Legislature(2011 - 2012)CAPITOL 17

01/26/2012 01:00 PM TRANSPORTATION


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 235 MOTOR VEHICLE TRANSACTIONS TELECONFERENCED
Moved Out of Committee
*+ HB 255 PROHIBIT DIALING OR TEXTING WHILE DRIVING TELECONFERENCED
Moved Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                        January 26, 2012                                                                                        
                           1:06 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Peggy Wilson, Chair                                                                                              
Representative Lance Pruitt, Vice Chair                                                                                         
Representative Eric Feige                                                                                                       
Representative Max Gruenberg                                                                                                    
Representative Pete Petersen                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Craig Johnson                                                                                                    
Representative Cathy Engstrom Munoz                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
Representative Bill Thomas, Jr.                                                                                                 
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 255                                                                                                              
"An Act  prohibiting the driver  of a motor vehicle  from reading                                                               
or  typing   a  text  message   or  other  nonvoice   message  or                                                               
communication  on a  cellular  telephone,  computer, or  personal                                                               
data assistant while driving a motor vehicle."                                                                                  
                                                                                                                                
     - MOVED OUT OF COMMITTEE                                                                                                   
                                                                                                                                
HOUSE BILL NO. 235                                                                                                              
"An  Act relating  to certain  vehicles, including  trailers; and                                                               
relating  to  motor  vehicle dealer  advertising,  motor  vehicle                                                               
dealer  sales  of  used  motor   vehicles,  motor  vehicle  sales                                                               
contracts,  motor vehicle  service contracts,  and motor  vehicle                                                               
sales financing."                                                                                                               
                                                                                                                                
     - MOVED OUT OF COMMITTEE                                                                                                   
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 255                                                                                                                  
SHORT TITLE: PROHIBIT DIALING OR TEXTING WHILE DRIVING                                                                          
SPONSOR(s):  REPRESENTATIVE(s)  GARA,  THOMAS,  GATTO,  P.WILSON,                                                               
GRUENBERG, TUCK                                                                                                                 
                                                                                                                                
01/17/12       (H)       PREFILE RELEASED 1/6/12                                                                                
01/17/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (H)       TRA, JUD, FIN                                                                                          
01/26/12       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 235                                                                                                                  
SHORT TITLE: MOTOR VEHICLE TRANSACTIONS                                                                                         
SPONSOR(s): REPRESENTATIVE(s) THOMPSON                                                                                          
                                                                                                                                
04/12/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/12/11       (H)       TRA, L&C                                                                                               
01/26/12       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
REPRESENTATIVE LES GARA                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 255 as a co-prime sponsor of                                                                
the bill.                                                                                                                       
                                                                                                                                
ANNE CARPENETI, Assistant Attorney General                                                                                      
Legal Services Section                                                                                                          
Criminal Division                                                                                                               
Department of Law (DOL)                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the discussion of                                                              
HB 255.                                                                                                                         
                                                                                                                                
QUINLAN STEINER, Director                                                                                                       
Central Office                                                                                                                  
Public Defender Agency                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during the discussion of                                                              
HB 255.                                                                                                                         
                                                                                                                                
KATE SAKEGAK                                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 255.                                                               
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 235 as prime sponsor of HB                                                                  
235.                                                                                                                            
                                                                                                                                
JANE PIERSON, Staff,                                                                                                            
Representative Thompson                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented a section by section analysis of                                                               
HB 235 on behalf of the prime sponsor.                                                                                          
                                                                                                                                
STEVEN J. ALLWINE, President                                                                                                    
Mendenhall Auto Center                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 235.                                                                          
                                                                                                                                
STEVE DELBIANCO, Executive Director                                                                                             
NetChoice                                                                                                                       
Washington, D.C.                                                                                                                
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion HB 235.                                                                                                              
                                                                                                                                
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General                                                                      
Commercial/Fair Business Section                                                                                                
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 235.                                                               
                                                                                                                                
GARY SLEEPER, Attorney                                                                                                          
Jermain, Dunnagan, & Owens, PC                                                                                                  
Anchorage Alaska                                                                                                                
POSITION STATEMENT:  Testified during the discussion of HB 235.                                                               
                                                                                                                                
MARTIN MARTENSEN, President                                                                                                     
Alaska Auto Dealers Association                                                                                                 
Owner; Continental Auto Group                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 235.                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:06:34 PM                                                                                                                    
                                                                                                                                
CHAIR  PEGGY  WILSON  called the  House  Transportation  Standing                                                             
Committee meeting to  order at 1:06 p.m.   Representatives Feige,                                                               
Gruenberg,  Petersen, and  Wilson  were present  at  the call  to                                                               
order.   Representative  Pruitt  arrived as  the  meeting was  in                                                               
progress.                                                                                                                       
                                                                                                                                
        HB 255-PROHIBIT DIALING OR TEXTING WHILE DRIVING                                                                    
                                                                                                                                
1:06:46 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON announced that  the first order of business would                                                               
be HOUSE BILL NO. 255, "An  Act prohibiting the driver of a motor                                                               
vehicle from reading  or typing a text message  or other nonvoice                                                               
message or  communication on a  cellular telephone,  computer, or                                                               
personal data assistant while driving a motor vehicle."                                                                         
                                                                                                                                
1:07:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LES  GARA, Alaska State Legislature,  presented HB                                                               
255  on  behalf of  the  six  co-prime sponsors:  Representatives                                                               
Thomas,  P. Wilson,  Gruenberg,  Tuck, Gatto,  and  himself.   He                                                               
stated,  as many  of you  know,  the legislature  thought it  had                                                               
passed a  bill a  few years ago  that prohibited  watching videos                                                               
and  texting while  driving.   The  aforementioned  bill was  not                                                               
written as  clearly as the courts  would have liked and  a number                                                               
of judges have taken the position  that the previous bill had not                                                               
been intended  to apply to texting.   He reported that  this case                                                               
is currently  on appeal to  the Court  of Appeals and  the matter                                                               
may go to the  Alaska Supreme Court.  He said  the reason for the                                                               
bill is to reinforce to the  public that texting while driving is                                                               
dangerous.                                                                                                                      
                                                                                                                                
1:08:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  emphasized that members only  need one fact.                                                               
He   said  according   to  the   National  Conference   of  State                                                               
Legislatures (NCSL), drivers  who text while driving  are 20 more                                                               
times likely to have an accident than  those who do not text.  He                                                               
informed  members  the  woman who  co-founded  the  organization,                                                               
Mothers Against Drunk Driving (MADD),  has now taken the issue of                                                               
"texting while driving"  on as seriously as she did  the issue of                                                               
drunk driving.   He  characterized this issue  as the  "new drunk                                                               
driving" issue.   He  was unsure of  the correlation  between the                                                               
dangers of drunk  driving and driving while texting  - whether it                                                               
would  be 20  times or  30 times  riskier -  but he  assumed that                                                               
texting presented a  similar risk since the  driver endangers the                                                               
lives of other while engaging in  this type of behavior.  He said                                                               
this is why  he introduced HB 255 four  other legislators decided                                                               
to add on as co-prime sponsors of the bill.                                                                                     
                                                                                                                                
1:09:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA described the  drafting process taken and his                                                               
intent to  stay as  true to  the original bill  as possible.   He                                                               
emphasized  that numerous  policy  calls  have been  incorporated                                                               
into the  bill, which the  co-prime sponsors  do not want  to see                                                               
changed.   He  reported a  previous law  already addresses  other                                                               
driver activities, such  that drivers may not watch  or operate a                                                               
video screen while  their vehicle is in motion.   He acknowledged                                                               
several  approaches  could have  been  taken  when drafting  this                                                               
bill.  The  bill could have been modeled after  the language used                                                               
in  current   statutes  for  a   person  who  is   driving  while                                                               
intoxicated (DWI).   Those statutes assume that  a person sitting                                                               
in the driver's  seat with the key in  the ignition [demonstrates                                                               
the intent  to drive].   However, he  admitted he did  not really                                                               
have a problem with drivers  viewing text messages while they are                                                               
sitting in their vehicles in a  parking lot.  He also admitted it                                                               
was impossible  to draft  the bill perfectly.   He  suggested the                                                               
bill could  be drafted in  a way to cover  almost all of  the bad                                                               
circumstances,  or it  could  be  drafted to  cover  all the  bad                                                               
circumstances,  but  in doing  so  might  affect a  few  innocent                                                               
people.   Since 2009, the statutory  language prohibiting texting                                                               
refers to  texting while the driver's  vehicle is in motion.   He                                                               
described a  scenario in which a  driver may decide to  check his                                                               
phone while stopped at the beginning  of a red light.  The driver                                                               
may just have received a text  from his wife regarding child pick                                                               
up arrangements.   The driver  [hears the phone beep],  and since                                                               
the light  just changed  knows he has  another 30  seconds before                                                               
the light  will change to  view the  text message, and  then look                                                               
back at the  light.  He offered his belief  this type of activity                                                               
would not warrant jail time.   He pointed out an exemption in the                                                               
bill  allows   law  enforcement,  public  safety   officers,  and                                                               
firefighters to  use equipment installed  in their  vehicles such                                                               
as video  screens, laptops,  and communication  devices necessary                                                               
for their work.  He said that  the bill sponsors will work in the                                                               
coming  weeks to  determine whether  public safety  agencies will                                                               
need any additional exemptions.                                                                                                 
                                                                                                                                
1:11:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA  reported  that   35  states  currently  ban                                                               
texting for  all drivers.  He  said," It's dangerous.   It should                                                               
be addressed."  The Department  of Public Safety (DPS) has always                                                               
had  [public service  announcements] informing  drivers they  are                                                               
not  allowed to  text while  they  drive.   He expressed  concern                                                               
about sending  the public mixed  messages.  He said  the co-prime                                                               
sponsors  are  hoping  this  bill  will pass.    He  related  his                                                               
understanding  that some  contention  may exist  with respect  to                                                               
cell phone use  in bills currently before the  legislature so his                                                               
intention is to  let those bills proceed separately.   He advised                                                               
members  of the  desire  to limit  HB 255  to  texting, which  is                                                               
something his  original co-prime sponsor,  Representative Thomas,                                                               
and he had agreed to early on.                                                                                                  
                                                                                                                                
1:11:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG said  he is only aware of  one case that                                                               
was  held to  the contrary.   He  asked whether  the sponsor  was                                                               
aware of any other cases.                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA  related his understanding that  a magistrate                                                               
in  Kenai  has  held  the  [2008] law  does  not  cover  texting.                                                               
Additionally, a supervising judge  in Fairbanks has indicated she                                                               
would  direct her  magistrates  to also  issue  the same  ruling;                                                               
however, her  directive may  be pending.   He  was unsure  if any                                                               
other cases  have had  favorable rulings, but  he was  aware that                                                               
some  drivers have  signed plea  agreements admitting  to texting                                                               
while driving.  He said  the district attorney's office has taken                                                               
the position  that the activity was  intended to be illegal.   He                                                               
advised members that  the cases are currently on  appeal, and the                                                               
Department  of Law  and Legislative  Legal and  Research Services                                                               
("Legislative Legal") is comfortable with the language.                                                                         
                                                                                                                                
1:12:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN asked  to place on the  record that under                                                               
this bill a driver  could pull over and park in  a parking lot or                                                               
driveway  and legally  text; however,  texting by  the driver  is                                                               
illegal activity when the vehicle is in motion on the roadway.                                                                  
                                                                                                                                
1:13:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT also  wanted to ensure the  record is clear                                                               
on HB  255 since issues  have arisen  with respect to  a previous                                                               
bill  that passed  the legislature  [2008],  but the  legislative                                                               
intent could not be determined.   He asked for clarification that                                                               
HB 255 would not apply to a person unlocking his/her cell phone.                                                                
                                                                                                                                
REPRESENTATIVE  GARA responded  that this  bill is  very specific                                                               
and does  not regulate talking on  cell phones so if  HB 255 were                                                               
to pass it  would not be illegal for people  to unlock their cell                                                               
phone to make a phone call.   He cautioned members of other bills                                                               
currently before the legislature may  apply to cell phone use and                                                               
could impose restrictions if any of them passes the legislature.                                                                
                                                                                                                                
1:14:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT related his  understanding HB 255 would not                                                               
apply to a driver dialing a number on a cell phone.                                                                             
                                                                                                                                
REPRESENTATIVE GARA agreed.   He said that a driver  could dial a                                                               
number, press  the answer button,  and do anything else  a person                                                               
normally would do  to talk on his/her cell phone.   He reiterated                                                               
that   various  proposals   are  before   the  legislature,   but                                                               
restricting phone use is not in HB 255.                                                                                         
                                                                                                                                
1:15:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT pointed  out that many smart  phones have a                                                               
global positioning system  (GPS), such as MapQuest.   He inquired                                                               
as to whether  people would be prohibited from  using these types                                                               
of systems.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA agreed  MapQuest  and GPS  mapping would  be                                                               
allowed in HB 255, noting that  the use of these types of systems                                                               
was covered when the original  bill, sponsored by Representatives                                                               
Gruenberg and Gatto passed the legislature [in 2008.]                                                                           
                                                                                                                                
1:15:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  mentioned  he  has  questions  on  the                                                               
fiscal note.                                                                                                                    
                                                                                                                                
1:16:13 PM                                                                                                                    
                                                                                                                                
ANNE  CARPENETI,  Assistant   Attorney  General,  Legal  Services                                                               
Section, Criminal  Division, Department of Law  (DOL), introduced                                                               
herself.                                                                                                                        
                                                                                                                                
1:16:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to  the fiscal notes  from the                                                               
Department  of Law  (DOL)  and from  the  Public Defender  Agency                                                               
(PDA).   He noted the  fiscal note from  the PDA was  prepared by                                                               
Quinlan  Steiner,  Public  Defender.   He  referred  to  page  2,                                                               
paragraph  2, of  the fiscal  note  analysis and  read, "In  some                                                               
communities where  judicial officers have concluded  that texting                                                               
and  driving is  not  covered by  the  current statute,  District                                                               
Attorneys  are  no  longer  pursuing   charges  for  texting  and                                                               
driving".   He stated  he was  not aware  of the  DOL's position.                                                               
Instead, he  understood that cases  were being dismissed  so they                                                               
could be  appealed.  He  further understood the DOL  was pursuing                                                               
this  since the  department's position  is that  the magistrate's                                                               
decision in this instance is "wrong  on the law."  He inquired as                                                               
to whether she  was aware of any communities in  which cases were                                                               
not being pursued.                                                                                                              
                                                                                                                                
MS. CARPENETI  answered she  was unaware of  any cases  not being                                                               
pursued.    She  related  her  understanding  the  DOL  has  been                                                               
petitioning decisions  by the magistrates  and while  the appeals                                                               
are not automatic  the DOL has asked that the  matter of legality                                                               
of  the matter  to be  reviewed  by the  Court of  Appeals.   She                                                               
agreed  that the  DOL's position  has been  that this  conduct is                                                               
covered by the statute originally passed in 2008.                                                                               
                                                                                                                                
1:18:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  said he  simply has  not been  aware of                                                               
this situation.   He  agreed that any  decision not  to prosecute                                                               
would impact  the fiscal  note.   Although the  finance committee                                                               
will  considered  fiscal impact,  but  he  stated that  he  would                                                               
appreciate confirmation as to  whether the prosecutorial activity                                                               
is  happening.   He  said  he strongly  hoped  that  the DOL  was                                                               
pursuing these cases.                                                                                                           
                                                                                                                                
MS.  CARPENETI  offered  to  research this  and  respond  to  the                                                               
committee.                                                                                                                      
                                                                                                                                
1:20:55 PM                                                                                                                    
                                                                                                                                
QUINLAN  STEINER   Director,  Central  Office,   Public  Defender                                                               
Agency, offered  to respond to  questions about the  fiscal note.                                                               
He related  his understanding  that Representative  Gruenberg had                                                               
questions on  whether district  attorneys were  prosecuting cases                                                               
in  all   communities.    He   reported  that  he   obtained  his                                                               
information for  the fiscal note  analysis from the  DOL's Deputy                                                               
Attorney  General Rick  Svobodny.   He advised  committee members                                                               
that the  cases have not been  pursued in all jurisdictions.   He                                                               
concluded that passing  HB 255 would impact  full prosecutions in                                                               
all communities in the state with a district attorney's office.                                                                 
                                                                                                                                
1:22:07 PM                                                                                                                    
                                                                                                                                
CHAIR  P.  WILSON  asked  for  clarification  on  the  impact  of                                                               
prosecution on the fiscal note.                                                                                                 
                                                                                                                                
MR.  STEINER  responded  that  as long  as  the  cases  involving                                                               
texting while driving  were being fully pursued  and drivers were                                                               
being  arrested it  wouldn't have  a fiscal  impact; however,  it                                                               
just depends on  the assumptions.  He  described the assumptions,                                                               
such  as whether  police  were arresting  for  the texting  while                                                               
driving  activity,  if  the   district  attorneys'  offices  were                                                               
pursuing  all cases,  and also  if the  parties were  being fully                                                               
prosecuted.   He said when  he prepared  the fiscal note  that he                                                               
assumed the cases were not being prosecuted in all communities.                                                                 
                                                                                                                                
CHAIR P.  WILSON said  she would  like a  definite answer  by the                                                               
next committee.                                                                                                                 
                                                                                                                                
MR.  STEINER was  unsure  if he  could  provide that  information                                                               
definitively, but he offered to follow up with the DOL.                                                                         
                                                                                                                                
1:23:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  offered  his  belief that  this  is  a                                                               
policy question.   He  related his  understanding that  the cases                                                               
involving  texting  while  driving  were being  pursued  until  a                                                               
decision had been issued by one  judge.  He surmised this has led                                                               
to  a hiatus,  in  which  some communities  may  not be  pursuing                                                               
texting while  driving cases.   He  acknowledged that  the fiscal                                                               
note is  a matter for  the finance committee to  review; however,                                                               
he wondered whether this situation  was temporary, and if so, and                                                               
how that may affect the fiscal impact.                                                                                          
                                                                                                                                
1:24:43 PM                                                                                                                    
                                                                                                                                
MR. STEINER offered  to clarify with the Department of  Law to be                                                               
certain  of  the  historical  prosecution of  these  cases.    He                                                               
acknowledged the ambiguity this has  created and agreed to follow                                                               
up on it.                                                                                                                       
                                                                                                                                
1:25:16 PM                                                                                                                    
                                                                                                                                
KATE SAKEGAK, a Denali Montessori  student, provided testimony on                                                               
HB 255.   She  stated that driver  distraction is  biggest reason                                                               
for  vehicle  accidents.    She  explained  that  drivers  become                                                               
distracted by their  phone screen at the same time  as the crash.                                                               
She  identified  the reason  that  texting  while driving  causes                                                               
distraction is that drivers can't focus  on a small screen and at                                                               
traffic while their vehicle is moving.   She compared this to her                                                               
own experience.   She stated that  her mother will not  allow her                                                               
to watch  television while  she is doing  her homework  since the                                                               
television creates a distraction.    Finally, she pointed out the                                                               
safety of all is worth a small limit on personal freedom.                                                                       
                                                                                                                                
CHAIR P. WILSON thanked Ms. Sakegak for her testimony.                                                                          
                                                                                                                                
1:27:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT  moved to  report HB  255 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GRUENBERG objected for  purpose of discussion.  He                                                               
suggested  the  committee  make   a  recommendation  rather  than                                                               
individual recommendations.                                                                                                     
                                                                                                                                
REPRESENTATIVE   PRUITT  restated   his  motion,   including  the                                                               
recommendation of "do pass," as follows:                                                                                        
                                                                                                                                
Representative Pruitt  moved to  report HB  255 out  of committee                                                               
with the recommendation of "do  pass" and the accompanying fiscal                                                               
notes.   There being  no further objection,  HB 255  was reported                                                               
from the House Transportation Standing Committee.                                                                               
                                                                                                                                
                                                                                                                                
1:28:27 PM                                                                                                                    
               HB 235-MOTOR VEHICLE TRANSACTIONS                                                                            
                                                                                                                                
CHAIR P. WILSON announced that  the final order of business would                                                               
be  HOUSE BILL  NO. 235,  "An Act  relating to  certain vehicles,                                                               
including  trailers;   and  relating  to  motor   vehicle  dealer                                                               
advertising, motor  vehicle dealer sales of  used motor vehicles,                                                               
motor vehicle  sales contracts, motor vehicle  service contracts,                                                               
and motor vehicle sales financing."                                                                                             
                                                                                                                                
1:28:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON,  Alaska State Legislature, thanked                                                               
members for the  opportunity to present HB 235.   This bill would                                                               
update statutes  AS 45.25.400 -  AS 45.25.900, commonly  known as                                                               
the  Alaska  Auto  Dealers  Practices Act.    The  changes  would                                                               
clarify  provisions concerning  the advertising  of new  and used                                                               
automobiles.     These  revisions  should  assist   consumers  in                                                               
understanding  auto  comparison   pricing  and  should  eliminate                                                               
ambiguities  contained in  the current  statutes while  assisting                                                               
dealers in following state law.                                                                                                 
                                                                                                                                
1:29:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMPSON  reported that  this bill was  drafted in                                                               
conjunction  with the  Commercial/Fair  Business  Section of  the                                                               
Department  of Law.   He  said, "Additionally,  this bill  should                                                               
take care of the contentious issues of the "DOC" fees making the                                                                
issue mute."                                                                                                                    
                                                                                                                                
1:30:10 PM                                                                                                                    
                                                                                                                                
JANE PIERSON, Staff, Representative Thompson, Alaska State                                                                      
Legislature, introduced herself.  She turned to the sectional                                                                   
analysis of HB 235.                                                                                                             
                                                                                                                                
1:30:21 PM                                                                                                                    
                                                                                                                                
MS. PIERSON read a sectional analysis of HB 235, as follows:                                                                    
                                                                                                                                
     Section 1.   Clarifies the "MSRP" shown  on the federal                                                                    
     Monroney  sticker   is  the   manufacturer's  suggested                                                                    
     retail price,  and not  the dealer's  advertised price.                                                                    
     Also  clarifies   what  items   are  included   by  the                                                                    
     manufacturer  in  arriving  at  MSRP as  shown  on  the                                                                    
     Monroney  sticker, and  allows dealers  to advertise  a                                                                    
     savings or discount from the MSRP.                                                                                         
                                                                                                                                
     Section  2.    Requires that  the  dealer's  advertised                                                                    
     price  must include  all dealer  fees and  costs except                                                                    
     fees paid  to a governmental  agency such as  taxes and                                                                    
     licensing fees.                                                                                                            
                                                                                                                                
     Section  3.   Removes disclosure  requirement regarding                                                                    
     use  of MSRP  in  advertising,  and removes  subsection                                                                    
     dealing  with  price  advertising that  is  covered  in                                                                    
     Section 1 to amendment to AS 45.25.400(b).                                                                                 
                                                                                                                                
     Section 4.  Requires  dealers use nationally recognized                                                                    
     valuation  publications (such  as  Kelly  Blue Book  or                                                                    
     N.A.D.A. Official  Used Car Guide) as  the retail value                                                                    
     when advertising comparative pricing  for used cars. HB                                                                    
     235 requires that this  pricing information be provided                                                                    
     to consumers upon request.                                                                                                 
                                                                                                                                
1:31:31 PM                                                                                                                    
                                                                                                                                
MS. PIERSON continued the sectional analysis, by reading the                                                                    
following [original punctuation provided]:                                                                                      
                                                                                                                                
     Section 5.   Removes section  now covered in  Section 2                                                                    
     amendment to  45.25.440; allows dealer to  make vehicle                                                                    
     identification    information    available    in    the                                                                    
     advertisement or at the dealership  - this resolves the                                                                    
     problem   of  impossible   to  read   small  print   on                                                                    
     television  advertising;  and   renumbers  sections  of                                                                    
     45.25.460(a). (This renumbering  requires the amendment                                                                    
     in Section 8)                                                                                                              
                                                                                                                                
     Section 6.  Changes the  word "verified" to "signed" so                                                                    
     the information  provided by an individual  to a dealer                                                                    
     need not be notarized.                                                                                                     
                                                                                                                                
     Section 7.   Allows a dealer  to have a vehicle  on the                                                                    
     sales lot and show it  to customers prior to having all                                                                    
     required paper work, but prohibits  sale of the vehicle                                                                    
     until  the dealer  has all  required  paperwork in  its                                                                    
     possession.                                                                                                                
                                                                                                                                
     Section 8.   Conforms AS 45.25.520  with renumbering in                                                                    
     Section 5.                                                                                                                 
                                                                                                                                
     Section 9.   Clarifies that the sales  contract will be                                                                    
     void  if  the  dealer   or  the  financing  institution                                                                    
     changes  terms  of  a separate  agreement  relative  to                                                                    
     financing.                                                                                                                 
                                                                                                                                
1:32:44 PM                                                                                                                    
                                                                                                                                
MS. PIERSON continued the sectional analysis, by reading the                                                                    
following [original punctuation provided]:                                                                                      
                                                                                                                                
     Section 10.  Provides for  responsibility of a buyer to                                                                    
     return a vehicle  if financing is not  approved and the                                                                    
     responsibility   of  dealer   to   return  a   trade-in                                                                    
     delivered to the dealer.                                                                                                   
                                                                                                                                
     Section 11.   Establishes responsibility of  a buyer to                                                                    
     return  a  vehicle if  the  financing  is denied  as  a                                                                    
     result of  intentional misrepresentation in  the credit                                                                    
     application, including  mileage fee  if over  100 miles                                                                    
     are put  on the  vehicle and responsibility  for damage                                                                    
     to the  vehicle, parking tickets, towing  fees, storage                                                                    
     fees, impound fees, and  other similar charges incurred                                                                    
     by the  buyer while  the vehicle  was in  possession of                                                                    
     buyer.                                                                                                                     
                                                                                                                                
     Section  12.     Removes  unnecessary  and  impractical                                                                    
     obligation  imposed  on  dealers  relating  to  service                                                                    
     contracts.                                                                                                                 
                                                                                                                                
1:33:39 PM                                                                                                                    
                                                                                                                                
MS. PIERSON continued the sectional analysis, by reading the                                                                    
following [original punctuation provided]:                                                                                      
                                                                                                                                
     Section  13.   Provides that  changes affect  contracts                                                                    
     entered into on or after  the effective date of the act                                                                    
     and  provides definitions  for  terms  used in  several                                                                    
     sections.                                                                                                                  
                                                                                                                                
     For   Section  7   -  Motor   vehicle  is   defined  in                                                                    
     45.25.590(3)   "motor  vehicle,"   notwithstanding  the                                                                    
     definition of "motor vehicle" in  AS 45.25.990, means a                                                                  
     vehicle, including  a trailer,  that is required  to be                                                                    
     registered  under  AS 28.10,  but  does  not include  a                                                                    
     motorcycle.                                                                                                                
                                                                                                                                
     For  Section   12,  Service  contract  is   defined  in                                                                    
     45.25.990  (18) "service  contract"  means an  optional                                                                    
     agreement  that is  separate from  a  contract for  the                                                                    
     sale of a motor vehicle  and that covers certain repair                                                                    
     or maintenance functions beyond  coverage provided by a                                                                    
     warranty.                                                                                                                  
     For Section Sections  9, 10, 11, and  12, Motor vehicle                                                                    
     is defined  in 45.25.990  (12) "motor vehicle"  means a                                                                    
     motor vehicle  that is required to  be registered under                                                                    
     AS  28.10,  but  does  not  include  a  motor  home,  a                                                                    
     recreational   vehicle,  or   a  motorcycle;   in  this                                                                    
     paragraph,                                                                                                                 
          (A) "all-terrain vehicle" has the meaning given                                                                       
          in AS 45.27.390;                                                                                                    
          (B) "recreational vehicle" includes an all-                                                                           
          terrain vehicle and a snow machine;                                                                                   
          (C) "snow machine" has the meaning given in AS                                                                        
          45.27.390.                                                                                                          
                                                                                                                                
1:34:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE referred to page 1, lines 11-12 of HB 245                                                                  
and asked for clarification as to why this language is being                                                                    
deleted.                                                                                                                        
                                                                                                                                
MS. PIERSON noted that Mr. Sniffen, Department of Law was on                                                                    
line to answer questions.                                                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG  related  he  has  some  questions  and                                                               
potential amendments  he may offer,  but he first wanted  to hear                                                               
public testimony.                                                                                                               
                                                                                                                                
1:36:55 PM                                                                                                                    
                                                                                                                                
STEVEN J.  ALLWINE, President, Mendenhall  Auto Group,  stated he                                                               
has been an  automobile dealer in Alaska for about  25 years.  He                                                               
offered his  strong support for  the bill.   He said he  has been                                                               
involved  with this  issue  from the  beginning  and expressed  a                                                               
willingness  to provide  clarification on  any provisions  in the                                                               
bill.  He explained that the  industry reached the point at which                                                               
it needed  to identify  in statute what  was functional  what was                                                               
not -  some provisions were simply  a waste of time  or tended to                                                               
make things  murky.  He  related that  years ago some  changes to                                                               
statute were adopted with a  specific intent, but over time these                                                               
statutes  have been  unintentionally  interpreted  in some  other                                                               
way.  He suggested that this bill should provide some clarity.                                                                  
                                                                                                                                
1:38:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE  referred to page 1,  line 12, of HB  245 to                                                               
the language being deleted, "AND  MINUS ALL MANUFACTURER DISCOUNT                                                               
AND  SAVINGS."    He  asked  for  clarification  on  the  deleted                                                               
language.                                                                                                                       
                                                                                                                                
MR.  ALLWINE  answered  that   this  information  is  information                                                               
already contained  on the manufacturer's  sticker, which  is also                                                               
known as the  Monroney sticker.  He referred to  page 1, line 10,                                                               
of  the   bill.    He   said  that   the  key  language   is  the                                                               
manufacturer's suggested  retail price  must reference  the final                                                               
price listed by  the manufacturer.  In  certain circumstances the                                                               
manufacturer will  choose to package certain  options and provide                                                               
a discount.  He highlighted  that this specific discount would be                                                               
disclosed on the Monroney sticker.                                                                                              
                                                                                                                                
1:40:27 PM                                                                                                                    
                                                                                                                                
STEVE   DELBIANCO,  Executive   Director,  NetChoice,   explained                                                               
NetChoice as  a trade association  of e-commerce that for  over a                                                               
decade  NetChoice  has  been an  advocacy  organization  for  the                                                               
Internet, dedicated  to supporting  online commerce  and consumer                                                               
choice.  He related that  NetChoice also has supported updates to                                                               
states' consumer protection laws, such  as this bill, in order to                                                               
give consumers  greater confidence  and trust in  the information                                                               
and  for  on-line  commerce.    His  organization  also  promotes                                                               
innovation that  helps to improve  the on-line industry,  such as                                                               
helping on-line travel agents reduce  costs and to give consumers                                                               
more choices.   NetChoice helps  provide ticket markets  to serve                                                               
sports and  concert fans.   He stated that NetChoice  supports HB                                                               
235  since  the  bill  will empower  consumers  to  have  pricing                                                               
information  that  is  comparable  across  competitors  and  will                                                               
eliminate any surprises with respect  to the final vehicle price.                                                               
He pointed  out the change  related to what dealers  must include                                                               
in  manufacturer's suggested  retail price  (MSRP) or  list price                                                               
will help  consumers identify  the final  MSRP across  the board.                                                               
He  related  that this  provision  is  in  line with  many  other                                                               
states.    This  bill  carries standardization  further  so  that                                                               
consumers can identify the final price  - the MSRP - as the basis                                                               
for  savings   vis-a-vis  advertised   price  comparisons.     He                                                               
emphasized support for proposed Section  5, since it will make it                                                               
harder  for any  dealer to  "bait and  switch" by  drawing buyers                                                               
into  a showroom  to  see a  car  that's not  really  there.   He                                                               
concluded  by  comparing  this  bill to  [a  federal  bill]  that                                                               
recently passed with  respect to airline tickets.   Travel agents                                                               
must now disclose a complete  and comparable price on any airline                                                               
tickets,  including that  all government  required  fees and  tax                                                               
requirements must  be included, as  well as baggage fees.   These                                                               
new federal  rules are similar  to the  ones in this  bill, which                                                               
are  designed   to  give  consumers   more  complete   and  clear                                                               
information  to allow  them to  compare prices  and know  what is                                                               
included in  the final ticket price.   He thanked members  of the                                                               
committee and offered NetChoice's support for the bill.                                                                         
                                                                                                                                
1:43:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRUITT  related  his understanding  that  out  of                                                               
state  dealers also  advertise  in  Alaska.   He  asked how  this                                                               
compares to other  states' laws and whether dealers  in the Lower                                                               
48 would have an advantage.   He offered his belief that Alaska's                                                               
rules have obscured  and limited our dealers from  being as clear                                                               
to the customers as he would like.                                                                                              
                                                                                                                                
1:44:25 PM                                                                                                                    
                                                                                                                                
MR.   DELBIANCO   related   his   understanding   that   Alaska's                                                               
regulations, which  require comparable  and clear  pricing, would                                                               
also apply  to any motor  vehicle dealer who  advertises vehicles                                                               
for sale in  Alaska.  He reiterated that all  dealers are subject                                                               
to these  statutes no  matter where  the dealer  is located.   He                                                               
said he certainly hoped that  was the case since Alaska consumers                                                               
should not  be subject to differences  standards of comparability                                                               
and  clarity, just  because  they happened  to  use a  newspaper,                                                               
magazine, or website from out of state.                                                                                         
                                                                                                                                
1:45:10 PM                                                                                                                    
                                                                                                                                
MR.  ALLWINE,  in  response  to   a  question  by  Representative                                                               
Gruenberg,  answered  that a  Juneau  resident  buying a  car  is                                                               
subject to a sales tax.                                                                                                         
                                                                                                                                
MR.  DELBIANCO,  in  response to  a  question  by  Representative                                                               
Gruenberg, answered that  the sales tax on motor  vehicles is not                                                               
assessed  on the  place of  purchase,  but depends  on the  place                                                               
where the  title for  the vehicle  is obtained.   He  offered his                                                               
belief that sales  tax is handled differently  for motor vehicles                                                               
than it is for other tangible  property due to the requirement to                                                               
obtain a title for motor vehicles.                                                                                              
                                                                                                                                
1:46:46 PM                                                                                                                    
                                                                                                                                
MR. ALLWINE agreed that is normally  the case, except in the City                                                               
and Borough  of Juneau.  He  explained that a mechanism  does not                                                               
exist within  Alaska to allow the  CBJ to collect sales  tax on a                                                               
vehicle  purchased  from  another state  or  location,  including                                                               
Anchorage.  He  mentioned that Anchorage dealers  are not subject                                                               
to sales tax.  He related  that people may purchase their vehicle                                                               
in Anchorage, but the Division  of Motor Vehicles (DMV) would not                                                               
collect sales  tax on  behalf of  the CBJ  if these  vehicles are                                                               
registered  in Juneau.   He  agreed with  Mr. Delbianco  with the                                                               
process he described  as being accurate and true in  the State of                                                               
Washington.                                                                                                                     
                                                                                                                                
1:48:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG asked him  to estimate the percentage of                                                               
advantage  out  of  state  dealers  would  receive  when  selling                                                               
vehicles to Juneau residents.                                                                                                   
                                                                                                                                
MR. ALLWINE answered  that sales tax on motor  vehicles is capped                                                               
at $375.   In  further response  to Representative  Gruenberg, he                                                               
explained that sales tax rate for  motor vehicles valued at up to                                                               
$7,500 would be assessed at 5  percent, with a $375 maximum sales                                                               
tax on vehicles valued at over $7,500.                                                                                          
                                                                                                                                
1:48:45 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON asked him to  estimate the value of the sales tax                                                               
if the legislature were to attempt  to provide a remedy for sales                                                               
tax  collection  on.   She  related  her understanding  that  one                                                               
obstacle is the  DMV would need to collect sales  tax it does not                                                               
currently collect on behalf of communities.                                                                                     
                                                                                                                                
MR. ALLWINE identified  this as an issue does not  pertain to the                                                               
bill;  however,  he  is  very  excited to  contemplate  it.    He                                                               
predicted that  the potential income  for cities and  boroughs in                                                               
Alaska would be  significant.  He did not recall  that anyone has                                                               
studied the matter.   He has observed, from his  experience as an                                                               
auto dealer in Juneau, that  a significant number of vehicles are                                                               
registered but  are not operated in  Juneau.  He surmised  that a                                                               
large  number  of these  vehicles  are  exported, but  the  motor                                                               
vehicle must  be titled to do  so legally.  He  suggested that if                                                               
one  were to  ask DMV's  representatives what  their observations                                                               
were  on this  matter,  they would  indicate  that a  significant                                                               
number  of  titles,  registrations,  and plates  are  sent  to  a                                                               
trailer  park  in  town,  but the  vehicles  are  not  physically                                                               
located in Juneau.  He  characterized this issue as being similar                                                               
to counterfeiting and exporting  vehicles illegally so addressing                                                               
the sales tax issue would stop these practices.                                                                                 
                                                                                                                                
1:50:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  pointed  out   that  NetChoice  is  an                                                               
Internet business  might be able  to clarify  pricing differences                                                               
and the  effect of Internet  purchases on local brick  and mortar                                                               
businesses.                                                                                                                     
                                                                                                                                
MR. DELBIANCO  responded that NetChoice  is a  trade association,                                                               
and not an  Internet seller organization, although  many of their                                                               
members  are Internet  sellers.   He  recalled earlier  testimony                                                               
that the  DMV would be  responsible for assessing  the applicable                                                               
local  sale tax  at  the time  a  motor vehicle  is  titled.   He                                                               
referred catalog sales for merchandise  other than motor vehicles                                                               
and when a customer purchases a  product, such as a new coat from                                                               
an  on-line vendor,  the vendor  is not  required to  collect and                                                               
remit any sales  tax.  He acknowledged that the  vendor would pay                                                               
a  use tax,  which is  applicable  in most  states; however,  the                                                               
business would pay the use  tax since individual consumers rarely                                                               
pay use  taxes on merchandise.   Some  may claim this  creates an                                                               
unfair advantage since  it would be six percent less  for a local                                                               
resident to buy a snow shovel  from an on-line merchant than from                                                               
a  local one;  however, the  downside to  consumers is  that they                                                               
must  wait several  days to  receive  the on-line  item plus  pay                                                               
shipping charges,  which is  more costly  to Alaskans  than sales                                                               
tax.  Therefore,  there is rarely a  price difference significant                                                               
enough  for  sales  tax  to  swap  shipping  costs  on  an  item.                                                               
Additionally,  the  Internet  has  also given  brick  and  mortar                                                               
businesses in Alaska the means  to survive and compete with large                                                               
box chain stores by allowing  them to sell specialty items around                                                               
the world.   He reiterated that small Main  Street businesses all                                                               
around the country have turned  to the Internet and e-commerce to                                                               
reach customers  with somewhat unique products,  which has become                                                               
Main Street's way of competing with catalog and Internet stores.                                                                
                                                                                                                                
1:54:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GRUENBERG  agreed   that   the  Internet   could                                                               
technically  allow the  local  person to  compete,  yet it  would                                                               
still bring  about competitive disadvantages to  local customers.                                                               
He pointed  out transportation costs  for a large truck  would be                                                               
expensive,  but  would  be  minimal  for  a  diamond  ring.    He                                                               
concluded  that  high  value  small volume  goods  would  have  a                                                               
disparate effect, depending on the industry.                                                                                    
                                                                                                                                
MR.  DELBIANCO  agreed  in  some  instances  the  sales  tax  for                                                               
consumers in  Alaska would  exceed the  extra shipping  cost they                                                               
pay.  However,  Virginians who purchased whale  bone jewelry from                                                               
Alaskan artists would  not pay any sales tax.   He concluded that                                                               
the  Internet  ends  up  being  the  means  for  availability  of                                                               
specialty items to people from all  over the country.  An Alaskan                                                               
merchant also would not have to  figure out the sales tax regimes                                                               
nationwide.                                                                                                                     
                                                                                                                                
1:57:06 PM                                                                                                                    
                                                                                                                                
CLYDE  (ED)  SNIFFEN,  JR., Senior  Assistant  Attorney  General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
Department  of  Law (DOL),  provided  a  brief history  with  his                                                               
involvement with  the development of HB  235.  He said  he worked                                                               
with dealers  on most  of the changes  incorporated into  HB 235.                                                               
He reported that this statute  was first enacted in 1992, amended                                                               
in 2004, and dealers and  the department have now had significant                                                               
experience with this type of  activity.  The changes incorporated                                                               
in  HB   235  help  to   clarify  the  intent  of   the  enabling                                                               
legislation.   This bill makes  it much easier for  consumers and                                                               
auto  dealers, in  that it  helps to  streamline the  process and                                                               
make  transactions  clear  to  the public.    He  described  some                                                               
substantive  provisions in  HB 235,  including a  provision which                                                               
allows   motor  vehicle   dealers   to   make  price   comparison                                                               
advertisements  for used  vehicles,  not  currently allowable  in                                                               
statute.  He offered that  by requiring price comparisons be made                                                               
only  to a  nationally  recognized pricing  source,  such as  the                                                               
Kelley  blue book,  helps  avoid consumer  deception  or harm  by                                                               
giving consumers  a standard  on which  to base  their decisions.                                                               
One  provision allows  motor vehicle  dealers  to advertise  free                                                               
merchandise with  the sale of  a motor  vehicle.  He  pointed out                                                               
similar  advertising  for  goods  such  as  furniture,  spas,  or                                                               
produce that advertise free goods  with sales.  He concluded that                                                               
the  statutory restrictions  seemed to  single out  auto dealers,                                                               
which is one reason to remove the restriction.                                                                                  
                                                                                                                                
2:00:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to page  1, lines 9-10,  of HB                                                               
235,  which would  delete  "advertised"  and add  "manufacturer's                                                               
suggested retail  price or  list."  He  expressed concern  that a                                                               
manufacturer's suggested  retail price  (MSRP), as listed  on the                                                               
Monroney sticker,  identifies a  specific price for  the vehicle,                                                               
yet the vehicle  might be advertised at a lower  price.  He asked                                                               
whether a  dealer is required  to stick to the  advertised price,                                                               
and if  so, if  that may  mislead people who  may think  they are                                                               
getting a better deal on a vehicle than they actually will get.                                                                 
                                                                                                                                
MR. SNIFFEN answered  that the specific changes on  page 1, lines                                                               
9-13, removes  the advertised price  and inserts the  MSRP, which                                                               
flows with the language on page  1, lines 6-8, in subsection (b).                                                               
This subsection identifies  when a dealer may use  the MSRP term.                                                               
He explained  that Section 1  attempts to describe what  the MSRP                                                               
must include.   He  understood the concern  that by  removing the                                                               
word  "advertised" a  situation may  occur where  a dealer  has a                                                               
Monroney  sticker  on car,  but  might  argue that  the  Monroney                                                               
sticker price  is not  the advertised price.   He  understood the                                                               
concern, but  he was unsure  any real consumer harm  would occur,                                                               
except that the dealer might be  able to add a dealer preparation                                                               
fee to  the price if the  Monroney sticker price is  not the same                                                               
as the advertised price.                                                                                                        
                                                                                                                                
REPRESENTATIVE GRUENBERG said he was now a little more confused.                                                                
                                                                                                                                
2:03:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT offered  to clarify.  He  explained that an                                                               
auto dealer who advertises on  television or in a newspaper would                                                               
still  need  to   hold  the  vehicle  stocking   number  for  the                                                               
individual item advertised.   He referred to page 3,  15-19 of HB                                                               
245 and read, "unless the  vehicle identification number, vehicle                                                               
stocking  number,   or  license   number  is  disclosed   in  the                                                               
advertisement or  made available  by the dealer  on request  of a                                                               
retail  buyer."   He emphasized  that  the dealer  would have  to                                                               
provide  documentation to  identify  the  specific vehicle  being                                                               
advertised,  even  if  the  advertised price  is  not  on  actual                                                               
Monroney sticker.                                                                                                               
                                                                                                                                
2:04:17 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:04:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE     GRUENBERG    agreed,     conceptually,    with                                                               
Representative  Pruitt's   explanation;  however,   he  expressed                                                               
concern that a  dealer may disclose a truck's serial  number in a                                                               
television advertisement;  however, consumers may not  be able to                                                               
clearly capture the detailed serial  number as it is rattled off.                                                               
Since it's possible the consumer may  not be able to identify the                                                               
specific vehicle,  it would  seem better  to have  the advertised                                                               
price  listed  on  the  vehicle   itself.    He  reiterated  that                                                               
otherwise consumers  may not  know for  certain which  vehicle is                                                               
the advertised vehicle.                                                                                                         
                                                                                                                                
2:05:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRUITT related  his understanding  that a  dealer                                                               
might show a specific 2012 Ford  Explorer in a television ad, but                                                               
consumers may think  all of the 2012 Ford Explorers  in stock are                                                               
for  sale at  the specific  price.   He agreed  the dealer  would                                                               
still  need  to be  able  to  identify  the specific  vehicle  to                                                               
consumers  advertised  to  prevent   a  "bait  and  switch"  from                                                               
happening.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG  and  Representative Pruitt  asked  Mr.                                                               
Sniffen to respond.                                                                                                             
                                                                                                                                
2:07:36 PM                                                                                                                    
                                                                                                                                
MR. SNIFFEN agreed with Representative  Pruitt's example.  He did                                                               
not think the  provision on page 1 would address  the instance on                                                               
whether a consumer could link  and identify a specific vehicle to                                                               
an advertisement.   He offered  his belief that those  issues are                                                               
covered in  other parts of the  bill.  He agreed  that the dealer                                                               
must be able to  provide satisfactory documentation for consumers                                                               
for  a specific  vehicle  advertised  at a  specific  price.   He                                                               
assured  members  if it  came  to  his  attention that  a  dealer                                                               
consistently  advertised   vehicles  at   one  price,   but  told                                                               
prospective buyers  the sale  vehicle had  already been  sold and                                                               
directed the prospective buyer to a  more expensive one - a "bait                                                               
and  switch"  tactic  -  that  he would  require  the  dealer  to                                                               
document the  advertised vehicle.   Thus, a dealer would  need to                                                               
provide proof that  he/she sold the specific  vehicle, during the                                                               
advertisement period,  at the specified  price.  He  offered that                                                               
he has  not seen this  type of issues  arise during his  12 years                                                               
working  in consumer  protection; however,  he suggested  that HB                                                               
235 would address this type of issue.                                                                                           
                                                                                                                                
2:09:15 PM                                                                                                                    
                                                                                                                                
GARY SLEEPER,  Attorney, Jermain, Dunnagan, &  Owens, PC, related                                                               
he is speaking  on behalf of the  Automobile Dealers Association.                                                               
He related  he has  also worked  with Mr.  Sniffen, DOL,  on this                                                               
issue.   In  response to  earlier question  as to  the reason  to                                                               
delete  manufacturer's discounts,  he explained  the MSRP  or the                                                               
Monroney sticker is  prepared by the manufacturers  and placed on                                                               
the vehicle  at the time of  manufacture.  He reported  that some                                                               
manufacturers'  discounts and  savings, such  as rebates  or cash                                                               
backs, can  be offered after the  MSRP is produced.   He referred                                                               
to earlier  discussion, with respect  to the deleted  language in                                                               
Section  1.   He  related his  understanding  that this  language                                                               
change would  more correctly describe  the MSRP.  He  recalled an                                                               
earlier  discussion related  to  comparison  advertising on  used                                                               
cars.  He pointed out that  dealers have sought for years to have                                                               
the ability  to advertise  discounts on used  cars, which  is not                                                               
allowed under  current law.   He  related a  scenario in  which a                                                               
dealer has a  convertible advertised for $20,000,  but the dealer                                                               
is prohibited by  law to advertise the vehicle at  $15,000 in the                                                               
event  the car  didn't sell  during the  summer.   He related  an                                                               
actual event in which a  large franchised dealer had an inventory                                                               
of  used cars.    The dealer  wanted to  liquidate  his used  car                                                               
inventory to obtain cash and  also advertise his price as exactly                                                               
the price he paid for the  vehicles.  Even though this would have                                                               
resulted in  substantial savings for the  buyer, after consulting                                                               
with the DOL, Mr. Sniffen could not  find a way for the dealer to                                                               
advertise the  discount under the  existing statute.   While this                                                               
bill would  not change that  situation, the proposed  change will                                                               
help consumers.   The dealer could indicate the  asking price and                                                               
consumers can compare the vehicle's  price to the Blue Book price                                                               
for  comparison.    He  concluded that  this  provision  will  be                                                               
beneficial to dealers and consumers.                                                                                            
                                                                                                                                
2:12:38 PM                                                                                                                    
                                                                                                                                
MR. SLEEPER turned to the  issue of advertising free merchandise.                                                               
He  explained   that  current  law  prohibits   the  dealer  from                                                               
adjusting  a   vehicle's  price  to   cover  the  cost   of  free                                                               
merchandise.  Thus,  a dealer could not adjust  a vehicle's price                                                               
to cover  the cost  of the  trip offered, such  as when  a dealer                                                               
offers an airline  ticket to Seattle with purchase  of a vehicle.                                                               
He  also  explained  the  reason for  the  proposed  deletion  of                                                               
advertised price in  Section 1, that the language  was changed in                                                               
order to differentiate between the  dealer's advertised price and                                                               
the MSRP.  He offered his  belief that change would make the rest                                                               
of the statutes consistent.   He then summarized proposed Section                                                               
2, noting  that a  motor vehicle  dealer's advertised  price must                                                               
include all  fees including  dock fees, which  are not  fees that                                                               
are included  in the MSRP.   He  recapped that deleting  the word                                                               
"advertised" has  the effect  of making  the statute  clearer and                                                               
helps  to  distinguish  a  dealer's  price from  the  MSRP.    He                                                               
characterized this as the only intent of that provision.                                                                        
                                                                                                                                
2:14:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  expressed  concern that  auto  dealers                                                               
cannot   advertise  discounts   on   used  cars,   such  as   the                                                               
aforementioned  scenario.   He  related  in  such an  instance  a                                                               
dealer wanted to  offer discounts on a large number  of cars that                                                               
had not  been sold during the  summer months.  The  dealer simply                                                               
wanted to let  potential consumers know of that the  cars were on                                                               
sale, but  the law  did not  allow him to  do so.   He  asked for                                                               
clarification   as  to   the  reason   for  the   restriction  in                                                               
advertising used  vehicles and how  the law should be  changed to                                                               
allow  this  type of  advertising.    He  said it  appeared  that                                                               
letting consumers know a special  sales price would be beneficial                                                               
to consumers.                                                                                                                   
                                                                                                                                
MR. SLEEPER  responded that the  reason a used car  dealer cannot                                                               
advertise a price reduction is  because the statutes do not allow                                                               
comparison  advertising  at  all.    He  said,  "It's  absolutely                                                               
prohibited."   He provided an  example, that under current  law a                                                               
sticker  that  reads,  $19,999,  cannot be  adjusted  to  show  a                                                               
reduced  price  of $15,999.    One  solution  would be  to  allow                                                               
comparison  advertising.    He   pointed  out  the  concern  that                                                               
consumers and Mr. Sniffen would  have is the concern that dealers                                                               
may advertise false  savings.  He related a scenario  in which in                                                               
which a dealer  places a car on  the lot and advertise  it for at                                                               
$2,999, and three days later  reduces it to $1,999, and announces                                                               
the savings of $1,000 to consumers.   He reiterated that the goal                                                               
is to  prevent advertising false  savings.  He offered  that this                                                               
type of  conduct is  already prohibited  under the  Alaska Unfair                                                               
Trade  Practices statute.   He  stated that  the current  statute                                                               
addresses  this by  providing a  blanket prohibition  against any                                                               
type of  comparison advertising.   He said it's  conceivable that                                                               
the  legislature could  change current  law to  allow dealers  to                                                               
show  comparison  advertising  and rely  on  consumer  protection                                                               
contained in the  Unfair Trade Practices Act.   He concluded that                                                               
the  approach this  bill  takes  is to  provide  a compromise  by                                                               
giving consumers a reference price  to easily access to eliminate                                                               
the issue of false savings.                                                                                                     
                                                                                                                                
REPRESENTATIVE   GRUENBERG  offered   to  work   on  this   issue                                                               
separately  to   solve  a  problem   yet  not   permit  deceptive                                                               
practices.    He inquired  as  to  whether language  Mr.  Sniffen                                                               
thought language could be developed to do so.                                                                                   
                                                                                                                                
2:17:59 PM                                                                                                                    
                                                                                                                                
MR. SNIFFEN  commented.  He related  that for the past  ten years                                                               
he has worked  to seek a remedy  in statute, but the  matter is a                                                               
complicated  one.   He acknowledged  that  fictitious pricing  is                                                               
difficult  to  enforce.    He  described  the  situation  he  has                                                               
observed in  furniture stores where  furniture is  continually on                                                               
sale.    He related  that  furniture  sales' regulations  require                                                               
furniture must  be listed  at a  certain price  for at  least six                                                               
months.   He explained  that furniture  stores can  reduce prices                                                               
after the store attempts to sell  the furniture in good faith for                                                               
at  least a  six month  period.   The store  could then  show the                                                               
price was  originally $8,000, but  the price has been  reduced to                                                               
$6,000.   He  described cases  in which  furniture dealers  would                                                               
receive a large shipment of  furniture, list it with high prices,                                                               
store  it  in a  corner  and  six  months  later would  move  the                                                               
furniture to  the front of the  store.  The store  would show the                                                               
original price, plus the reduced  price, which is essentially the                                                               
price  that the  furniture should  initially have  been set.   He                                                               
explained the  problems associated  with used  auto prices.   The                                                               
department  has considered  requiring the  dealer to  advertise a                                                               
vehicle -  clearly and  conspicuously - for  a certain  period of                                                               
times, such as 60 days, after  which time the dealer could reduce                                                               
the  price.   However,  with  a small  enforcement  staff, it  is                                                               
difficult for the DOL to  enforce whether the dealer followed the                                                               
timeline and if a car was listed  for 60 days or only for 5 days.                                                               
He  characterized  this   as  a  tricky  scenario.     Thus,  the                                                               
compromise  in the  bill  allows  used car  dealers  to at  least                                                               
reference a  nationally available  pricing with  some legitimacy.                                                               
He reiterated that  consumers could compare pricing on  a new car                                                               
to  the MSRP,  which is  consistent nationwide.   The  bill would                                                               
allow  used  auto  dealers  to  use  the  Kelley  Blue  Book  for                                                               
consumers  to  identify  comparison   prices.    He  expressed  a                                                               
willingness to consider another way for fair price comparison.                                                                  
                                                                                                                                
2:20:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE  referred to page 1,  line 11, of HB  235 to                                                               
the  Monroney sticker.    He  asked what  information  is on  the                                                               
sticker, and whether options, including accessories, are listed.                                                                
                                                                                                                                
MR.  SLEEPER  identified  the  Monroney   sticker  as  a  sticker                                                               
required  by  federal  law,  which   is  required  to  shows  all                                                               
accessories   and   options  added   to   the   vehicle  by   the                                                               
manufacturer.   It does  not show anything  added by  the dealer.                                                               
He  agreed  that  the  language  [on page  1,  lines  9-13],  the                                                               
Monroney sticker,  includes accessories and options;  however the                                                               
said he did not think the language needed further clarification.                                                                
                                                                                                                                
2:22:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to  Section 3 of  HB 235.   He                                                               
asked why  the bill would  remove language that  requires dealers                                                               
to clearly  disclose the  MSRP and the  language in  paragraph 5,                                                               
since  these  provisions  include important  protections  to  the                                                               
consumer.                                                                                                                       
                                                                                                                                
MR. SNIFFEN asked for clarification on the question.                                                                            
                                                                                                                                
REPRESENTATIVE GRUENBERG restated his question.                                                                                 
                                                                                                                                
2:24:17 PM                                                                                                                    
                                                                                                                                
MR. SNIFFEN  offered his belief  that Section 3 is  deleted since                                                               
it  essentially prohibits  the motor  vehicle dealer  from making                                                               
the  price comparison.    In  doing so,  this  would allow  price                                                               
comparisons for a  new vehicle.  He referred to  page 2, to lines                                                               
22-25 of  HB 235, which  would not  allow a price  comparison for                                                               
vehicles unless  that price is fully  disclosed on the MSRP.   He                                                               
admitted he  did not recall  whether Section  3 of the  bill does                                                               
this, but  he recalled one section  of the bill deals  with price                                                               
comparisons generally  and prohibits any price  comparison except                                                               
for new vehicles.                                                                                                               
                                                                                                                                
2:25:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  referred  to   page  2,  line  14,  of                                                               
proposed  AS  45.25.450  (b)  of  Section  3.    He  related  his                                                               
understanding  that this  subsection  would only  apply to  price                                                               
comparisons  for  new  motor  vehicles  and  not  to  used  motor                                                               
vehicles.                                                                                                                       
                                                                                                                                
MR.  SNIFFEN agreed.   He  explained the  effect of  removing the                                                               
language  on page  2, lines  22-29  of the  bill.   He said  that                                                               
deleting paragraph 4,  would mean that dealers would  not need to                                                               
put a  disclaimer in an advertisement  that essentially indicates                                                               
there may  not have been other  vehicles sold at the  MSRP price.                                                               
He suggested  that this language  was originally in  the statutes                                                               
to avoid  a situation  in which  consumers thought  numerous Ford                                                               
Explorers  were  being sold  at  the  MSRP,  so when  the  dealer                                                               
discounted  the MSRP  price, the  consumers were  led to  believe                                                               
they were  saving a  lot of  money by  not paying  the MSRP.   He                                                               
pointed out  consumers were typically  savvy about what  the MSRP                                                               
represents so  it did not  seem reasonable to require  dealers to                                                               
pay  for  the   extra  space  in  advertisement   to  state  this                                                               
disclaimer.   He  concluded that  the  language did  not add  any                                                               
significant consumer protection.                                                                                                
                                                                                                                              
2:27:28 PM                                                                                                                  
                                                                                                                                
MR. SLEEPER asked  to further comment.  He explained  that as Mr.                                                               
Sniffen pointed  out, Section 3  of the bill would  allow dealers                                                               
to  advertise  that they  are  selling  below  the MSRP.    Under                                                               
current  law, if  a dealer  advertises a  new vehicle  for $3,000                                                               
below MSRP,  the dealer would  be in  violation of the  law since                                                               
dealers cannot offer discounts.   Dealers are also not allowed to                                                               
make  any representation  in their  ads that  suggest a  consumer                                                               
would save  money by  paying less  than the  price listed  on the                                                               
MSRP.  He  highlighted that dealers have been  hamstrung and have                                                               
not been  able to figure  out how to  let consumers know  of real                                                               
savings.  He described an instance  in which the MSRP is $21,900,                                                               
but the  dealer wants  to reduce  the price by  $1,500.   He said                                                               
some dealers  simply advertise that  the vehicle is  "$1,500 off"                                                               
the MSRP.  He said this situation  just did not make sense and in                                                               
fact has impaired dealers' ability  to show the price calculation                                                               
for the advertised price.   He summarized that proposed Section 3                                                               
would eliminate  the prohibition  and allow dealers  to advertise                                                               
with more clarity.  It would  allow dealers to let consumers know                                                               
when  vehicles are  on sale  so they  can take  advantage of  the                                                               
savings.   He characterized the  changes as similar to  ones that                                                               
allow comparison advertising on new cars.                                                                                       
                                                                                                                                
2:30:08 PM                                                                                                                    
                                                                                                                                
MARTIN  MARTENSEN, President,  Alaska  Auto Dealers  Association;                                                               
Owner, Continental  Auto Group,  stated that  he often  feels the                                                               
need for  clarification from Mr.  Sniffen prior to running  an ad                                                               
to be  sire the advertisement  is within  the law.   He expressed                                                               
his gratitude for the good  relationship with Mr. Sniffen and the                                                               
DOL's consumer protection staff.   He acknowledged that sometimes                                                               
Mr. Sniffen has  deterred them from advertising in  a certain way                                                               
since the  advertising would fall  in a  "gray" area of  the law.                                                               
He related that  purpose of this bill is to  remove the gray area                                                               
and allow  dealers to operate within  the law and also  allow the                                                               
Department  of  Law  to  enforce  the  statute  in  a  clear  and                                                               
consistent manner.                                                                                                              
                                                                                                                              
2:31:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PETERSEN asked for  clarification between the term                                                               
discount and rebate.                                                                                                            
                                                                                                                                
MR.  SLEEPER answered  that the  terms  are technical  ones.   He                                                               
related that  the term  rebate is  a term  used to  describe cash                                                               
given back, which is only  offered by manufactures and is defined                                                               
in  statute.   He  explained  that a  discount  would be  savings                                                               
offered by the  local dealer and represents a  reduction from the                                                               
MSRP and is not offered by the manufacturer.                                                                                    
                                                                                                                                
2:33:05 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON, after first  determining no one else  wished to                                                               
testify, closed public testimony on HB 235.                                                                                     
                                                                                                                                
2:33:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG expressed  concern about another phrase.                                                               
He  asked  if  he  could  have copies  of  a  proposed  amendment                                                               
distributed,  although  he  was  uncertain  he  would  offer  any                                                               
amendment.                                                                                                                      
                                                                                                                                
[The amendment was not offered.]                                                                                                
                                                                                                                                
2:34:41 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 2:34 p.m. to 2:36 p.m.                                                                       
                                                                                                                                
REPRESENTATIVE  THOMPSON  urged  members  to pass  HB  235.    He                                                               
explained that this bill would  assist help protect consumers and                                                               
would also  help dealers adhere to  state law.  He  urged members                                                               
to  support  the  bill  and  advance it  its  next  committee  of                                                               
referral.                                                                                                                       
                                                                                                                                
2:36:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG thanked the  parties that worked on this                                                               
bill.   He thanked  people who testified  and helped  clarify the                                                               
issues.                                                                                                                         
                                                                                                                                
2:37:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT  moved to  report HB  235 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 235 was reported  from the                                                               
House Transportation Standing Committee.                                                                                        
                                                                                                                                
2:38:13 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Transportation Standing  Committee meeting was adjourned  at 2:38                                                               
p.m.                                                                                                                            

Document Name Date/Time Subjects
2 HB235Sponsor Statement.pdf HTRA 1/26/2012 1:00:00 PM
HB 235
3 HB235 version A.pdf HTRA 1/26/2012 1:00:00 PM
HB 235
4 HB235 Sectional 1 17 12.pdf HTRA 1/26/2012 1:00:00 PM
HB 235
5 HB235 AADA Letter of Support.pdf HTRA 1/26/2012 1:00:00 PM
HB 235
HB 255 Sponsor Statement.pdf HJUD 2/8/2012 1:00:00 PM
HTRA 1/26/2012 1:00:00 PM
HB 255
HB 255 version I.pdf HJUD 2/8/2012 1:00:00 PM
HTRA 1/26/2012 1:00:00 PM
HB 255
NCSL Legisbrief Addressing Distracted Driving.pdf HTRA 1/26/2012 1:00:00 PM
HB 255
NCSL Texting Law by State.pdf HJUD 2/8/2012 1:00:00 PM
HTRA 1/26/2012 1:00:00 PM
HB 255
HB235-DOA-DMV-1-23-12.pdf HTRA 1/26/2012 1:00:00 PM
HB 235
HB235-LAW-CIV-01-20-12.pdf HTRA 1/26/2012 1:00:00 PM
HB 235
HB255-DOA-OPA-1-20-12.pdf HJUD 2/8/2012 1:00:00 PM
HTRA 1/26/2012 1:00:00 PM
HB 255
HB255-DOA-PDA-1-23-12 (2).pdf HTRA 1/26/2012 1:00:00 PM
HB 255
HB255-DOC-OC-01-20-12.pdf HTRA 1/26/2012 1:00:00 PM
HB 255