amount would only be $750, he noted. In other words, he said,
"This protection wouldn't kick in, whereas, under current
language it is for cheaper cars." He noted that the people who
buy cheaper cars are generally people without as much money who
really need the protection even more than people with a little
more means.
Number 2310
REPRESENTATIVE GRUENBERG said that he would like to delete "or
$1,000,", because he said he thinks it not good for the
consumers, particularly folks who live in parts of town like
his.
Number 2277
MR. SNIFFEN remarked that that's an excellent observation, and
he added that it is curious, because [Representative Gruenberg's
point] is the exact reason why that language was included in the
first place. He said that [the language] wasn't [added with the
intention] to not provide consumers protection.
MR. SNIFFEN explained that there are dealers who sell cars for
under $10,000, and when they get some of these cars they find
they have little scratches on the fender, for example, and they
might have to spend $500 in labor to buff out the scratches or
replace a panel. The cost of doing those repairs can quickly
exceed the 5 percent limit that is in statute; therefore, [one
of the dealers] asked for the rule to be relaxed a little, for
the reason that if they do work on a low-value car, they would
have to disclose [that information], which could make it
difficult to sell the car, or might create some kind of
impression that the car really isn't new, whereas dealers who do
exactly the same thing on higher-valued cars would not have to
disclose this type of work.
MR. SNIFFEN stated that he would have no objection to removing
that language if that's the will of the committee. He suggested
perhaps another number could be chosen, perhaps $800, for
example. He explained that a limit needed to be put in that
would allow all dealers to at least work up to a certain range
without making disclosures - to level the playing field.
Number 2168
REPRESENTATIVE GRUENBERG asked if "dings," for example wouldn't
come under the phrase, "cosmetic parts", on page 5, line 30.
MR. SNIFFEN said it would not, because the cosmetic part
language is intended to include things that can be replaced in
whole, like bumpers, for example. In response to a follow-up
question by Chair Weyhrauch, he said that a hubcap would also be
an example of a cosmetic part.
Number 2130
REPRESENTATIVE GRUENBERG announced that he would probably bring
up, for the purpose of discussion, reducing the $1,000 to $800,
which was the amount that Mr. Sniffen suggested.
Number 2100
CHAIR WEYHRAUCH asked if anyone had any thoughts regarding that
possible change.
Number 2089
REPRESENTATIVE CRAWFORD commented that the way vehicles cost
today, he doesn't think there's a huge difference between $800
and $1,000.
CHAIR WEYHRAUCH said that he feels $1,000 is an easier number to
work with.
REPRESENTATIVE LYNN indicated that he is not concerned.
REPRESENTATIVE GRUENBERG said, "Okay, well we will not worry
about that then."
Number 2060
CHAIR WEYHRAUCH asked if there were any questions on Sections 6,
7, and 8. There being none, he said the committee would focus
on Section 1.
[The hearing on HB 272 was temporarily suspended to address the
next bill.]
HB 158-ELIMINATING LONGEVITY BONUS PROGRAM
Number 2042
CHAIR WEYHRAUCH announced that the next order of business was
HOUSE BILL NO. 158, "An Act eliminating the longevity bonus
program and making related conforming changes; and providing for
an effective date." He stated his intent was to ask for a
motion to move the bill to the House Finance Standing Committee
for public comment there. He noted that there is a lot of
passion involved regarding HB 158.
Number 1970
CHIP WAGONER, Lobbyist for Pioneers of Alaska, stated that that
group has looked at the issue surrounding HB 158, is aware of
the fiscal realities of Alaska, and has joined with AARP to
propose a compromise position that is fair to seniors, "to give
them time to have a softer landing." He told the committee that
[the compromise] would provide a "4-year phase-out" - four more
years of [longevity bonus] payments, with a 20 percent reduction
each year.
MR. WAGONER opined that [the compromise] is a gutsy move by the
leadership of AARP and by the Pioneers of Alaska, because "they
will be taking over a $9 million hit in FY 04," followed by a
decrease [of funds] over the next four years. Conversely, he
stated, [the compromise] would protect the seniors that are in
the program currently who have planned their financial lives
around the [longevity bonus] payments, and it would give them
time to "readjust with some dignity."
MR. WAGONER conveyed the belief that [the compromise] is fairer
than "a cutting off" of the entire program in one year, which he
said is cruel. He also offered the belief that [the compromise]
is fairer than the current needs-based proposal being
circulated. That proposal, he explained, would eliminate 75
percent of the people in the program with one fell swoop.
MR. WAGONER said that [the Pioneers of Alaska] hope that the
legislature adopts [the compromise], that the governor accepts
it, and that "life goes on for our seniors."
Number 1879
REPRESENTATIVE LYNN asked if any thought has been given to going
to a needs based [program] after the four years.
MR. WAGONER prefaced that he cannot speak for the organization.
However, he stated that he has given that some thought. He
noted that one issue with trying to turn the current longevity
program into a needs based one is that it only takes into
account half of the senior population. He clarified that only
half of the senior population is in the program now. He
mentioned seniors, women, and children [who may be in need], and
"the working poor," and said, "Whatever program is developed by
the legislature should incorporate those people, too." He
reiterated that [the Pioneers of Alaska] think that the phase-
out is fair. He added that he hopes that the legislature will
"step up to the plate," with regard to drug prescription
programs," for example.
MR. WAGONER, in response to a follow-up question by
Representative Lynn, said that he has not had communication with
the administration on this particular proposal and has received
no assurances from [the governor] one way or the other.
Number 1699
MARIE DARLIN, Coordinator, Capital City Task Force, AARP,
testified that AARP has previously given testimony on HB 158 to
state that its first priority is that [the longevity bonus
program] remain as is. She emphasized that there are many
seniors who "really depend on this."
MS. DARLIN said that AARP was asked by some of the staff to
either find $47 million or come up with an option. Therefore,
AARP began looking at possible options. In working with the
Pioneers of Alaska, AARP jointly agreed that [the compromise]
seemed like something that would be workable if the current
longevity bonus could not be maintained as it currently is.
MS. DARLIN, addressing the issue of people going on adult public
assistance, stated that AARP feels that "the rates for
eligibility for that are very low." She said there are many
seniors who are "on the borderline," and would not qualify for
[public assistance], yet still need some [financial] help. She
continued as follows:
MS. DARLIN said that if the end result is either a continuation
of the current program or an acceptance of an optional type of
program over a period of a few years, then AARP can work on
making a "fairly level playing field for seniors," in order for
seniors to be able to remain in their homes and out of
"facilities," and remain as independent as she emphasized they
want to be. Ms. Darlin reiterated that AARP was asked to come
up with options, which it did. She stated that AARP felt lucky
to be able to work with the Pioneers of Alaska to come up with
something that both groups thought was at least feasible.
MS. DARLIN said that AARP knows that there are some legislators
who still want to "hang tough on 'a promise is a promise.'" She
said that AARP really feels the same, yet remarked, "In order to
be able to work with the legislature, and all, if you're asked
for options, that's what you try to do." She said that the
longevity bonus still needs to be considered, and she stated the
fact that seniors bring in a great deal into the economy of
Alaska, and are an important part of the state; therefore AARP
wants to see that seniors are taken care of as much as possible
and allowed to remain independent for as long as possible.
Number 1530
PAT LUBIE, Legislative Representative for AARP, told the
committee that he works in the Anchorage office on both state
and federal issues. He mirrored Ms. Darlin's testimony that
AARP would prefer that the longevity bonus [program] run its
course and eventually end as people die or leave the state. He
said that AARP doesn't think that that option will exist. He
mentioned the collaboration between AARP and the Pioneers of
Alaska. He referred to Mr. Wagoner's description of [the
compromise] as "a softer landing." He stated, "People have to
be able to prepare for this; you can't just take all this income
away from people and then expect them to survive."
Number 1481
MR. LUBIE said that a "means test" has a lot of logic to it and
will help "the people who need it the most." However, he
pointed out that the problem with the means test is that it only
looks at income. He related that a woman in Anchorage who's
[annual income] is between $17,000 and $18,000 "probably could
make it." He said that she would not be eligible for the means
test. He noted that she also has $750 a month in prescription
drug bills. He stated that one third of "older Alaskans" have
no coverage for prescription drugs and the means test doesn't
take any of that into consideration. He said that AARP will be
looking for some way - either through [U.S. Congress] or the
state legislature - to also deal with the enormous prescription
drug problem that older people face. He said, "The older you
are, the more prescriptions you take." He stated that Alaska
has the highest prescription drug increase rate in the country;
the Keyser Family Foundation reported that [Alaska's]
prescriptions increased 25 percent, with the average for the
country being 17 percent.
MR. LUBIE remarked that when the governor said that [the
longevity bonus program] doesn't work and would be eliminated,
older people began calling AARP every day, unable to sleep
because they are worried about the issue. He stressed that it
is important to come up with a plan, so that on July 1, the
older people don't get a note saying, "By the way, the program
ends completely. You better make some other plans." He added,
"It's a little tough when you're 85."
Number 1343
REPRESENTATIVE GRUENBERG stated that this is a very difficult
situation. He told all three testifiers that he applauds their
efforts to find a solution. He asked them if they had truly
obtained resolutions from their board of directors or
memberships to back up what they are doing [in proposing HB
158]. He said that he can foresee what will happen politically:
People will write saying, "The groups may have said we want the
compromise, but I can't live with this." He stated that,
politically, he has to follow the wishes of his constituents.
Number 1270
MR. WAGONER responded that the Pioneers of Alaska have a
governmental affairs committee which is charged with legislative
advocacy. Members throughout the state serve on that committee.
He said that he has a letter from the grand-president of the
Pioneers of Alaska, giving authority to that committee to
represent the membership. He told the committee that letters
will be arriving from each igloo - the Pioneers of Alaska's
subsidiary organizations. He also noted, "The committee
chairman representing the committee has authorized us to speak
on this compromise."
Number 1213
MR. LUBIE informed the committee that AARP has an executive
council that sets the legislative policy for the association in
each state. In addition, he said that [AARP] asked many of its
current and former leaders at the local level what they found
out about the issue, how they reacted [to the proposed cut], and
how they thought people in their local chapters would react.
MR. LUBIE admitted that there would undoubtedly be people who
would "take shots at" [AARP's] organizations for caving in. He
stated it is imperative that [AARP] be concerned about what will
happen on July 1, and he said that the organization wants to
throw [the compromise] on the table. He recognized that many
legislators would like to let the longevity bonus program run
its course and let it phase out, while others would like to do
some type of a means test. He added that, no matter what the
legislature might do, what needs to be done is to figure out
what is best for older people. For example, he said, "What are
they going to be able to handle, in terms of paying their
bills." He also talked about relieving some of the stress and
anxiety that this issue has raised with older people.
MR. LUBIE said that [AARP] knows that it has a responsibility to
educate its folks. He stated that the organization realizes
also that its people have paid taxes before and understand that
the government is not free and Alaska is in a fiscal crisis.
They are not naïve and know that they will have to pay their
fair share. Many of those people question whether the longevity
bonus program should have been established in the first place,
he said. He added that the program did not end up the way the
legislature had intended, and he mentioned a court case.
Number 1100
MR. LUBIE noted that the average age of the longevity bonus
recipient is 77, and [the recipient base] is composed primarily
of older women. He stated that the most significant financial
event in an older woman's life is when her husband dies. He
explained that an older woman usually spends much of her and her
husband's assets to pay for his health care at the end of his
life, and that's when women become poor.
MR. LUBIE stated that [AARP] will be working with the
administration, as well as with the legislature, to attempt to
figure out what needs to be done regarding adult public
assistance and housing, for example. He said that one woman he
spoke to who had received "the letter" from the governor
indicating which safety-net programs were available to her, told
him that she is number 1,170 on the eligibility list and would
be dead before being eligible for federal housing. He clarified
that her point was that she is indeed eligible, but cannot get
in.
Number 1015
REPRESENTATIVE GRUENBERG said that, at the request of a senior,
he had offered an amendment in the House Special Committee on
Ways and Means to provide an exemption for people over the age
of 65. He stated that, if Alaska adopts a sales tax, that would
be "an additional hit for the seniors." He stated that he does
not know that he will support [HB 158]. He said that he would
like to see if there's a way that [the legislature] can solve
this problem.
Number 0965
REPRESENTATIVE CRAWFORD stated that he does not like the
position that [the legislature] is in. He stated that his big
concern is that [the legislature] would adopt [the compromise]
only to have [the administration] veto it. He said that he
doesn't see a good solution. He said that he would much prefer
that if a phase-out is adopted, it be more like 10 percent a
year for 10 years, not 5 years. He stated, "I don't want to be
put in a position to vote for a cut in the longevity bonus, but
if that's what y'all want, I'll do it without objection. But I
don't like it."
Number 0873
REPRESENTATIVE LYNN stated, "There's already a phase-out program
in effect: It's called death."
Number 0856
REPRESENTATIVE SEATON asked [the testifiers] if they have
received indications from [the administration] that if [the
compromise] is adopted it will satisfy [the administration's]
requirement.
Number 0831
MS. DARLIN responded that a letter was sent to the governor, but
no reply was received. She mentioned further meetings on the
issue like the one present and said that "we" were asked to give
an option. She stated that "we've run the figures" to see what
could be done to save money over time. She noted that the cost
of the program already would go down $3 million every year under
the current phase-out, because of the death rate. She continued
as follows:
There's going to be a lot of them that are going to be
gone in five years. That's for sure. As everybody
says, "Look at the obituaries." And, as some of the
other legislators have said, "We're dying as fast as
we can." Well, what more can we do than to say [that]
we're trying to look at some options. We do want to
protect our people.
MS. DARLIN reiterated that [AARP'S] preference would be to keep
the program as it currently is, with the original schedule of
phase-out, but if that can't happen then other options need to
be looked at. She stated, "Most of our people are willing to do
that." In fact, she said, most of the testimony that was given
during hearings on this issue showed that "we're willing to go
back to paying an income tax." She added, "Nobody said anything
about sales tax." She said that those people on the lower end
of the scale would not be paying that much [income tax] anyway;
therefore an income tax wouldn't hit people as [hard] as some of
the other options. She noted that the governor has "line-item
veto" [power].
Number 0621
REPRESENTATIVE CRAWFORD said, "It seems to me that you're
negotiating against yourself .... Until you hear from the third
floor, I don't see how you can negotiate."
MS. DARLIN responded that that may be true, and she said she
supposes the only place that [AARP] can negotiate is with [the
legislature].
REPRESENTATIVE CRAWFORD said, "We don't have the power."
MS. DARLIN replied, "I don't know where that leads us."
Number 0565
MR. WAGONER, in regard to a previous comment by Representative
Crawford, stated that the governor has already said in his
budget that he wants to eliminate the [longevity bonus] program
in its entirety. He opined that the governor has already taken
a political hit and does not have anything to lose by staying
the course. He said that he thinks it would be harder for the
governor to redline the compromise proposal of the seniors than
it would to redline the whole program, because it is a
compromise that is both fair and takes into the account the
fiscal realities of the state. He said that [the compromise]
shows responsibility by the seniors to step up to the plate and
respond to the governor's public declaration in the newspapers
asking [seniors] for a proposal. He read [that declaration]
from an unidentified news article as follows:
In the tradition of Alaska's pioneers, I am confident
that pre-1996 seniors who are receiving the longevity
bonus would want to lead the effort to right Alaska's
fiscal problems. They would be among the first to
agree to share the load in down times.
MR. WAGONER said, "Well, we took him up on his challenge." He
stated that he doesn't know any other organization other than
AARP and the Pioneers of Alaska that has showed some fiscal
responsibility by being willing to take the hit in order to help
the fiscal situation. He posited that it would be more
difficult for the governor to veto [the compromise] than it
would be for him to eliminate the entire program.
MR. WAGONER said he knows that many legislators want to support
"the entire program." He said, "If you've got the votes, go
ahead and do it. But if you don't have the votes, then we
believe our compromise puts us in the strongest political
position to go forward and to allow our seniors to have a soft
landing."
Number 0368
REPRESENTATIVE SEATON asked if the $9 million decrease per year
includes the $3 million reduction from death rate, or is just
"20 percent off of the number of checks that are written."
MR. WAGONER answered that he believes that it takes into account
"the death also," based upon looking at the average number of
monthly payments. He said that, if the program stays as is, the
projected FY 04 cost is $44,776,000. Under [the compromise] it
would be $35,821,000. He continued as follows:
In the succeeding years where you have the big savings, for FY
05 it would go from $41.5 million down to $24.9 million. For FY
06 it would go from $38.3 million down to $15.3 million. For FY
07 it would go from $35.2 million down to $7 million. In other
words, if the legislature and the third floor can get over the
hump of FY 04, then from a physical point of view from the
state, it's much, much easier.
Number 0235
CHAIR WEYHRAUCH asked Mr. Wagoner to provide those statistics
[in writing] to the committee.
[The hearing on HB 158 was temporarily suspended in order to
address the next bill.]
The meeting was recessed at 9:43 a.m. to a call of the chair.
Number 0112
CHAIR WEYHRAUCH called the meeting back to order at 1:36 p.m.
Present at the call back to order were Representatives Seaton,
Dahlstrom, Lynn, Gruenberg, and Weyhrauch. Representatives Holm
and Crawford rejoined the meeting as it was in progress.
TAPE 03-69, SIDE A
Number 0001
The committee took an at-ease from 1:37 p.m. to 1:43 p.m.
HB 272-MOTOR VEHICLE DEALERS
Number 0045
CHAIR WEYHRAUCH announced that the committee would return to
HOUSE BILL NO. 272, "An Act relating to motor vehicle dealers."
Before the committee was the proposed committee substitute (CS),
Version 22-LS0975\H, Bannister, 5/14/03.
Number 0160
REPRESENTATIVE CRAWFORD moved to adopt [a new] Amendment 1,
which read as follows [original punctuation provided]:
Page 2, Line 11:
Insert "The vehicle is a current model used vehicle
that has been leased by a consumer and has been
returned to the leasing dealer; or"
Renumber accordingly
REPRESENTATIVE CRAWFORD stated that he believes fleet vehicles
need to be included, and Amendment 1 would do that.
Number 0189
REPRESENTATIVE GRUENBERG referred to a two-page amendment
labeled [23-LS0975\H.1, Bannister, 5/15/03], which he said he
had referred to previously as [Amendment] 1, which read as
follows:
Page 2, lines 2 - 3:
Delete "received as a trade-in"
Insert "manufactured for sale in the United
States and acquired by the dealer"
Page 2, line 6:
Delete ";"
Insert "; or"
Page 2, lines 7 - 13:
Delete all material and insert:
"(3) the vehicle is a current model used vehicle
not manufactured for sale in the United States, the
dealer acquired the vehicle in the normal course of
business, and the dealer complies with AS 45.25.470."
Page 5, following line 22:
Insert a new bill section to read:
"* Sec. 5. AS 45.25.470 is amended to read:
Sec. 45.25.470. Sales of vehicles manufactured
for sale in a foreign country. Before the sale of [,]
a motor vehicle not manufactured for sale in the
United States, a motor vehicle dealer shall disclose
to the consumer in writing, in addition to any other
disclosures required for the sale of a used [WHETHER A
MOTOR] vehicle, [WAS ORIGINALLY MANUFACTURED FOR SALE
IN CANADA OR ANOTHER FOREIGN COUNTRY]
(1) that the vehicle was originally
manufactured for sale in Canada or another specified
foreign country;
(2) if applicable, that the vehicle was
originally sold new in the specified foreign country
identified under (1) of this section and imported into
the United States;
(3) that the vehicle's odometer was
converted from kilometers to miles, and shall provide
the consumer with a legal vehicle title, an odometer
verification certificate, or another document that
verifies the mileage reading after the conversion;
(4) if applicable, that the vehicle does
not have a manufacturer's warranty; and
(5) any other information required by
regulations adopted by the attorney general."
Renumber the following bill sections accordingly.
REPRESENTATIVE GRUENBERG noted that if the committee
subsequently adopts that amendment [Version H.1], then
Representative Crawford's Amendment 1 would become moot;
however, he said, "But I have no objection to this being in
there with that understanding."
Number 0259
CHAIR WEYHRAUCH asked if there was any objection to
[Representative Crawford's] Amendment 1. There being no
objection, it was so ordered.
Number 0425
The committee took an at-ease from 1:47 p.m. to 1:48 p.m.
Number 0486
MR. SNIFFEN, in response to a comment by Chair Weyhrauch,
confirmed that he did draft the language of Amendment 1, which
was just adopted.
Number 0600
REPRESENTATIVE GRUENBERG offered Amendment 2 [labeled 23-
LS0975\H.3, Bannister, 5/15/03, which was originally labeled
Amendment 3], which read as follows:
Page 6, following line 1:
Insert a new bill section to read:
"* Sec. 6. AS 45.25 is amended by adding a new
section to read:
Sec. 45.25.530. Disclosure regarding receipt of
commissions. If a motor vehicle dealer's service
operations employees receive a commission for the
amount of work they perform, the motor vehicle dealer
shall post a conspicuous sign that is visible to
service customers that the dealer's service operations
employees work on commission."
Renumber the following bill sections accordingly.
REPRESENTATIVE GRUENBERG recalled testimony revealing that it is
often a practice that people in service centers work on
commission; therefore, the more repairs sold, the larger the
commission. He added, "That's happened to me." He noted that
Amendment 3 would ensure full disclosure.
Number 0655
MR. SNIFFEN, in response to a request by Chair Weyhrauch, said
that he understands the intent behind [Amendment 2] and does not
see any harm in it.
CHAIR WEYHRAUCH said that [Amendment 2] has some appeal to him.
He explained that his mother just bought tires for her car and,
while on a trip, was told at a station that she needed a whole
new set, and she bought them. He said he thinks people are
vulnerable to this.
Number 0698
REPRESENTATIVE CRAWFORD noted that the only place where this
type of thing has happened to him was at Sears, where he was
solicited to buy "numerous oil changes, and that sort of thing."
He stated that he is not so sure that Sears would be included
under "motor vehicle dealer".
Number 0760
CHAIR WEYHRAUCH said that [the amendment] does relate to motor
vehicles, and he said that he is "trying to keep within the
scope of this."
REPRESENTATIVE CRAWFORD said that he doesn't know if the
committee is directing the amendment to what the actual problem
is. He commented that he doesn't have much experience with new
car dealers.
REPRESENTATIVE GRUENBERG responded that he offered the amendment
in response to what happened to him. He added that he is not
saying that the people were at all dishonest, but that he "just
didn't know."
Number 0815
CHAIR WEYHRAUCH asked if there was any objection to Amendment 2.
Number 0830
MR. SNIFFEN referred to AS 45.45.150, which he said is titled
"notice to customer" and requires an automobile repair facility
to notify a customer that he/she is entitled to a return of the
replaced parts from the repair of an automobile. It also
requires the repair shop to post in a conspicuous location a
sign that informs the consumer of its requirement to provide
those parts when requested. He said he was wondering if "this
type of language would fit better in that statute, as opposed to
this statute."
Number 0885
REPRESENTATIVE GRUENBERG replied that he would ask that the
staff work with Legislative Legal and Research Services counsel
to see "whether it would go better here or in 45.45.150." He
added that he doesn't care where it goes.
Number 0916
CHAIR WEYHRAUCH said, "We will make that note on Amendment 2,
and, seeing no objection, Amendment 2 is adopted."
Number 0925
REPRESENTATIVE GRUENBERG offered an amendment labeled [23-
LS0975\H.5], which he called Amendment 3, which read as follows:
Page 1, line 8, through page 2, line 6:
Delete all material and insert:
"(b) A person who does business as a dealer in
the state may not offer to sell or sell a motor
vehicle as a new or current model motor vehicle
[HAVING A MANUFACTURER'S WARRANTY] unless
(1) if the vehicle is offered for sale or
sold as having a manufacturer's warranty, the dealer
has a current sales and service agreement with the
manufacturer and the agreement requires the dealer,
upon demand of the motor vehicle buyer, to perform or
arrange for, within a reasonable distance of the
dealer's place of business in the state, the repair
and replacement work required of the manufacturer
under the warranty; [OR]
(2) the vehicle is a current model used vehicle
received as a trade-in in the normal course [DEALER
OFFERS TO GIVE THE BUYER A REBATE TO COVER THE REPAIR
AND REPLACEMENT WORK THAT THE DEALER CANNOT PERFORM OR
ARRANGE FOR WITHIN A REASONABLE DISTANCE OF THE
DEALER'S PLACE] of business;"
REPRESENTATIVE GRUENBERG asked Mr. Sniffen if he remembered
previously discussing page 1, line 8 through page 2, line 1, [in
Version H], on the record with him.
MR. SNIFFEN answered yes.
REPRESENTATIVE GRUENBERG said, "What this will do is deal with
subsection (b)."
CHAIR WEYHRAUCH noted that he had interrupted Mr. Sniffen's
preliminary comments earlier in the morning. Because the bill
was drafted as a result of concerns that Mr. Sniffen voiced
originally, he said he wants to make certain that the committee
has the full benefit of hearing any additional thoughts and
views of Mr. Sniffen's.
[No action was taken on the proposed Amendment 3 at this time.]
Number 1124
MR. SNIFFEN responded that he did listen to a lot of testimony
last night and would appreciate the opportunity to follow up on
some of the comments from "our department's perspective." He
noted that his department is charged with protecting consumers
under [Alaska's] consumer protection Act, and he stated his
concern with some of representations that "might be taken out of
context by the committee here." He continued as follows:
One of those deals with the idea that a registered
importer has some kind of consumer protection
responsibility because they are bonded and licensed
and other things, and, as I'd mentioned earlier today,
that process is a very simple one - it's not very
difficult to become a registered importer.
But, more importantly, the registered importer has no
interaction with the consumer. Consumers purchase
these vehicles from dealers. Dealers get these cars
from importers or from auctions, and then the auctions
deal with the importers.
We had a case here, just last year, from a consumer
who purchased a Canadian vehicle - it was 1996 Chevy
product - and it had an onboard diagnostic chip that
could not be recalibrated to conform [to] U.S.
emissions standards. He took that vehicle back to the
dealer, and the dealer essentially wanted to wash his
hands of the problem and said, "Well, you know, it was
imported that way."
When the consumer tried to get some documentation from
the dealer who actually tried to find who the importer
was and find out if there was some recourse against
the importer, it was just impossible to do, because
the relationship that the consumer sees is he's buying
from the dealer, he's not buying from an importer.
The consumer doesn't know who this importer is; he's
not aware of this bond. I don't know that any
consumer would know how to bring an action against an
importer's bond. It would take some savvy.
So, the notion that there is some consumer protection
here because of the obligations on an importer to
comply with federal standards and might go to jail for
20 years if they tamper with odometers and those
things, those protections don't really filter down to
the consumer, and this bill, I think would help
prevent some of those things in its present form.
And another issue I wanted to bring up dealt with the
whole warranty issue that several of the Lyberger
employees testified about, and, you know, if every
used car dealer in Alaska was a Lyberger, perhaps we
wouldn't have as many problems as we do. And the
testimony we've heard from used-car dealers are
reputable used-car dealers - ... the Budgets and the
Lybergers and the Affordables - but there are 347
other used-car dealers in the state, and all of these
other used-car dealers may not be as forthcoming with
these types of disclosures and information as Mr.
Lyberger's folks are. And we're going to create,
perhaps, an opportunity for consumer fraud if ... we
allow these kinds of transactions to proceed if we
don't monitor them very carefully.
And, I think it was brought up earlier: these dealers
aren't required to offer warranties on these cars.
Lyberger does and that's great. I think Mr. Hass (ph)
testified earlier, and he didn't suggest that he
offered these kinds of warranties on vehicles. So,
there's no guarantee that these warranties are going
to go with these vehicles, so discussing when they
apply, whether there are service contracts, whether
there are warranties - I think that's important stuff,
but for a majority of car dealers that may become
irrelevant. And if we're going to sanction these
transactions now that are currently prohibited, I
would be cautious that we're opening up a new ground
for perhaps some used-car dealers who don't sell these
vehicles to now start selling them. And we might run
into some of these problems in the future.
I would just like the committee to consider those
comments as you go through some of the original intent
of this bill, and why we need to do something with the
current law, but at the same time, provide some
consumer protection. And I'm just leery that you
might be thinking that, "Well, ... importers are
protecting consumers," because I have some serious
reservations whether they are. I also have
reservations about whether free warranties with
vehicles from used car dealers are going to help
protect consumers, as well.
Number 1429
REPRESENTATIVE SEATON referred to [paragraph] (2) on page 2,
[beginning on] line 2, which read as follows:
(2) the vehicle is a current model used
vehicle received as a trade-in in the normal course
[DEALER OFFERS TO GIVE THE BUYER A REBATE TO COVER THE
REPAIR AND REPLACEMENT WORK THAT THE DEALER CANNOT
PERFORM OR ARRANGE FOR WITHIN A REASONABLE DISTANCE OF
THE DEALER'S PLACE] of business;
REPRESENTATIVE SEATON asked, "Isn't that essentially ... what is
being satisfied with either the Heritage warranty, or offering
to do that in-house with his own ... repair facilities or with a
short distance?"
MR. SNIFFEN replied as follows:
I think it does to some extent, but I don't know that
that was the original intent of this section. The way
statute currently reads is you can't sell a new or
current-model car having a manufacturer's warranty.
The Heritage warranty is not a manufacturer's
warranty, it's really an after-market service contract
or warranty, if you will - technically it is a service
contract.
But I think the current statute has this language in
here to prevent, perhaps, folks in the Bush who don't
have access to repair facilities, from selling a new
vehicle to a consumer with a manufacturer's warranty,
but then not have the ability to actually perform the
warranty service.
So, under those circumstances, if you had to fly from
Bethel to Fairbanks, or from some remote area to a
repair facility to get the work done, then you could
only sell the warranty if you agreed to reimburse the
consumer for those expenses. And I think that was the
situation that this language addressed.
I don't know that it necessarily was meant to allow
used car dealers to sell current-model Canadian
vehicles so long as they had a replacement service
contract of some kind to go along with them, because
those aren't manufacturer's warranties.
MR. SNIFFEN, in response to a question by Representative
Gruenberg, confirmed that he had not yet received [Amendment 3].
REPRESENTATIVE GRUENBERG offered Amendment 4 [originally labeled
Amendment 3], which read as follows [original punctuation
provided]:
Page 5, following line 22:
Insert a new bill section to read:
"*Sec.5. AS 45.25.465 is amended by adding a new
subsection to read:
(c) When a motor vehicle dealer sells a used
motor vehicle, the motor vehicle dealer shall disclose
to the buyer in writing in a manner that is clear and
conspicuous
(1) that the warranty provisions of AS
45.45.300-45.45.360 do not apply to the purchase of
the motor vehicle; and
(2) that, if applicable, the vehicle is
not subject to a manufacturer's warranty."
Renumber the following bill sections accordingly
REPRESENTATIVE GRUENBERG said that that would include a current-
model motor vehicle also.
Number 1729
REPRESENTATIVE LYNN objected for the purpose of discussion.
Number 1750
MR. SNIFFEN, in response to a question by Representative
Gruenberg, said that he doesn't believe that the words "or
current-model motor vehicle" have to be added. He stated, "I'm
not sure that [paragraph] (2) would have any relevance to a lot
of motor vehicles covered by this language. The vehicles
(indisc.) to a manufacturer's warranty is almost assumed and
obvious in so many used vehicle transactions that making it a
requirement might ... just add another unnecessary layer of
paperwork to an otherwise ... normal used-car transaction." He
proffered that it really makes the most sense to require that
disclosure when you're selling a vehicle "that a consumer might
confuse the new vehicle, which would be these current-model year
vehicles."
Number 1790
REPRESENTATIVE GRUENBERG suggested the following amendment to
Amendment 4 as follows:
After "used motor vehicle"
Before ","
Add: "or a current-model motor vehicle"
MR. SNIFFEN confirmed that that would be the right term to use.
Number 1830
REPRESENTATIVE SEATON stated his understanding that "current-
model motor vehicle" would include a new vehicle.
REPRESENTATIVE GRUENBERG responded no. He explained, "New is
different."
REPRESENTATIVE SEATON said, "No, a current model can be neither
[either] new or used, but it's a current model."
Number 1855
MR. SNIFFEN responded as follows:
That was exactly my first reaction, is that if we just
said "current-model motor vehicle", that would include
the universe of all new cars. And it would have to
read something to the effect of "current-model used
motor vehicle".
REPRESENTATIVE GRUENBERG acquiesced to the suggestion of
inserting the words "current-model used motor vehicle" instead.
He asked Mr. Sniffen if he could support Amendment 4, [as
amended].
MR. SNIFFEN said yes. He added, "The more information we can
give a consumer about these transactions, ... the better."
Number 1920
REPRESENTATIVE GRUENBERG said that his staff had added the words
"clear and conspicuous" to Amendment 4 after a discussion he had
had with Representative Lynn. He asked Representative Lynn if
that addition was satisfactory.
Number 1933
REPRESENTATIVE LYNN suggested a "bumper-sticker-sized sign" on
the window that says, "Canadian vehicle, current, no factory
warranty." He added that it would also say in small print, "see
disclosure forms for further information."
Number 1988
REPRESENTATIVE GRUENBERG said that he would accept that as a
"conceptual friendly amendment" [to Amendment 4]. He suggested
that it could read:
After "clear and conspicuous"
Insert "and posted in the window of the car"
REPRESENTATIVE LYNN repeated his idea for the information to
read "Canadian vehicle" and "no factory warranty". He rephrased
his previously stated suggestion to recommend that [the sticker]
also read in small print, "See detailed disclosure."
REPRESENTATIVE GRUENBERG said he thinks that the amendment
should also include "that it's not subject to the lemon law."
REPRESENTATIVE GRUENBERG suggested another amendment to
Amendment 4 would be to delete the word "and" [preceding
paragraph (2)], and [after the corrected word "warranty", to
delete "." and] insert ";" and "(3) and stating the country of
manufacture if not the United States."
REPRESENTATIVE GRUENBERG, in response to a question by
Representative Lynn, said that he would like the language to be
broad enough [to encompass other countries].
Number 2080
MR. SNIFFEN, in response to a question by Chair Weyhrauch, noted
that there is already a statute - AS 45.25.470 - that requires
the disclosure in writing to a consumer whether a vehicle was
originally manufactured for sale in Canada or another foreign
country; therefore he said he doesn't know that that language
needs to be included in here.
Number 2100
REPRESENTATIVE LYNN reiterated his idea to require a sticker on
the car. He noted that a lot of vehicles manufactured overseas
arrive into the U.S. in a legitimate manner. He clarified that
he wants to separate those cars that come in from the "grey-
market" from those that come in through a new-car dealer in the
normal course of business. He suggested an alternative would be
to "withdraw the friendly amendment and just vote against the
whole thing."
REPRESENTATIVE GRUENBERG read AS 45.25.470 as follows:
Sales of vehicles manufactured for sale in a foreign
country. Before sale, a motor vehicle dealer shall
disclose in writing whether a motor vehicle was
originally manufactured for sale in Canada or another
foreign country.
REPRESENTATIVE GRUENBERG said, "So, my suggestion would simply
be to have as a category, 'subject to AS 45.25.470,' and that
would do exactly what you want." He asked Mr. Sniffen if that
was true.
MR. SNIFFEN said he believed so.
Number 2198
REPRESENTATIVE LYNN withdrew his friendly amendment.
Number 2225
REPRESENTATIVE GRUENBERG clarified that [a new paragraph (3)]
would read as follows:
(3) that, if applicable, the vehicle is subject to AS
45.25.470
REPRESENTATIVE GRUENBERG said he would make that conceptual,
because "we don't want to just cite the statute." He said that
it would have to say clearly that it's made in another country,
subject to sale in the United States.
Number 2770
CHAIR WEYHRAUCH asked if there was any objection to the
amendment to Amendment 4 that would add "or a current-model used
motor vehicle".
Number 2299
REPRESENTATIVE CRAWFORD said, "It's getting awfully confusing to
me, and I don't know if it's really needed, but ..."
Number 2315
REPRESENTATIVE LYNN stated that he would vote against [Amendment
4] no matter what is added to it.
CHAIR WEYHRAUCH continued:
And then ... adding, "(3) that, if applicable, the
vehicle is subject to AS 45.25.470." Okay, as a
friendly amendment we'll just add those.
CHAIR WEYHRAUCH, in response to a question by Representative
Gruenberg, said that he thinks the committee has the idea [of
what the amendments are about]. He asked Representative
Gruenberg if there was anything else [to discuss] regarding
Amendment 4.
REPRESENTATIVE GRUENBERG answered no.
CHAIR WEYHRAUCH said, "Okay, there's a motion on Amendment 4 [as
amended and] an objection. Is there any further discussion?
Secretary call the roll."
[The friendly amendments to Amendment 4 were treated as adopted;
therefore, Amendment 4 would read as follows:]
Page 5, following line 22:
Insert a new bill section to read:
"*Sec.5. AS 45.25.465 is amended by adding a new
subsection to read:
(c) When a motor vehicle dealer sells a used
motor vehicle or a current-model used motor vehicle,
the motor vehicle dealer shall disclose to the buyer
in writing in a manner that is clear and conspicuous
(1) that the warranty provisions of AS
45.45.300-45.45.360 do not apply to the purchase of
the motor vehicle;
(2) that, if applicable, the vehicle is
not subject to a manufacturer's warranty; and
(3) that, if applicable, the vehicle is
subject to AS 45.25.470."
Renumber the following bill sections accordingly
A roll call vote was taken. Representatives Gruenberg, Holm,
Seaton, Crawford, and Weyhrauch voted in favor of Amendment 4,
as amended. Representative Lynn voted against it. Therefore,
Amendment 4, as amended, was adopted by a vote of 5-1.
Number 2400
REPRESENTATIVE GRUENBERG offered Amendment 5 [text provided
previously].
REPRESENTATIVE LYNN objected for the purposes of discussion.
Number 2420
MR. SNIFFEN, in response to a question by Representative
Gruenberg, said, "We have no opposition to that amendment."
REPRESENTATIVE LYNN withdrew his objection to Amendment 5.
Number 2436
CHAIR WEYHRAUCH asked if there was further objection. There
being none, Amendment 5 was adopted.
Number 2485
REPRESENTATIVE GRUENBERG referred to Amendment 3. He addressed
Mr. Sniffen as follows:
It was my thought that the law currently allows
somebody who is selling a current-model motor vehicle
to provide a rebate to cover the cost of repair, or to
have a current sales and service agreement. I
actually wanted to just retain the current law.
REPRESENTATIVE GRUENBERG referred to [paragraph (2)] of
Amendment 3, which read as follows:
(2) the vehicle is a current model used vehicle
received as a trade-in in the normal course [DEALER
OFFERS TO GIVE THE BUYER A REBATE TO COVER THE REPAIR
AND REPLACEMENT WORK THAT THE DEALER CANNOT PERFORM OR
ARRANGE FOR WITHIN A REASONABLE DISTANCE OF THE
DEALER'S PLACE] of business;"
REPRESENTATIVE GRUENBERG said, "We had continued to delete
that," but he said that he thinks that language should probably
be left in. He asked Mr. Sniffen if he agreed.
Number 2571
MR. SNIFFEN said it looks as though that language is repeated in
[paragraph] (1) of [Amendment 3]; therefore he said he's not
sure "what the purpose of keeping that language in would be."
Number 2582
REPRESENTATIVE GRUENBERG said that that is what he had thought
initially; however, he noted that the rebate is not mentioned
[in paragraph (1)], and he thinks that's important to include.
CHAIR WEYHRAUCH, in response to a request for clarification from
Representative Crawford, said that the committee is discussing
Amendment 3 "that was earlier discussed and then withdrawn,"
which is labeled, 23-LS0975\H.5, [Bannister, 5/16/03].
REPRESENTATIVE GRUENBERG reiterated that [paragraph (2)] is not
exactly the same as [paragraph (1)], because of the reference to
the dealer's ability to give the buyer a rebate.
Number 2666
REPRESENTATIVE SEATON pointed out another difference [between
the two paragraphs] is that paragraph (1) talks about a new car
having a manufacturer's warranty, while paragraph (2) addresses
used vehicles. He stated that he agrees with Representative
Gruenberg that the deleted language should be left in for
consumer protection.
Number 2695
MR. SNIFFEN responded as follows:
I don't know that I have a problem with the concept or
the intent here, but when we're trying to amend
current Version H to include these warranty issues
things get a little complicated for me as well, and I
have to share Representative Crawford's confusion a
little bit.
I think the intent of the initial amendment was to
clean up [AS] 08.66.015, so it was very simple and
easy to understand. If you're selling a new car, this
is what you have to do. If you're selling a current-
model car that's not new, this is what you have to do
to sell that. And we took out these warranty issues,
because they simply weren't a problem up here in
Alaska. And I think working with that language over
... at least the four years I've been here, and
speaking with the new car dealers, I think the
manufacturers' service agreements with the dealers
have sort of removed some of the concerns that that
warranty language was intended to protect against.
If we want to address these warranty issues - selling
cars, whether or used with a warranty, and what you
have to do - it might be better to put that into a
separate provision in and of itself, so we're not
combining these concepts. And I think that might keep
it cleaner and easier to understand.
Number 2755
REPRESENTATIVE GRUENBERG suggested he could offer [Amendment 3]
as a conceptual amendment and ask the drafter to work with staff
and Mr. Sniffen to set the language out in a separate section,
if necessary.
MR. SNIFFEN responded that he thinks that would be a better
approach, and he stated that he would be happy to work with the
drafters on either coming up with a separate section or "a
separate provision within this section" that just addresses
these warranty concerns.
Number 2833
REPRESENTATIVE CRAWFORD asked if there is a problem with the way
our Version H is written. He said, "I thought we had worked
this language out that was pretty much acceptable."
CHAIR WEYHRAUCH said, "And I object too, for that reason. I
think I want to keep that as simple as possible on this one."
He asked if there were any further comments from the committee.
Number 2860
MR. SNIFFEN, in response to a question by Representative
Gruenberg, said that Amendment 3 raises some confusion for
various reasons that he said he did not know if the committee
had time to get into. He concluded, "I don't know that it helps
our cause any."
Number 2875
REPRESENTATIVE GRUENBERG withdrew [his motion to adopt Amendment
3].
Number 2885
REPRESENTATIVE GRUENBERG moved to adopt Amendment 6, [labeled
23-LS0975\H.1, Bannister, 5/15/03].
Number 2889
REPRESENTATIVE LYNN objected for the purpose of discussion.
Number 2900
REPRESENTATIVE GRUENBERG reviewed the highlights of Amendment 6
[text provided previously].
TAPE 03-69, SIDE B
Number 2999
MR. SNIFFEN mentioned the "sale approach." He added, "And I
think I've testified previously on our concerns with it, but
leave it to the committee to decide how they would like to
approach it." Mr. Sniffen continued as follows:
[Amendment 6] certainly would be something that would
help the consumer. I don't know that it would be as
effective as the language currently contained in
Version H, simply because we're dealing with so many
used-car dealers and their ability to make these
disclosures in an informed way is something that our
office doesn't have a lot of faith in, to be frank.
And I remember testimony by one of the members of this
committee that when they visited Lyberger's lot this
year, they weren't even told that these vehicles were
manufacturers' (indisc.). So, having this law and
making sure that all of the 350 some-odd used- car
dealers in Alaska who sell these vehicles comply with
it is a different story, and since we are dealing with
a fairly large purchase - if not the single largest
purchase a consumer might make in their lifetime, then
perhaps the second largest, followed closely by their
home - it's risky. ... But it does accomplish some of
the goals that we're trying to achieve.
Number 2930
REPRESENTATIVE CRAWFORD said he thinks he's addressed this issue
several times. He noted that there are "homegrown franchised
dealers" [in Alaska], and [the legislature] has seen fit in the
law to say that there can't be other new-car dealers within 14
miles of [another same dealership]. He continued as follows:
These cars that are coming in - they are used, under
the law, but pretty much as a technicality, as far as
I see. And they're new to the consumer. They may be
used to the law, but they're new to the consumer, and
I believe that undercuts and puts our franchised
dealers in a non-competitive situation, and I can't
vote for it.
Number 2900
REPRESENTATIVE LYNN said, "Ditto."
Number 2910
REPRESENTATIVE HOLM apologized for his absence during the
earlier portion of the meeting. He referred to [Amendment 6]
and asked for a definition of "normal course of business".
Number 2869
MR. SNIFFEN said that he doesn't believe that that term is
defined anywhere in statute. He said that it's an assumed
definition, such as "reasonable person," which he said really
isn't defined anywhere, other than in some jury instructions.
Number 2853
REPRESENTATIVE GRUENBERG said there has been considerable
testimony that there are various ways that "people do obtain
these vehicles." Some of those ways, he noted, are purchasing a
used vehicle as a trade-in, directly from a consumer, or "from a
rebel fleet or a repossession." However, he stated his
understanding that the primary way that dealers obtain these
vehicles is at dealer auctions. He asked Mr. Sniffen if he
agreed with that assessment.
MR. SNIFFEN said that that is the testimony that he's heard, as
well.
Number 2811
A roll call vote was taken. Representatives Holm, Seaton, and
Gruenberg voted in favor of Amendment 6. Representatives
Dahlstrom, Lynn, Crawford, and Weyhrauch voted against it.
Therefore, Amendment 6 failed by a vote of 3-4.
Number 2759
REPRESENTATIVE DAHLSTROM moved to report CSHB 272(STA), Version
23-LS0975\H, [Bannister, 5/14/03], as amended, out of committee
with individual recommendations and the accompanying zero fiscal
note. There being no objection, CSHB 272(STA) was reported out
of the House State Affairs Standing Committee.
HB 158-ELIMINATING LONGEVITY BONUS PROGRAM
Number 2718
CHAIR WEYHRAUCH announced that the committee would return to
HOUSE BILL NO. 158, "An Act eliminating the longevity bonus
program and making related conforming changes; and providing for
an effective date."
CHAIR WEYHRAUCH summarized the previous testimony heard earlier
the same day for the benefit of Representative Holm, who had
recently arrived.
Number 2669
REPRESENTATIVE SEATON moved [to report HB 158 out of committee
with individual recommendations and the accompanying fiscal
note].
CHAIR WEYHRAUCH noted an objection from Representative Lynn.
Number 2652
REPRESENTATIVE CRAWFORD said that [the decision before the
committee] is a tough one on him and everybody involved. He
said that he knows it is not a choice that the seniors want to
[make]. He stated his understanding that "something is better
than nothing," but told [the testifiers], "I don't believe we're
negotiating with the governor here." He stated that he is
opposed to a 5-year phase-out and believes that "the deal has
already been struck." He said that he doesn't know how he could
vote to phase [the longevity bonus program] out in any manner.
He concluded, "I don't like it. And I don't know how to say it
any better than that."
Number 2598
REPRESENTATIVE DAHLSTROM stated for the record that although she
thinks that this is a tough situation, she cannot vote to agree
to a 4- to 5-year phase-out. She said that she doesn't believe
that "that would allow us to fix our problem in a reasonable
amount of time." She said she believes that no matter what
changes are worked out among groups, the governor will do as he
said and remove the program. Representative Dahlstrom said, "If
there were to be a phase-out, and it was a six-month to a year
phase-out, that might be a different story. But I can't agree
to a 4- to 5-year [phase-out]."
Number 2552
REPRESENTATIVE LYNN stated that he thinks "we" have a de facto
contract with the seniors of Alaska. He reiterated his
disclosure that he is not a recipient of the longevity bonus.
He said that he knows the governor is attempting to cut
spending. He said that that is a laudable goal, but he doesn't
think it "should be cut on the backs of the seniors." He said
that he doesn't have a clue what the governor will do when [HB
158] or any other bill arrives on his desk.
REPRESENTATIVE LYNN reiterated that the longevity bonus
[program] is, in fact, being phased out by death. He said that
he totally agrees that phasing out the program in a 4- or 5-year
plan is better than [ending] it all at once. He added,
"Nonetheless, you dress a pig in a tuxedo and it's still a pig.
And we shouldn't get rid of it."
Number 2503
CHAIR WEYHRAUCH, in response to a question by Representative
Seaton, confirmed that there is no amendment to the bill. He
explained that [the intent] is to move [HB 158] to the next
committee of referral for any amendments.
2469
REPRESENTATIVE SEATON said he wanted to clarify that the
committee will be voting on the original bill [requested by] the
governor.
Number 2410
REPRESENTATIVE DAHLSTROM renewed the motion to report HB 158 out
of committee.
CHAIR WEYHRAUCH reminded the committee that an objection had
been previously stated.
A roll call vote was taken. Representatives Seaton, Dahlstrom,
Holm, and Weyhrauch voted in favor of HB 158. Representatives
Lynn, Crawford, and Gruenberg voted against it. Therefore, HB
158 was reported out of the House State Affairs Standing
Committee by a vote of 4-3.
ADJOURNMENT
Number 2395
The meeting was recessed at 2:43 p.m. to a call of the chair.
[The meeting did not reconvene.]
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