Legislature(1993 - 1994)
04/11/1994 01:50 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 3/28/94. 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 Seward. 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 well. Number 136 SENATOR LITTLE moved that SB 327 be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. Number 140 SENATOR TAYLOR brought SB 302 (UNIFORM INTERSTATE FAMILY SUPPORT 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 mind. 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 consumer. 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 SENATOR TAYLOR brought SB 332 (POSSESSION OF 25 LIVE MARIJUANA 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 ordered. Number 301 SENATOR TAYLOR brought SB 349 (GRAND JURY EVIDENCE BY POLICE 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 SENATOR TAYLOR brought SB 350 (ARREST FOR VIOLATING RELEASE 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 bill. 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 SENATOR TAYLOR brought SB 351 (CHARACTER EVIDENCE IN CRIMINAL 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 ordered. Number 360 SENATOR TAYLOR brought SB 353 (PEREMPTORY CHALLENGE OF JURORS) 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 ordered. There being no further business to come before the committee, the meeting was adjourned at 3:55 p.m.