Legislature(1993 - 1994)

04/11/1994 01:50 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                   SENATE JUDICIARY COMMITTEE                                  
                         April 11, 1994                                        
                           1:50 p.m.                                           
  MEMBERS PRESENT                                                              
 Senator Robin Taylor, Chairman                                                
 Senator Rick Halford, Vice-Chairman                                           
 Senator George Jacko                                                          
 Senator Dave Donley                                                           
 Senator Suzanne Little                                                        
  MEMBERS ABSENT                                                               
 All members present                                                           
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 327                                                           
 "An Act amending the motor fuel tax to establish a different tax              
 levy on residual fuel oil used in and on watercraft; and providing            
 for an effective date."                                                       
 SENATE BILL NO. 302                                                           
 "An Act relating to the establishment, modification, and                      
 enforcement of support orders and the determination of parentage in           
 situations involving more than one state; amending Alaska Rule of             
 Administration 9; amending Alaska Rule of Civil Procedure 82; and             
 providing for an effective date."                                             
 SENATE BILL NO. 362                                                           
 "An Act relating to insurance, to the licensing, accreditation,               
 examination, regulation, and solvency of persons engaged in the               
 insurance business, including insurers, nonadmitted insurers,                 
 purchasing groups, risk retention groups, and United States                   
 branches of alien insurers; relating to the management of and the             
 filing of reports by persons licensed or otherwise doing business             
 under the insurance code; amending Alaska Rule of Civil Procedure             
 45; and providing for an effective date."                                     
 SENATE BILL NO. 332                                                           
 "An Act relating to the method of calculating the weight of live              
 marijuana plants for purposes of applying controlled substance laws           
 and amending the definition of `marijuana'."                                  
 SENATE BILL NO. 349                                                           
 "An Act amending Alaska Rule of Criminal Procedure 6(r) relating to           
 admissibility of hearsay evidence by peace officers before the                
 grand jury."                                                                  
 SENATE BILL NO. 350                                                           
 "An Act relating to a defendant's violation of conditions of                  
 release; and providing for an effective date."                                
 SENATE BILL NO. 351                                                           
 "An Act amending Alaska Rule of Evidence 404, relating to the                 
 admissibility of certain character evidence in court proceedings."            
 SENATE BILL NO. 353                                                           
 "An Act amending Alaska Rule of Criminal Procedure 24(d) relating             
 to peremptory challenges of jurors in felony criminal proceedings."           
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB 327 - See Transportation minutes dated 3/10/94 and 3/31/94.                
 SB 302 - See State Affairs minutes dated 3/21/94, 3/23/94, and                
 SB 362 - See Labor & Commerce minutes dated 3/29/94 and 3/31/94.              
 SB 332 - See Judiciary minutes dated 2/11/94, 3/11/94,                        
          and 4/8/94.                                                          
 SB 349 - See State Affairs minutes dated 3/14/94, and                         
          Judiciary minutes dated 3/25/94, 4/8/94.                             
 SB 350 - See State Affairs minutes dated 3/14/94, and                         
          Judiciary minutes dated 3/25/94, 4/8/94.                             
 SB 351 - See State Affairs minutes dated 3/14/94, and                         
          Judiciary minutes dated 3/25/94, 4/8/94.                             
 SB 353 - See State Affairs minutes dated 3/14/94, and                         
          Judiciary minutes dated 3/25/94, 4/8/94.                             
 WITNESS REGISTER                                                              
 Ray Gillespie, Representing Petro Marine Services                             
 9478 Riverside Court                                                          
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Offered information on SB 327                          
 John Mallonee, Deputy Director                                                
 Child Support Enforcement Division                                            
 Department of Revenue                                                         
 550 W. 7th, Suite 312                                                         
 Juneau, AK 99501-3556                                                         
  POSITION STATEMENT:   Offered information in support of SB 302               
 Donna Page, Senior Hearing Officer                                            
 Department of Revenue                                                         
 P.O. Box 110400                                                               
 Juneau, AK 99811-0400                                                         
  POSITION STATEMENT:   Responded to questions on SB 302                       
 Laraine Derr, Deputy Commissioner                                             
 Department of Revenue                                                         
 P.O. Box 110400                                                               
 Juneau, AK 99811-0400                                                         
  POSITION STATEMENT:   Supports SB 302                                        
 David Walsh, Director                                                         
 Division of Insurance                                                         
 Department of Commerce & Economic Development                                 
 P.O. Box 110805                                                               
 Juneau, AK 99811-0805                                                         
  POSITION STATEMENT:   Offered information on SB 362                          
 Barbara Thurston, Chief Actuary                                               
 Division of Insurance                                                         
 Department of Commerce & Economic Development                                 
 P.O. Box 110805                                                               
 Juneau, AK 99811-0805                                                         
  POSITION STATEMENT:   Answered questions on SB 362                           
  ACTION NARRATIVE                                                             
 TAPE 94-34, SIDE A                                                            
 Number 001                                                                    
  CHAIRMAN ROBIN TAYLOR  called the Judiciary Committee meeting to             
 order at 1:50 p.m.  He brought  SB 327  (TAX ON RESIDUAL MARINE FUEL     L    
 OIL) before the committee as the first order of business.                     
 SENATOR LITTLE explained the legislation allows the state to do               
 some creative economic development.  Currently, the state charges             
 5 cents per gallon for residual fuel, and SB 327 would allow the              
 state to continue to collect the 5 cents per gallon for the                   
 residual fuel until the existing amount of tax has been collected.            
 The historical amount has been approximately $205,000, and after              
 that amount is collected, the bill would allow for the tax to go to           
 1 cent per gallon.  She said dropping the tax to 1 cent per gallon            
 will create an incentive for cruise ships to purchase their fuel in           
 Number 080                                                                    
 RAY GILLESPIE, representing Petro Marine Services, said Petro                 
 Marine is based in Seward, and their marketing director, Jim Burns,           
 worked with the cruise industry to try to develop a new market for            
 bunker fuels.  He said the purpose of the legislation is to expand            
 the market by making the product more competitive without costing             
 the state treasury any money.                                                 
 SENATOR LITTLE noted that Sitka is very enthused about the                    
 legislation as it may create some economic opportunities there as             
 Number 136                                                                    
 SENATOR LITTLE moved that SB 327 be passed out of committee with              
 individual recommendations.  Hearing no objection, it was so                  
 Number 140                                                                    
 ACT) before the committee as the next order of business.                      
 JOHN MALLONEE, Deputy Director, Child Support Enforcement Division,           
 Department of Revenue, said SB 302 addresses one of the most                  
 complex and complicated areas of child support.  Passage of the               
 legislation will improve services to case parties involved in the             
 interstate enforcement of child support orders by clarifying the              
 process and moving to a one order system honored by all states                
 which have passed this uniform law.  Currently, eight states have             
 passed this uniform law and 25 other states have it in their                  
 current session.                                                              
 Mr. Mallonee said that while the bill contains many provisions, the           
 most significant is the one maintaining only one valid order at one           
 time.  Under the current interstate laws, there can be several                
 orders in effect at one time in several states.  This creates much            
 confusion - obligors can be paying and be current in one state and            
 have arrears and not be meeting their child support payments in               
 other states because there is not one order in effect at one time.            
 Number 182                                                                    
 SENATOR LITTLE asked if this Act is a mandate of the federal                  
 government.  MR. MALLONEE answered that it has not been mandated by           
 the federal government at this time.  Uniform Law Commissioners,              
 who look at laws that need to be uniform throughout the states,               
 have recommended passage of this particular law and repealing the             
 Uniform Reciprocal Enforcement of Support Act (URESA).                        
 SENATOR LITTLE asked if there has been any opposition to the                  
 legislation.  MR. MALLONEE answered that he does not know of any              
 opposition to it, although an attorney in Anchorage, who represents           
 a group of obligors, has suggested some minor changes to it.                  
 Number 214                                                                    
 There were several questions raised on the waiving by a "tribunal"            
 of the petitioner's filing fee or other costs.  DONNA PAGE, Senior            
 Hearing Officer, Department of Revenue, clarified that the bill was           
 drafted using the word "tribunal" because, currently, child support           
 is established both by the courts and by the agency.  Right now,              
 URESA is not used very much by the agency because in order to use             
 URESA, they have to go to court and that causes a huge backlog of             
 their work in trying to get it through the court system.  She                 
 explained if the word "tribunal" is used and the agency is included           
 in this Act, as opposed to the way it is done in URESA, the agency            
 will use the Act and in a much more expeditious manner                        
 administratively establish child support in an interstate case.  If           
 a state has jurisdiction over a child support case, another state             
 cannot create another child support order.  The child support                 
 agency can be the entity that takes another state's order and                 
 enforces it or modifies it if that is appropriate.  MR. MALLONEE              
 added that the modification must come from the state that has                 
 continued exclusive jurisdiction in the case.                                 
 Number 340                                                                    
 Mr. Mallonee and Ms. Page responded to several questions from                 
 committee members on how the information is currently shared                  
 between states, how this Act will enable the state to function                
 better in collecting child support payments, and how a state gains            
 jurisdiction over a child support case.                                       
 Number 500                                                                    
 SENATOR LITTLE asked for an explanation of the term "default                  
 order."  MR. MALLONEE responded that in the establishment of a                
 notice of finding a financial responsibility, the number one thing            
 that the agency does is attempt to locate information on what an              
 individual makes by checking Department of Labor statistics, as               
 well as requesting information from the person.  A default order is           
 only set once they have no information.  The courts do the same               
 thing, and in many cases, they set it using a $60,000 figure.  If             
 they ask the person to provide financial information and they do              
 not, the court normally sets it using $60,000, which is the maximum           
 in the guidelines.                                                            
 Number 531                                                                    
 SENATOR TAYLOR commented that he understands the concern and the              
 desire to make certain that people conduct themselves in an                   
 appropriate fashion, but he thinks the entire weight of the State             
 of Alaska, the Attorney General's office and the Child Support                
 Enforcement Agency are set up for one purpose only and that is to             
 gain money.                                                                   
 Number 590                                                                    
 SENATOR HALFORD asked what would happen if the word "tribunal" were           
 changed to "court" throughout the bill.  MS. PAGE responded that              
 she thought that the situation would be the same as it is now.  She           
 thinks it is necessary to have it "tribunal" in order to make it              
 easy for the administrative agency to administratively respond to             
 interstate cases.  If they can't, they have other statutes that               
 allow them to do what they are doing now, and that is to establish            
 an Alaska order every time they've got an interstate case.                    
 TAPE 94-34, SIDE B                                                            
 Number 050                                                                    
 SENATOR HALFORD said it is absolutely asinine to have a minimum               
 payment level of $50, which is nothing, and the obligor is getting            
 money under the table to avoid having to pay more child support,              
 while at the same time, he is driving around in a new truck.  He              
 suggested it would be better to go back into the 90.3 statute and             
 rewrite new minimum and maximum payments, and say that is the                 
 degree of motion that the system has got.  He added that the court            
 has said that in the case of that set of rules, they would like to            
 see that done.                                                                
 Number 068                                                                    
 LARAINE DERR, Deputy Commissioner, Department of Revenue, said she            
 just recently assumed the administrative responsibility for child             
 support, and she thinks there are problems in every area.  She                
 stated this bill is one way of starting to fix an interstate                  
 problem and addresses the problem of an individual having multiple            
 court orders and which one should be followed.                                
 Number 115                                                                    
 SENATOR HALFORD stated the current system is a mess and he is not             
 willing to make a system work any better that is not worth fixing.            
 Number 130                                                                    
 SENATOR TAYLOR asked Mr. Mallonee to comment on the federal aspects           
 of the program.  MR. MALLONEE said 66 percent of operating expenses           
 of the entire child support program is federally funded.  They also           
 receive incentives anywhere from 6 to 10 percent based on the AFDC            
 collections that they return, of which 50 percent goes to the state           
 to replace its share of the AFDC and 50 percent goes to the federal           
 government to replace their share of the AFDC.  In most cases, they           
 have more than 100 percent of their budgeted expenses covered by              
 federal funds.  Therefore, the federal government has laid down               
 some fairly significant rules in the child support area based on              
 giving funding to these programs.  He reiterated that this                    
 particular program is not mandated by the federal government, as              
 yet, but he suspects that before too many more years the federal              
 government will mandate this program or something similar.  He also           
 agreed that there are a lot of problems within the system, and one            
 of the most complicated ones that creates a lot of confusion and              
 hardship to a lot of people is the interstate one.                            
 Number 160                                                                    
 There being no further testimony or questions on SB 302, SENATOR              
 TAYLOR stated he would like to hold the bill in committee to take             
 a closer look at it.                                                          
 Number 170                                                                    
 SENATOR TAYLOR brought  SB 362  (OMNIBUS INSURANCE REFORM) before the    he   
 committee as the next order of business.                                      
 DAVID WALSH, Director, Division of Insurance, Department of                   
 Commerce & Economic Development, said SB 362 is a combination of              
 small but not controversial items contained in one bill.  The bill            
 has a zero fiscal note.                                                       
 SB 362 contains items in three areas:  (1) small, but substantive             
 changes in Title 21; (2) small NAIC models; and (3) provisions that           
 would allow the division, when there are no outstanding obligation,           
 to accept the surrender of a certificate of authority.                        
 Mr. Walsh noted the division had provided, for the committee's                
 information, a sectional analysis of the bill, as well as a side-             
 by-side analysis of the bill where the statutes were changed.                 
 Mr. Walsh also pointed out that the division had two requirements             
 for any items to be in the bill.  The main one was that they be               
 absolutely noncontroversial, and, secondly, that they not be part             
 of any larger bill, which is why separate legislation relating to             
 risk-based capital was introduced.                                            
 Number 225                                                                    
 Responding to a question from Senator Taylor, Mr. Walsh said a                
 provision in the bill clarifies what the risk retention groups do             
 and reduces the number of hurdles that they have to jump through.             
 He added that there are very few risk retention groups in the                 
 state, but the ones that exist are very pleased with the change.              
 Number 260                                                                    
 SENATOR DONLEY asked for an explanation on the provision relating             
 to consumer credit insurance.  DAVE WALSH responded that credit               
 insurance is one of the most problematic areas that they regulate,            
 and the bill allows the division to establish some regulations and            
 is a first step in what they hope is going to be a solution.  In              
 the past, Alaska has been listed as among the worst states for                
 credit insurance.   BARBARA THURSTON, Chief Actuary, Division of              
 Insurance, added that the main thing it does is it increases the              
 disclosures that need to made to consumers.  It also adds a 30-day            
 period where the consumer can look at the policy and change his               
 Number 335                                                                    
 SENATOR TAYLOR asked if would be possible to impose a requirement             
 that no bank, credit bureau, or lending institution may profit in             
 any way from the sale, brokerage, or whatever, of any policy of               
 insurance.  MR. WALSH acknowledged that such a provision could be             
 added to the bill if that was the will of the committee.  However,            
 the division didn't want to come in with a bill as big as SB 362              
 with anything that was going to generate a lot of controversy and             
 a lot of contention.                                                          
 SENATOR TAYLOR inquired what change was made to Alaska Rule of                
 Civil Procedure 45.  MR. WALSH answered that the change came from             
 the Department of Law.  There was concern that the division does              
 get proprietary information in conjunction with an exam.  If the              
 division has proprietary information, information which,                      
 essentially, does not belong to them, but belongs to the company              
 itself, this stops a collateral attack to obtain the information              
 from the division.  There is concern that without this kind of                
 section, the division will be forced into litigation to get the               
 kind of information it needs from the companies.                              
 Number 475                                                                    
 SENATOR DONLEY asked if there were any provisions in the bill                 
 relating to automobile insurance.  MR. WALSH directed attention to            
 Section 53 which, he said, clarifies some of the ambiguities in               
 this type of insurance and levels the playing field for the                   
 Number 625                                                                    
 SENATOR JACKO referred to Section 30 wherein it provides that the             
 director may adopt regulations for additional education or                    
 experience.  He asked Mr. Walsh how much additional education or              
 experience he perceived would be required and how this would affect           
 people who live in places where there aren't educational                      
 experiences provided.  MR. WALSH replied that it is a section that            
 the independent agents and brokers have wanted for a long time.  It           
 allows the adoption of continuing education regulations.  Part of             
 it is to allow for the fact that there are a significant number of            
 agents and brokers in rural Alaska, and allows for doing their                
 continuing education by viewing video tapes at home or even                   
 teleconference kinds of courses.  SENATOR JACKO suggested putting             
 the provision in statute rather than having it as a regulation.               
 Number 677                                                                    
 SENATOR TAYLOR commented there is large movement in the Legislature           
 called "tort reform," and this is second large bill on insurance              
 reform he has seen, and they raise a lot of serious questions.                
 TAPE 94-35, SIDE A                                                            
 Number 010                                                                    
 SENATOR DONLEY asked if the statutes provide that insurance agents            
 cannot discount their fees, and if those fees are statutorily fixed           
 fees.  MR. WALSH answered that the fees are not fixed by statute,             
 but the statute does provide that an agent cannot discount their              
 commission.  The fees are set by the companies.  He noted that                
 there are only a couple of states that allow any type of cutting              
 commissions, etc.  He said that, ultimately, discounting is a                 
 policy decision that the Legislature makes, and, if the Legislature           
 wishes to allow discounting, they will regulate it the way the                
 Legislature wants them to.  However, it is not something that the             
 division believes is good because they want a level playing field             
 for all consumers similarly situated.                                         
 Number 105                                                                    
 SENATOR DONLEY asked what the division's policy was in approving              
 commission rates.  MS. THURSTON responded that there is very little           
 variation in commission rates.  Basically, the companies have to              
 compete for the business, and the way they do that, in most cases,            
 is to keep the premiums lower.  As long as the commissions are                
 within the normal bounds, the division generally approves it, and             
 they do routinely question commissions that look out of line.                 
 There was further discussion between committee members and Mr.                
 Walsh concerning contingency fees, discounting and commission                 
 rates.  Mr. Walsh said they would do some research and put some               
 information together for the committee's information.                         
 There being no further witnesses to testify on SB 362, SENATOR                
 TAYLOR thanked the Division of Insurance for their participation              
 and assistance.  He stated the bill would be held in committee for            
 further work.                                                                 
 Number 245                                                                    
 PLANTS) before the committee and directed attention to a proposed             
 committee substitute.  He said the committee substitute changes the           
 dried weight concept to 25 plants or more, and that the Department            
 of Law agreed with the change.                                                
 SENATOR JACKO moved that CSSB 332(JUD) be adopted.  Hearing no                
 objection, the motion carried.                                                
 SENATOR LITTLE moved that CSSB 332(JUD) be passed out of committee            
 with individual recommendations.  Hearing no objection, it was so             
 Number 301                                                                    
 OFFICERS) before the committee and directed attention to a                    
 committee substitute which encompasses changes made as a result of            
 testimony at a previous hearing on the legislation.  He said                  
 language was added at the bottom of page 2 which provides that the            
 defendant was the one that had to bear the burden of showing that             
 he had suffered prejudice to substantial rights.                              
 SENATOR HALFORD moved that CSSB 349(JUD) be adopted.  Hearing no              
 objection, the motion carried.                                                
 SENATOR HALFORD moved and asked unanimous consent that CSSB
 349(JUD) be passed out of committee with individual                           
 recommendations.  Hearing no objection, it was so ordered.                    
 Number 325                                                                    
 CONDITIONS) before the committee as the next order of business.  He           
 said it was his understanding that there was no request on the part           
 of any member of the committee to make any changes to the original            
 SENATOR HALFORD moved and asked unanimous consent that SB 350 be              
 passed out of committee with individual recommendations.  Hearing             
 no objection, it was so ordered.                                              
 Number 351                                                                    
 TRIALS) before the committee as the next order of business.                   
 SENATOR DONLEY moved that SB 351 be passed out of committee with              
 individual recommendations.  Hearing no objection, it was so                  
 Number 360                                                                    
 before the committee as the final order of business and directed              
 attention to a proposed committee substitute.  The original bill              
 would have reduced the number of preemptory challenges from 10 to             
 6, and the committee substitute makes both sides equal by changing            
 it to 10 and 10.                                                              
 SENATOR DONLEY moved that CSSB 353(JUD) be adopted.  Hearing no               
 objection, the motion carried.                                                
 SENATOR LITTLE moved that CSSB 353 (JUD) be passed out of committee           
 with individual recommendations.  Hearing no objection, it was so             
 There being no further business to come before the committee, the             
 meeting was adjourned at 3:55 p.m.                                            

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