Legislature(1995 - 1996)
04/21/1995 01:15 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE April 21, 1995 1:15 p.m. MEMBERS PRESENT Representative Gary Davis, Chairman Representative Beverly Masek, Vice Chair Representative Jeannette James Representative Bill Williams Representative Jerry Sanders Representative Eileen MacLean Representative Tom Brice MEMBERS ABSENT None COMMITTEE CALENDAR * HJR 42: Relating to regulation of water carriers serving Alaska. PASSED OUT OF COMMITTEE HB 161: "An Act relating to civil liability for guest passengers on an aircraft or watercraft: and providing for an effective date." PASSED OUT OF COMMITTEE HB 210: "An Act relating to issuance of motor vehicle registrations and titles, and to licenses and permits to operate a motor vehicle." PASSED OUT OF COMMITTEE (* First public hearing) WITNESS REGISTER GORDON EVANS, Lobbyist Totem Ocean Trailer Express 318 4th Street Juneau, Alaska 99801 Telephone: (907) 586-3210 POSITION STATEMENT: Supports HJR 42 FRANK DILLION, Executive Director Alaska Trucking Association 3443 Minnesota Drive Anchorage, Alaska 99503 Telephone: (907) 276-1149 POSITION STATEMENT: Supports HJR 42 PATTY SWENSON, Legislative Assistant Representative Con Bunde Alaska State Legislature State Capitol, Room 108 Juneau, Alaska 99801-1182 Telephone: (907) 465-4843 POSITION STATEMENT: Provided sponsor statement for HB 161 RAY BROWN, Attorney Alaska's Academy of Trial Lawyers 510 L Street, Suite 603 Anchorage, Alaska 99501 Telephone: (907) 277-5400 POSITION STATEMENT: Opposed CSHB 161 REPRESENTATIVE AL VEZEY Alaska State Legislature State Capitol, Room 216 Juneau, Alaska 99801-1182 Telephone: (907) 465-3719 POSITION STATEMENT: Prime sponsor for HB 210 JUANITA HENSLEY, Chief of Driver Services Division of Motor Vehicles Department of Public Safety P.O. Box 111200 Juneau, Alaska 99802 Telephone: (907) 465-2650 POSITION STATEMENT: Provided technical information on HB 210 PREVIOUS ACTION BILL: HJR 42 SHORT TITLE: WATER CARRIERS SERVING ALASKA SPONSOR(S): TRANSPORTATION JRN-DATE JRN-PG ACTION 04/07/95 1173 (H) READ THE FIRST TIME - REFERRAL(S) 04/07/95 1173 (H) TRANSPORTATION 04/19/95 (H) TRA AT 01:00 PM CAPITOL 17 04/21/95 (H) TRA AT 01:00 PM CAPITOL 17 BILL: HB 161 SHORT TITLE: AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW SPONSOR(S): REPRESENTATIVE(S) BUNDE,Toohey JRN-DATE JRN-PG ACTION 02/08/95 271 (H) READ THE FIRST TIME - REFERRAL(S) 02/08/95 272 (H) TRA, JUD 03/06/95 (H) TRA AT 01:00 PM CAPITOL 17 03/08/95 (H) TRA AT 01:00 PM CAPITOL 17 03/08/95 (H) MINUTE(TRA) 03/13/95 (H) TRA AT 01:00 PM CAPITOL 17 03/15/95 (H) TRA AT 01:00 PM CAPITOL 17 03/15/95 (H) MINUTE(TRA) 04/21/95 (H) TRA AT 01:00 PM CAPITOL 17 BILL: HB 210 SHORT TITLE: PRIVATE MOTOR VEHICLE LICENSING/TESTING SPONSOR(S): REPRESENTATIVE(S) VEZEY JRN-DATE JRN-PG ACTION 03/01/95 529 (H) READ THE FIRST TIME - REFERRAL(S) 03/01/95 529 (H) TRANSPORTATION, STATE AFFAIRS 03/17/95 (H) TRA AT 01:00 PM CAPITOL 17 03/20/95 (H) TRA AT 01:00 PM CAPITOL 17 03/20/95 (H) MINUTE(TRA) 04/19/95 (H) TRA AT 01:00 PM CAPITOL 17 04/21/95 (H) TRA AT 01:00 PM CAPITOL 17 ACTION NARRATIVE Tape 95-16, SIDE A Number 000 The House Transportation Committee was called to order by Chairman Gary Davis at 1:15 p.m. Members present at the call to order were Representatives Davis, James, Masek, Williams, Sanders, MacLean and Brice. CHAIRMAN GARY DAVIS announced the agenda was to hear testimony on House Joint Resolution (HJR) 42, and review HB 161 and HB 210 in that order. He indicated the meeting is on teleconference with Anchorage. HJR 42- WATER CARRIERS SERVING ALASKA Number 014 GORDON EVANS, Lobbyist, Totem Ocean Trailer Express (TOTE) explained TOTE provides services from the port of Anchorage, Alaska to the port of Tacoma, Washington. Between TOTE and Sea-Land, they bring in the majority of the products that are used in Alaska, particularly the Interior of Alaska. TOTE supports HJR 42. Mr. Evans stated it was his belief that HJR 42 was self-explanatory. He felt it would be a serious mistake for Congress to repeal all regulations of the Alaska water trade. He referred to a bill currently under consideration in Congress which would repeal regulations, not only the Alaska water trade, but in Hawaii and Puerto Rico, as well. These are the only three areas that are currently regulated. He explained that the legislative bodies of these areas are being asked to ensure that an amendment is added to the bill in Congress allowing the people in the Interstate Commerce Commission (ICC) who are currently responsible for the regulating, that they and their duties would be transferred to the Department of Transportation (DOT). He explained it was to companies, such as TOTE and Sea-Land's, advantage to be regulated. One reason is the potential problems with anti-trust issues, or if an oligopoly, where there are several carriers serving a particular trade, the carriers could get together and raise rates and there would be no one to oversee them. TOTE feels as long as there is someone regulating the traffic, there is no potential of someone to institute new or higher tariffs and gouge the shippers involved. Mr. Evans said they have discussed this with Alaska's Congressional Delegation. They have indicated they would support this amendment in Congress, if they could show there was sufficient support in the state for it. MR. EVANS indicated the committee members should have in their bill packets, numerous letters of support from various companies, the municipality of Anchorage, the Alaska Railroad Corporation, Anchorage Chamber of Commerce and others. Mr. Evans indicated that Congressman Don Young was in Anchorage recently and met with the representatives of TOTE and the Alaska Truckers Association. Congressman Young indicated he was pleased with the letters and planned to push the amendment in Congress. Mr. Evans said the current problem is in timing and the mark-up in Congress is scheduled for around May 6, 1995; the first initial adjournment date for this year's Alaska Legislative session. He asked if there were any questions. Number 105 CHAIRMAN DAVIS stated for the record that Representative Eileen MacLean arrived at 1:17 p.m. REPRESENTATIVE BEVERLY MASEK said she was in support of getting the federal government out of the state's affairs and supported HJR 42. CHAIRMAN DAVIS said he would take testimony via teleconference from Mr. Frank Dillion in Anchorage. Number 107 FRANK DILLION, Executive Director of Alaska Trucking Association, stated they were large customers of the steamship industry. They handle the deliveries of the majority of freight that travels through the railbelt of Alaska. The Alaska trucking industry supports HJR 42 and requests that it be promptly moved forward to the floor. Mr. Dillion attended a meeting with Congressman Young and a TOTE representative and Congressman Young indicated that he has already drafted a letter to Chairman Shuster who has jurisdiction in Congress on this particular issue. This letter supported the continued oversight at the DOT of the Alaska water trade steamship (indisc.). He explained the oversight provides stability in the market place. This is an extremely important issue for the businesses in Alaska to understand what the shipping costs will be. He emphasized the importance of having stable and dependable services. He added there was no question regarding the dependability of TOTE and Sea-Land services. MR. DILLION continued to explain even in difficult situations, well beyond their control such as labor difficulties, they have maintained ships in operation and freight moving to Alaska. He indicated the stability should be maintained, and there should be a mechanism to prevent a situation where they may be treated unjustly and they have someone who can arbitrate or at least enforce TOTE and Sea-Land to justify the rates they are proposing. He did not feel that "unbridled" competition in this particular type of market would be in the best interest of anyone in Alaska. He expressed concern that not only would prices go too high, but conversely, of prices going too low. He said a good example of what happens to a transportation entity when it does not price itself compensatorily is the Mark Air situation. Simply by having market share and giving the customers and the shipping public a break, does not necessarily make for a good transportation system. He stated they would be afraid to see other steamship lines move into the market for a short term benefit, using a ship that might not be allowed elsewhere and hauling freight at a cut rate deal, establishing that pattern for awhile and then disappearing. He reiterated his eagerness on passing HJR 42. He asked if there were any questions. Number 160 CHAIRMAN DAVIS said a number of these resolutions have been scrutinized closely when reaching the floor, and he wanted to review some of the details in this particular resolution. Chairman Davis referred to line 9, page 1, stating "Whereas the citizens of the State of Alaska have expressed their desire to preserve tariff filing and the other essential elements..." and expressed concern regarding the letters of support that were drafted by groups and companies. He inquired as to the ways to defend the argument that where have the citizens of the state of Alaska expressed their desire. Number 172 MR. DILLION interjected and reminded the committee of the fact that there are thousands of employees who work for those organizations, and they are all citizens. At times, we defer to the judgment that people who we work for or elect make the decisions that, hopefully, are in the best interest of the majority of people. He did not feel this was the type of issue that you are going to see the rank and file person off the street take much interest in. People are interested in the prices they pay and the dependability of service. He felt this serves well the interests of all the citizens of Alaska that have continued oversight on this particular area of transportation. Number 184 MR. EVANS referred to the letters of support which included such entities as the municipality of Anchorage, the Alaska Railroad Corporation, Anchorage Chamber of Commerce, the General Teamsters Local Union, and the Anchorage Independent Longshoreman's Association and stated they were all consumers as well as groups. He indicated it will come out of their pockets in the end of what they pay at the local stores. He referred to Alaska Matanuska Maid Dairy, Alaska Fish and Farm products and others. He agreed with Mr. Dillon's comments. MR. DILLION added due to the fact that TOTE and Sea-Land are intensely competitive, they want someone watching over them so someone does not make an error in judgment that would impose costs to the state or hurt themselves. He indicated the reason that TOTE and Sea-Land want someone to continue to look over their shoulder is to make sure someone is looking over the other guy's shoulder. He felt this might explain some of the motivation for the support behind this particular issue. REPRESENTATIVE JEANNETTE JAMES asked Chairman Davis if he was interested in a motion to move HJR 42 out of committee. CHAIRMAN DAVIS said yes. REPRESENTATIVE JAMES moved to pass HJR 42 out of the House Transportation Committee. CHAIRMAN DAVIS asked if there was objection. Hearing none, HJR 42 was passed out of the House Transportation Committee. HB 161 - AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW Number 218 CHAIRMAN DAVIS announced the next order of business was to hear testimony on CSHB 161 and asked the prime sponsor's legislative assistant, Ms. Patty Swenson to present her testimony on the committee substitute (CS) for HB 161. PATTY SWENSON, Legislative Assistant to Representative Con Bunde, indicated the only change they have made to the committee substitute before the committee is on page 2, Section (B). This includes the addition of limiting aircraft or watercraft owners' liability, if they posted notice that they did not have insurance. People would then have some warning before they rode with the pilot of the boat or plane. This was the only change Representative Bunde made to the bill. CHAIRMAN DAVIS reminded the committee that a second version added the wording "simple negligence" and this was then deleted, because it would have made the whole bill unnecessary. He said the effect of the new wording... MS. SWENSON interjected that it would just limit the aircraft or watercraft owner's liability, when they posted notice. She explained it would then be similar to a person not having insurance and that it would compensate a person being transported, as is described in the first section of the bill under Section (a). They would have the same lack of liability in cases other than gross negligence acts. Number 234 CHAIRMAN DAVIS asked for confirmation that this was just a notice to the passengers. REPRESENTATIVE JERRY SANDERS asked if the form of notice was verbal or written? MS. SWENSON said it stated it was to provide notice to the person being transported. It does not specify the type of notice. REPRESENTATIVE SANDERS asked if it was a verbal notification and not some kind of label on the door or display on the aircraft, couldn't we get into a situation of "I said, he said, or you didn't tell me" situation. MS. SWENSON explained it was her understanding that if something were to happen and a notice was posted, then something happened to the notice, there would still be the same problems. REPRESENTATIVE SANDERS said this situation would occur more frequently if the notice was not posted. He said he supported the amendment to this bill and encouraged it from the beginning, but it did not seem to be definitive enough. Number 269 REPRESENTATIVE JAMES responded to Representative Sanders' comment that she has experienced similar situations. She presented an example of entering a mining area, where the people in charge require their guests to sign a piece of paper stating that the guest understands any risks that might be involved. She thought that people will want to insure themselves, so they will put it in writing that they are not responsible. CHAIRMAN DAVIS presented a scenario where a pilot took someone for a ride in their airplane, they crashed, and the passenger was killed. Previous to the flight, the passenger was notified that the pilot did not have insurance. Chairman Davis indicated "he can't give his word, I told him" so this type of situation seemed to be a problem. REPRESENTATIVE SANDERS concurred with Chairman Davis and stated if it was incorporated in this bill that there had to be in writing, the terms of liability, he would then feel more comfortable with it. However, at this time it does not state this and he has no reason to assume this would be carried out by the pilots. CHAIRMAN DAVIS indicated he would take testimony from Mr. Ray Brown via teleconference from Anchorage. Number 293 RAY BROWN, Attorney, Alaska's Academy of Trial Lawyers indicated he did not hear the first part of the presentation and didn't know who the speaker was who was talking about the amendments to the bill. He said he didn't know if they added back language, but he knew from the last time he testified on this bill, Mr. Bunde included under Section B, the wording "negligent conduct." He asked if that had been taken out. CHAIRMAN DAVIS said yes. MR. BROWN continued to explain that HB 161 is creating a litigation nightmare. He referred to the issue of a notice requirement as being problematic in and of itself. He inquired as to who will make the determination of whether or not notice was given as well as determining whether or not someone was negligent, grossly negligent or reckless or intentional, after an aircraft has crashed. He remarked this type of bill seems to carve out a special class of people that are being immunized from exposure, based upon their conduct. He said he was not aware of any other class, other than attempting to do this in the medical field, where there is an elite group of people, basically immunizing them from negligent conduct. He explained HB 161 when read in its entirety, and without some sort of clarification, would probably immunize people to some extent from reckless or grossly negligent conduct. It potentially leaves the care of victims, their families and their children, who if in the event both parents were killed without an income provider, the state of Alaska and the federal government could be responsible for covering the negligent acts of the pilots. If a person is catastrophically injured, it leaves their health care to the state and federal government because of the negligent or reckless conduct of another person. He said not only from an attorney's standpoint, but from a citizen's standpoint, and in a state where we have the highest per capita number of pilot error- type crashes, he was amazed that a bill such as this would be passed, to immunize those persons. He referred to Representative Bunde's explanation that this bill was designed to protect pilots from acts of God. Mr. Brown stated if this was really the purpose of the bill, there would be no need to pass it because under the torte liability law, if there is no negligence and it is an act of God, then there is no breach in the duty of care and no resulting liability to begin with. He indicated this is not the intent of this bill, particularly with the deletion of the negligence wording and it is not for the acts of God, but actually to protect negligent people for their conduct. He referred to Section 2(b) and said it was difficult for him to figure out from the bill itself, whether or not the language in subsection 2 (a) also applies to subsection 1(a). If it does, then there are some obvious problems. He mentioned it would encourage the property owner to purchase the minimum of coverage. MR. BROWN presented an example where someone with $3 million or $4 million in assets could engage in grossly negligent or reckless or intentional misconduct and only be liable for the minimum amount of coverage. He stated he would assume that people would elect to purchase the minimal amount of coverage, because for any amount over that they would be immunized for regardless of their conduct. He concluded it has the potential to work a great injustice on innocent victims. He felt that based on the wording of the statute, a person would be better off to be involved in an accident with people who would be grossly negligent or intentional with no insurance, so long as they had sufficient assets to cover an injury or death. He felt the statute discouraged adequate insurance and is a boondoggle for a select few people who are pilots and aircraft owners. He added it will work a great injustice on innocent victims who happen to ride in an aircraft. Number 363 REPRESENTATIVE BILL WILLIAMS asked Mr. Brown if he is an attorney. MR. BROWN responded, yes. REPRESENTATIVE WILLIAMS said he was under the impression that this bill catered to private parties who wanted to take their friends along for a ride. The way he viewed it and from what the attorney said, is that we would be providing for an open season in the court system. That may be true if the operator of the boat or plane was not going to take his friend for a ride. He presented an example where a friend of his goes for a ride with him in his boat and he tells the passenger that he does not have insurance and he can ride at his own risk. The passenger has the choice to stay or go. He felt that was the intent of this bill. MS. SWENSON stated Representative Williams is correct. The purpose of the bill was to be able to take friends and acquaintances on a boat or plane... REPRESENTATIVE WILLIAMS interjected and stated the pilots are not looking to make money... MS. SWENSON interjected that was specifically excluded, if it's a nonpaying passenger, common carriers are excluded as well. Currently the majority of aircraft owners do not have passenger insurance because of the high costs. The friends that ride with the pilots are traveling at their own risk. REPRESENTATIVE WILLIAMS said he had a friend who occasionally would take him for a ride in his airplane, and he was under the impression the pilot had insurance. Representative Williams said this would bring to his attention, the concern that the pilot could say I do not have any insurance and it is the passenger's choice to ride along and the pilot would be covered. He reiterated his comments on the fact the passenger has the choice to go or stay. MS. SWENSON said this was correct. Number 409 REPRESENTATIVE SANDERS stated there was more to this than just the friends going along for rides. He presented a scenario where Representative Williams was a pilot and took him flying. Representative Williams told Representative Sanders that he did not have insurance. He said he understood this and agreed not to sue him in the event of a crash. They then go flying, the plane crashes and Representative Sanders is killed, and his wife is left without an income. She would look to sue someone and deserves to. REPRESENTATIVE JAMES disagreed with Representative Sanders' statement. If a person was paying for a ride, that person would expect that the beneficiary would receive compensation for the incident. She felt if it was a commercial flight, the company would be required to cover all passengers. This bill addresses the issue of people going for rides for the fun of it and do not pay for the rides. She felt that the pilots would get someone to sign. She proposed the situation where a waiver was signed, but both family members were killed in a plane crash and everyone dies and other people are not a party to that. She felt that if someone did sign the waiver, this would be seen as evidence of the fact the passenger was informed. She said the issue is taking passengers for a free ride and of the passenger's will. She explained the insurance was expensive and it is a toy in many cases. She indicated she did not have a problem with people having toys even though they kill themselves with toys. She commented anytime someone is negligent, they should be held responsible. Number 434 MR. BROWN stated the problem, as he understood it, was that we are immunizing people for negligence. He stated when he gets into an airplane, car or boat, he hopes that the operator will not act in a negligent manner. He understands that he has no control over the operator of the boat, plane or car. He questioned why we would want to isolate one pocket of society. Whether it is called a toy or not, he did not understand why someone would want to protect a person from negligent conduct? He remarked this is exactly what this bill would be doing just by the mere recitation of a person stating they do not have insurance. He questioned who would be responsible for the negligent conduct of an uninsured pilot even if they gave notice, and added more than likely it would be the state of Alaska. He said fortunately we are in a state that does not have a large tax base, but someone will pay for the negligent acts. He commented on Representative Sanders' astute observations that there will be family members that will suffer because of this conduct. He reiterated his concerns for people wanting to immunize a person that caused the negligent act at the expense of everyone else. He added he did not understand what the problem was with requiring people to carry insurance to operate these toys. REPRESENTATIVE WILLIAMS stated the way he saw it, people can protect themselves to the hilt. He said the subject of torte reform had come up and said this sounds similar. He made the analogy of pedestrians crossing the street and assuming everyone in a car has liability insurance. He said the pedestrians are not aware of who has insurance and who does not, but if they cross the street, and are hit by a car...maybe this bill should include motor vehicles as well. CHAIRMAN DAVIS said he had neglected to adopt the Committee Substitute, and asked if he could have a motion to adopt the Version /F, CSHB 161. REPRESENTATIVE JAMES motioned to adopt CSHB 161, Version /F. CHAIRMAN DAVIS asked if there was any objection. Hearing none, CSHB 161, Version /F was adopted. REPRESENTATIVE SANDERS commented on the distinction between cars and boats, and said with cars there is no law saying you do not need insurance and the same applies to boats. Representative Sanders said he did not see why airplanes should be different. He felt a person should have insurance. He was not going to be party to making a law that states that insurance is not needed. Number 499 REPRESENTATIVE TOM BRICE added to Representative Sanders' comments that this was the intent of HB 161. It does not imply "my good friend, Jerry, come on my boat with me and we'll have fun," rather HB 161 indicates a person won't buy insurance because, if they do, they will be held liable, but if they don't buy the insurance, then they are off the hook. This was his concern with the fact it is a negative incentive to obtain insurance to help out in the situation where simple negligence is a factor. A person is still liable if they commit a grossly negligent act, but a person is not liable if they commit a negligent act. He suggested the possibility of lowering the standard to ease some of the concerns among members of the committee. As the bill is written, it says "don't buy insurance because it is a waste of time and money. The people that get hurt will be taken care of by the state." Representative Brice said that was his concern. REPRESENTATIVE EILEEN MACLEAN stated she had similar concerns, but added this should not be exclusive to air and watercraft guest passengers. She asked to make it all inclusive of other modes of transportation. Number 522 CHAIRMAN DAVIS stated it was his intent to address a motion on the CS for HB 161 to move it out of the House Transportation Committee. REPRESENTATIVE JAMES made a motion to move CSHB 161(TRA) out of Committee. CHAIRMAN DAVIS asked if there was objection. REPRESENTATIVE MACLEAN objected for discussion on CSHB 161(TRA). REPRESENTATIVE BRICE proposed an amendment on page 1, line 13, delete the word "gross" and negligence or reckless or intentional misconduct are not exempt under this. REPRESENTATIVE JAMES objected to Representative Brice's proposed amendment. CHAIRMAN DAVIS questioned the legal definition of the wording "reckless misconduct." He expressed concern for the legal interpretation of this. He would interpret this as being similar to simple negligence, but was not sure. He then announced there was a motion to delete the word "gross" on page 1, line 13, that had been objected to for the purpose of discussion. REPRESENTATIVE JAMES explained her objection was with the wording "negligence." She stated it was not possible for anyone to live without it. She said we are not perfect and any time someone does something that injures someone else, it can be construed as negligent. If someone does do something and nothing happens, it is not negligent. She explained there has to be some admittance to the fact that there is an inherent risk of living and people cannot be held responsible for everything people do that can be addressed as negligent. If people could place negligence in terms of degrees of a negligent act that a person did something intentionally.... She then presented an example of someone driving into a ditch and saying "I could have avoided that by doing this or this or this" and the person admits that they were negligent. It is not possible to go through life without having some sort of negligent accidents. She stated she would feel very vulnerable if every negligent action that she has is subject to a lawsuit. She reiterated her concerns on addressing the issue of an inherent risk of living. This is why she objected to the term negligent. Number 558 REPRESENTATIVE BRICE disagreed and explained that before this would happen there should be testimony from attorneys who understand the term negligence. He felt the immediate discussions were stretching the term way beyond its intent. He presented an example where he was just involved in a car accident on March 1, 1995. The driver crossed the yellow line and ran into him. As far as he is concerned, the other driver was negligent. Unfortunately, the lawyers are blaming the icy roads so she was found not to be negligent. He suggested that before every mishap that occurs is deemed a negligent act, there should be an understanding of a legally recognized and defined term for negligence. He reiterated his concerns on having someone from Legislative Legal Services confront this issue. He concluded by saying it would ease the concerns of a lot of people because unlike driving, snow mobiling or unlike any other type of activity, the operation of aircraft and watercraft are probably the two most unforgiving forms of transportation. Not only unforgiving in case of accidents, but also unforgiving in terms of various conditions of the outdoor elements. The potential for serious injuries is much higher than driving or walking. MS. SWENSON asked the maker of the amendment if his intent was to delete the term gross negligence and add negligence? REPRESENTATIVE BRICE said yes. MS. SWENSON asked for confirmation on adding the word negligence to the bill and not holding people liable for gross negligence acts... REPRESENTATIVE BRICE interjected that it would be lowering the standard to "negligence." CHAIRMAN DAVIS said he would speak in favor of the motion and suggested to move the bill to the Judiciary Committee, where further legal action could be discussed. REPRESENTATIVE JAMES reminded the committee that these passengers are riding for free and for the fun of it. The passengers in this case should assume some portion of the responsibility. Number 612 REPRESENTATIVE MACLEAN said she viewed it differently and presented an example of someone needing to be transported out of a village for medical reasons. The pilot is not being paid to transport the person out of the village. She asked how would this impact the passenger. CHAIRMAN DAVIS said the pilot would be contracted to transport the passenger. This would be seen as a business transaction through whatever company the pilot is affiliated with. He questioned whether a private pilot using his own plane to medivac someone out, would not be covered and the passenger may not be covered. REPRESENTATIVE MACLEAN stated she was referring to a situation where someone from Hoonah or Petersburg ws going to be transported in an emergency situation and they were not paying, how would this legislation impact this particular situation. Number 617 MS. SWENSON explained if there was an accident while transporting this person, the pilot would not be held liable. Many people would not be able to be transported if a pilot did not have passenger insurance. Pilots would be afraid that something might happen to them in flight that was beyond their control. As a result, the pilot may choose not to transport the person that needed to be transported. CHAIRMAN DAVIS asked to vote on the motion. He reminded the committee the motion was to move the amendment to delete the word "gross" on page 1, line 13. He then asked for a roll call on Representative Brice's amendment. Representatives Brice, Masek, Davis, Sanders, Williams and MacLean voted in favor of the amendment. Representative James opposed the amendment. Chairman Davis asked if there was further discussion. Hearing none, the amendment passed. REPRESENTATIVE WILLIAMS made a motion to move CSHB 161(TRA) as amended out of the House Transportation Committee with zero fiscal notes. REPRESENTATIVE SANDERS objected. CHAIRMAN DAVIS asked for a roll call vote. Representatives Brice, James, Davis, Masek and Williams voted in favor. Representatives Sanders and MacLean voted no. Chairman Davis announced that CSHB 161(TRA), as amended was moved out of the House Transportation Committee. HB 210 - PRIVATE MOTOR VEHICLE LICENSING/TESTING Number 645 CHAIRMAN DAVIS announced the next item on the agenda was HB 210. CHAIRMAN DAVIS asked for a motion to adopt the CS for HB 210 Version R, as the working document. REPRESENTATIVE SANDERS made a motion to adopt the CS for HB 210, Version R, as the working document. CHAIRMAN DAVIS asked if there was objection. Hearing none, the CS Version R, was adopted as the working document. REPRESENTATIVE AL VEZEY noted there has been previous discussion and a small subcommittee working with the Division of Motor Vehicles (DMV) on HB 210. He said a number of changes were made which were reflected in the committee substitute before the committee members. He asked if there were any questions. He then indicated there were proposed amendments before the committee. CHAIRMAN DAVIS said he, too, discussed the amendments with the DMV. He indicated that with the consent of the prime sponsor, the Administration and the committee, he would like to discuss and vote on each amendment individually. He suggested that Ms. Juanita Hensley with the Department of Public Safety could present details of previous meetings that she and the prime sponsor had regarding this issue. TAPE 95-16, SIDE B Number 000 JUANITA HENSLEY, Chief of Driver Services, Division of Motor Vehicles, Department of Public Safety, asked if Chairman Davis wanted her to speak directly to the amendments. She stated she worked directly with the sponsor of this bill to come up with the draft that was before the committee. She indicated that she had reviewed the draft and coordinated information with the Department of Law. The amendments presented were the concerns that they have. CHAIRMAN DAVIS suggested they make a motion for each particular amendment and have discussion and debate as each amendment was presented. REPRESENTATIVE JAMES made a motion to move Amendment 1. CHAIRMAN DAVIS asked if there was objection. REPRESENTATIVE BRICE objected to Amendment 1. MS. HENSLEY explained Amendment 1 on page 4, lines 24-25, Section (F) states "felonious attempt to commit an offense..." She said it had been the advice of the Department of Law that a felonious attempt is a felony. Section (F) would not be needed because "felony" is already covered in Section (E). CHAIRMAN DAVIS asked Representative Vezey if he would care to comment on this. REPRESENTATIVE VEZEY said he did not have any strong feelings on this particular amendment. He stated the intent was to try and create a contract relationship between an entity of the state and the private sector. He indicated a person does not have to break the law to have grounds under normal commercial law to terminate a contract. Crimes of moral turpitude are usually considered sufficient reasons to dissolve a contract. He explained this is what he was attempting to do here. He said they were trying to give the state more reasons for terminating a contract, but the state is indicating that they do not want more reasons. CHAIRMAN DAVIS indicated he communicated with the Department of Law in a meeting and said it's true that Section (E) is covered by Section (F). He then asked if the objection was still maintained on Amendment 1. REPRESENTATIVE BRICE withdrew his objection. CHAIRMAN DAVIS asked if there was any other objection to Amendment 1. Hearing none, Amendment 1 passed. REPRESENTATIVE JAMES motioned to move Amendment 2. CHAIRMAN DAVIS asked if there was objection on Amendment 2. REPRESENTATIVE BRICE objected to Amendment 2, for the purpose of discussion. Number 095 MS. HENSLEY explained the department feels that to take a person to arbitration, the due process must still be carried out. This would not allow for full due process with superior court oversight as to a decision being made. Ms. Hensley said the department would propose changes on lines 18-21, deleting the language "shall submit the issue to arbitration as provided under AS 09.43; the department may not cancel or suspend a certificate or card under this paragraph unless the cancellation or suspension is supported by the decision of the arbitrator." Ms. Hensley suggested that language be deleted and insert after examiner, "notice and hearing as provided under AS 28.05.141." CHAIRMAN DAVIS asked for confirmation that this was the department's current administrative hearing procedures. MS. HENSLEY said yes, the administrative procedures that are not covered under the Administrator Procedures Act. However, the person still may, if they feel they are aggrieved after the administrative hearing, file an appeal in superior court based on the record itself and not on (indisc.) hearing. Number 120 REPRESENTATIVE VEZEY stated the basic difference with this issue is the state is accustomed to operating under a certain set of statutes and procedures for adjudicating complaints or differences. What we are trying to establish is a contract. The standard in the state of Alaska and across the country for contract -- commercial law -- is that contract disputes are arbitrated. People are voluntarily entering into contracts that stipulate that any dispute on that contract will be solved by arbitration. Representative Vezey felt there were advantages to the state. Some of those advantages are: Under a contract relationship, any methods of dispute resolution can be used, providing both parties of the contract agree to it. It is when an agreement cannot be reached that they have to go to mandatory procedures, such as an administrative hearing procedure that the state and the DMV is accustomed to using. However, this is subject to appeal in the trial courts. He explained the advantage of arbitration is it does not cost the state anything. Both parties are required to pay for the cost of the arbitration. They are not using the court system, rather they are using an arbitration system. The courts have traditionally refused to review or overturn the findings of an arbitrator, because they respect the arbitration process and the right of parties to agree to arbitration. In commercial law, it is unusual for a court to take up a case that has been decided by an arbitration tribunal, unless there is some sign of clear abuse. Representative Vezey proposed arbitration will give the state greater flexibility than what they are currently bound to. He indicated it was a judgment value and either system achieves justice. It is a question of how are we willing to look at going to a new system. Number 174 MS. HENSLEY asked to address Representative Vezey's comments and stated if we had to go through the provision of setting up an arbitration section or to deal with arbitrators, it would cost the department to contract with an arbitrator and pay the cost of hotel accommodations for that individual, if they had to come in from out of town. Presently, the department already has administrative hearing officers on staff and the Department of Law already handles their appeals through the superior court. The mechanism is already set up. With the arbitrations area, they would have to set up a separate procedure for that, which would be costly to the department. Ms. Hensley did not feel the department would be able to absorb the cost, because the DMV does not have the budget in order to establish a program without receiving that cost of that program. Number 189 CHAIRMAN DAVIS asked if the arbitration was to continue as is, would the department establish a fiscal note for this bill? MS. HENSLEY said they would have to indicate what the cost of the arbitration would be, because they do not have the necessary process set up in their department at this time. In order to do that, they would have to develop whatever costs would be associated with that contract or the arbitrator. In most cases, when using arbitrators you do pay for all their expenses. Whereas, currently the department has hearing officers on staff. CHAIRMAN DAVIS stated the arbitration language is in statute so there would be no need for the regulations. MS. HENSLEY stated there would be no regulations. Number 196 REPRESENTATIVE JAMES said she visualized an arbitrator to be more neutral and fair than someone who is on staff with the department. She presented an example of arbitrators having to come to Juneau if that is where they had to work out of, or, if there was a contractor in Fairbanks, they would deal with an arbitrator from Fairbanks. To attach a fiscal note would be to presume that there are going to be disputes. She stated if there was any value to this legislation, it should be placed that this would be an infrequent occurrence where there would be arbitration issues such as this. Based on that position, she supported the idea of an arbitrator because of the fairness issue of not having someone within the staff of the Department of Public Safety. REPRESENTATIVE MACLEAN asked Ms. Hensley if snow machines and all terrain vehicles (ATV) were included under the category of motor vehicles. MS. HENSLEY explained it is a requirement with the DMV that snow machines be registered through Title 5. This is not the case with ATVs. The federal government determined years ago that ATVs were unsafe vehicles. Number 238 REPRESENTATIVE VEZEY stated he appreciated the department's position. Unless he was mistaken about the Alaskan Uniform Arbitration law, he thought that both parties have to pay, up- front, the anticipated costs of an arbitration proceeding. Typically, arbitration panels are not bound by Rule 82 that the court proceedings are. The prevailing party would be awarded full costs and fees. He indicated arbitration encourages mediation, where both parties agree to pay the costs of mediation. There are very few limits placed on how an arbitrator is selected. There is a proposed panel that is organized and people are given the chance to veto, or agree on an arbitrator or a mediator. He added that there were other means to settling disputes, but they are trying to create the atmosphere of a commercial relationship between the state and a contractor. CHAIRMAN DAVIS asked if there was still objection to Amendment 2? REPRESENTATIVE BRICE stated he objected to the amendment. CHAIRMAN DAVIS asked for a role call vote. Representatives Davis, Brice, Williams and James opposed the Amendment. Representative MacLean voted in favor of Amendment 2. Chairman Davis indicated Amendment 2 failed to pass the committee. He then announced Amendment 3. REPRESENTATIVE MACLEAN made a motion to move Amendment 3. CHAIRMAN DAVIS asked if there was objection. REPRESENTATIVE JAMES stated she objected to Amendment 3. Number 292 CHAIRMAN DAVIS asked Ms. Hensley to address Amendment 3. MS. HENSLEY explained that the DMV and the Department of Revenue reviewed this amendment and both departments expressed concern for Amendment 3. She explained in order to have some type of an audit trail on the contractors, the department would propose changes to page 7, lines 8-13, by deleting the existing language and inserting on line 8 after department, "as determined by contract." She explained if they have a business which only processes 20 transactions per month, then they might want the option to say, on a monthly basis they can make the deposits. She added it would give the department more control of a business and the ability to monitor that particular area more closely. She commented this is a good piece of legislation, but the department is just trying to obtain the maximum out of it. They are currently developing private indices; it's like a contract with government, privatizing out. They are trying to privatize areas such as the IM (inspection/maintenance) stations in Anchorage which are processing approximately 100 registrations per day. She noted there are currently 13 commission agents they are working with. She said this amendment just gives the department and the Department of Revenue more control over the amount of money being collected and when it is to be deposited, as well as the interest the state collects off that money. Number 303 REPRESENTATIVE VEZEY said he did not have strong opposition to Amendment 3. His intent was to provide for a reasonable commercial relationship between an agent and a proprietor (indisc). He said they modeled this after the Internal Revenue Service (IRS) and their manner of collecting payroll taxes. Whenever an agent collects a sum of money that exceeds $5,000, it is due that week, just as the payroll taxes are with the IRS. If $5,000 is not collected during the course of the quarter, then they still have to submit quarterly. He felt it was a reasonable standard. CHAIRMAN DAVIS supported the amendment. He stated it was hard to imagine what the outcome of this might be. He referred to the 13 contract agents and stated there are communities where there may be five transactions per day, yet another contractor could do much more, so different contracts are going to have different needs. If there is the flexibility such as what the department is requesting in the amendment, it would be beneficial because no one method is going to fit each contract. He asked if there were further discussions on Amendment 3, and was the objection still maintained? Hearing none, Amendment 3 passed. He then offered Amendment 4. REPRESENTATIVE JAMES made a motion to move Amendment 4. CHAIRMAN DAVIS asked if there was any objection. REPRESENTATIVE MACLEAN objected for purposes of discussion. She expressed concern for the section on the commercial drivers licenses CDL) program. MS. HENSLEY explained that 49 CFR (Code of Federal Regulations) of the Commercial Driver License Act allowed an individual to be grandfathered in until April 1, 1992. She explained that this stated if an employer certified that the person met the qualifications up until April 1, 1992, then the employer could certify that individual had met those requirements and they had been employed, and the individual would not be required to take a skills test - a driving test. After April 1, 1992, federal law requires a skills test to be administered to an individual applying for a commercial drivers license. This section would place the DMV out of compliance with the Commercial Driver License Safety Act of 1986, and it is subject to a 10 percent loss of federal highway funds, if they are found in noncompliance of that program. She mentioned that a couple of years ago, 10 percent of the federal highway fund equalled approximately $25 million. Number 359 REPRESENTATIVE BRICE referenced the loss of funding and asked if the funds are diverted, or does the state not get it. MS. HENSLEY explained it was part of the Intermodal System Transportation Efficiency Act (ISTEA) funds and would not be diverted, as the "helmet money" was diverted; it would be totally sanctioned against the state. REPRESENTATIVE VEZEY disagreed with the DMV on this particular issue because the Code of Federal Regulations (CFR) provide for that particular type of certification through private channels. The intent here was to allow for the program to be up by the state. He noted they were not mentioning anything regarding grandfathering people in after April 1, 1992, but they were only saying that a program will be set up. He mentioned that currently, there is a program in Alaska that is providing professional driver training which has received a number of accolades. However, they do not have the authority at this time to issue driver licenses. Representative Vezey indicated it would not take a great deal to bring them into compliance. He stated he disagreed with the characterization that this would put the state out of compliance with the federal regulations. Number 375 MS. HENSLEY explained that under this bill, the DMV would have the authority to contract or conduct third party testing, if the individual met all the requirements. The third party testing would be comprised of a commercial company, if the DMV chose to do a third party testing. The federal government requires extensive monitoring of those third party testers, of which the DMV has never had the budget to monitor, so they have never allowed a third party tester to do commercial driver licensing. However, the safety regulations dealing with the employer responsibility with the single license requirement, implies that within this requirement it states, "effective April 1, 1992, no person shall operate a commercial vehicle unless such person has taken and passed written and driving tests which meet the federal standards contained in subparts (f), (g) and (h) of this part, for commercial vehicles that a person operates." The department feels the remainder of the bill would provide the department with the opportunity, if they chose, to initiate a third party contract. She stated currently, they have the opportunity to do this, they've never been able to do the monitoring that the federal government requires of third party testers. She said they were interested in the fact an employer can say that an individual does meet the required standards without the required skills testing which may be completed and maintained by the employer, certifying that the person has passed all the skills requirements. Number 440 REPRESENTATIVE VEZEY withdrew his objection to Amendment 4. He stated it was not his intent to be in conflict with the federal regulations. CHAIRMAN DAVIS stated if Amendment 4 had not passed, his intent was to request that a note follow the bill to ensure the legality of it was carried out. He asked for objection on Amendment 4. Hearing none, Amendment 4 was passed. REPRESENTATIVE WILLIAMS made a motion to move Amendment 5. CHAIRMAN DAVIS asked if there was any objection. REPRESENTATIVE MASEK objected to Amendment 5. MS. HENSLEY acknowledged that Amendment 5 may be somewhat controversial. Amendment 5 was drafted by the Department of Law, proposing to delete on page 19, lines 18 and 19 in their entirety. She referred to the DMV regulations and stated that they preferred having as much as possible put into statute. She added she has to write the regulations and does not enjoy doing this, so if it can be placed in statute and have everything spelled out as to the desires of the department, then the department would like to not have to have regulations. However, the DMV and the Department of Law feels there possibly could be some requirements that they would have to have, particularly when dealing with some of the contract issues, instead of having to come back to the legislature every year and with those contracts in statute. If the Occupational Safety Hazard Administration (OSHA) requirement change or if the insurance requirements change, then they would have to return every year to the legislature and have all the statutes changed annually. The DMV feels this was an area they wanted to leave open so they would have the leeway. She said the DMV has always had legislative input on all of their regulations. REPRESENTATIVE VEZEY explained the purpose of that particular section was twofold. First, they wanted to construct a bill that was thorough and understandable. The goal of privatization of a service currently provided by the government, is something that has not been met with much success in the state of Alaska. He has observed numerous attempts over the years, and they have all failed. He explained they started out with the goal that the entire program would have to be placed in statute, so they would know exactly what they were getting into and how it would work. For that reason, he started off with the premise that there would not be any regulations; the statutes would have to be complete and functional. The other aspect of this section is the realization that this particular program may not work. It is somewhat of an experiment. He explained other states are trying it, most notably California. He felt it was important that the legislature does come back after a year or two of experience with this. He did not feel that the adoption of Amendment 5 would cause this program not to work, but he did feel it would cause the legislature to take a somewhat laissez faire attitude towards the statute. He stated it seems there is the tendency to say "well, we will let them work that problem out in regulation, and let it go." He remarked that it forces us to take what is in the amendment very seriously. Number 450 REPRESENTATIVE BRICE stated with all due respect to his good colleague from district 32 and his abilities, he felt it would be impossible to be so thorough to plan every contingency for the possible success of a piece of legislation. He indicated because of that, by not adopting Amendment 5, we are tying hands on possibly even insignificant issues that cause such projects to fail. He added these were his concerns, when that type of language is inserted. REPRESENTATIVE JAMES disagreed with Representative Brice and stated she supported the idea of coming back and making a legislative decision on anything that does not work. She inquired as to the three levels of decisions that affect the way state business is run. There is a statute, which is the underlining law, then there are regulations which also are law, and policies as well. If any of those things that you mentioned would arise, that you would be able to have a policy until there could be a legislative change. She said she was uncomfortable with writing a statute, within the length of time that we write statutes, that would encompass absolutely everything. She stated she had mixed feelings about this issue because the regulation process we have currently does not seem to be working. She noted she was not directing that comment specifically to the Department of Public Safety, but in general. She stated in her evaluation, writing regulations are what the Administration does. This is where most of the time and energy is spent. She added this is also where most of the laws are being made. REPRESENTATIVE WILLIAMS noted he had been watching legislation go through the process, which is a very timely process, where a lot of egos get in the way and games are played. He expressed concern that the public will hurt, if we have to wait a legislative session to get this changed to where it will work, rather than have to call in experts. He stated he was not always in agreement with the regulations, but will work with them. He said he would like to see the bill go and have it worked on. He suggested that the Administration should construct the regulations. MS. HENSLEY stated it has always been the department's intent, as well as the DMV's intent, to work with the legislators on regulations. The DMV would include legislative input on any regulations that would be adopted as a result of this legislation passing. Number 529 CHAIRMAN DAVIS indicated his support for the inclusion of Amendment 5. He stated he was is support of eliminating regulations and incorporating things into statute. He asked Ms. Hensley, "on a scale from 1 to 10, how inclusive is this piece of legislation as far as not needing regulations." MS. HENSLEY stated it is just about where we (indisc.) she was not sure if the DMV would even have to adopt a regulation. Policies may then have to become a regulation, if the department can't get statute change. If they came back for a statute change to implement that, then the regulation is a moot point. However, unless they do that, there may be some problems. Based on everything the department has looked at, this piece of legislation is quite intensive, as well as extensive. From her viewpoint, the department would not have to adopt many, if any, regulations to implement this program. CHAIRMAN DAVIS referred to the contract formats in the bill, and asked if there is any availability in the contract formats to make changes, should the federal government pass down some mandates relating to this. He questioned whether or not it is within the contract to make changes. MS. HENSLEY said no, there is not. The contracts are set in statute and law. These will be the contracts that they have to abide by. Any changes that are requested, would require the DMV to return to the legislature and request a change, unless a regulation could be adopted to include that into the contract. CHAIRMAN DAVIS said, "that would be my major concern, because this division...the business being taken care of in this legislation... has the federal government dealing with it to a certain degree also and we can't control the changes that they make that may require changes on our part." REPRESENTATIVE JAMES stated she did not think if we have those contracts in statute, that they can be changed by regulation. By deleting this section we have not said that regulations can change the contracts. She felt the statute will dictate. MS. HENSLEY stated Representative James was correct. She commented that the DMV has decided that they would not work on it with this committee, but would take it up in the House State Affairs Committee, regarding the contracts. The Department of Law has some problems with the contracts being in statute, due to the changes that are always being made, especially with the DMV and the federal hand that they have over them. She suggested putting in statute what the legislature would like for the DMV to have in a contract, but the contract, itself, not be in the statute, because of all the changes being made. Number 546 REPRESENTATIVE BRICE referenced the various sections throughout the bill that reflect back to statements such as "as required by the department," "provided for by the department", etc. He indicated the department has to have the ability to form the more intricate statements. He suggested this is what happens in regulations. He felt that type of language might cause the department some inability to work the various mandates of the bill. CHAIRMAN DAVIS commented that was a good point. He asked if there was further debate on Amendment 5. REPRESENTATIVE JAMES stated she still objected. CHAIRMAN DAVIS asked for a roll call vote on Amendment 5. Representatives MacLean, Williams and Brice were in support. Representative James and Davis were opposed to Amendment 5. He announced Amendment 5 passed. He asked Ms. Hensley to address the issue of why there was no fiscal note with the bill. Number 595 MS. HENSLEY explained when the DMV first reviewed this bill, it was their understanding they would have a mandate where they would have no option as to whether they could look at an area and determine whether or not it would be cost effective for them to contract with an agent, or whether it would be cost effective for the state to continue with the DMV services that are provided. She indicated in some areas there may be both. The first initial fiscal note they prepared was "unbelievable" because of the oversight they would be required to have. It was not going to be a cost savings to the state to contract with individuals. She said that is why we have worked with the sponsor in deleting the word "shall" and inserting the word "may" so they would have some leeway and would not be a mandate that this will be done. MS. HENSLEY added with this particular draft that was before the committee, the fiscal note would be zero. However, Ms. Hensley said she did want to go on record and say "that as we develop these contracts with the various agents, and if we see that it is costing for us to have the oversight and have the audit trails that we must have, especially when you're looking at the division bringing in $34 million or $36 million a year, those audit trails and that accounting needs to be there. There needs to be some training done. So, if we see and as those contracts increase, and we cannot absorb it within the existing staff that we have, we would like to go on record and say we will be coming back for an increment in the budget to address those issues, but right now the fiscal note would be zero." She indicated she would provide a fiscal note to the committee the following day. CHAIRMAN DAVIS stated the fiscal note will be accepted as a verbal statement that it would be a zero fiscal note and will look for a written statement in the near future. REPRESENTATIVE VEZEY referenced Version R of the bill, which contains the word "shall." He thought there was another version that read "may." MS. HENSLEY explained that was one of the recommendations the DMV had made. She thought it was an oversight when this went to the drafter after their conversation. She recommended that on page 1, line 7, the word "shall" be deleted and insert the word "may." REPRESENTATIVE JAMES made a motion to move Amendment 6. CHAIRMAN DAVIS asked if there was objection. Hearing none, Amendment 6 passed. He said he would entertain a motion to move CSHB 210(TRA) as amended out of the House Transportation Committee. REPRESENTATIVE JAMES made a motion to move CSHB 210(TRA), Version R, as amended out of the House Transportation Committee with individual recommendations and zero fiscal note. CHAIRMAN DAVIS asked if there was objection. Hearing none, CSHB 210 (TRA) as amended was passed out of the House Transportation Committee. ADJOURNMENT There being no further business to come before the House Transportation Committee, Chairman Davis adjourned the meeting at 2:15 p.m.