02/27/2007 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB84 | |
| SB68 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 84 | TELECONFERENCED | |
| += | SB 68 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 27, 2007
1:32 p.m.
MEMBERS PRESENT
Senator Johnny Ellis, Chair
Senator Gary Stevens, Vice Chair
Senator Bettye Davis
Senator Con Bunde
MEMBERS ABSENT
Senator Lyman Hoffman
COMMITTEE CALENDAR
SENATE BILL NO. 84
"An Act relating to the burning capability of cigarettes being
sold or offered for sale, or possessed for sale; relating to
compliance certifications by tobacco product manufacturers, a
directory of tobacco product manufacturers, the affixing of
stamps to cigarette packages, and cigarette tax stamps; and
providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 68
"An Act requiring motor vehicle insurers to provide to the
commissioner of administration a database listing vehicle
insurance policy information that will allow the commissioner to
verify whether mandatory motor vehicle insurance has been
obtained, limiting access to the database, establishing methods
for proving that mandatory motor vehicle insurance is in place,
allowing the additional penalties of suspending registration and
vehicle impoundment and forfeiture for failure to have mandatory
motor vehicle insurance, and authorizing hearings after
suspension of registration for failure to have mandatory motor
vehicle insurance."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 84
SHORT TITLE: TESTING & PACKAGING OF CIGARETTES
SPONSOR(s): SENATOR(s) OLSON
02/14/07 (S) READ THE FIRST TIME - REFERRALS
02/14/07 (S) L&C, JUD, FIN
02/27/07 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 68
SHORT TITLE: MOTOR VEHICLE INSURANCE
SPONSOR(s): SENATOR(s) FRENCH
01/26/07 (S) READ THE FIRST TIME - REFERRALS
01/26/07 (S) L&C, TRA, FIN
02/08/07 (S) L&C AT 1:30 PM BELTZ 211
02/08/07 (S) Heard & Held
02/08/07 (S) MINUTE(L&C)
02/27/07 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
SENATOR DONNY OLSON
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 84.
DENISE LICCTOLI
Staff to Senator Olson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 84 for the sponsor.
STEVE "RUSTY" BELANGER
State Fire Marshal
Division of Fire Prevention
Department of Public Safety (DPS)
Anchorage AK
POSITION STATEMENT: Supported SB 84.
DOUG SCHRAGE, Fireman
Anchorage Fire Department
Anchorage AK
POSITION STATEMENT: Supported SB 84.
WARREN CUMMINGS
Alaska Fire Chiefs Association
Fairbanks AK
POSITION STATEMENT: Supported SB 84.
JOANNA BALES, Manager
Excise Audit Division
Department of Revenue (DOR)
Juneau AK
POSITION STATEMENT: Commented on SB 84.
RAY BIZAL, Western Regional Manager
National Fire Protection Association (NFPA)
No address provided
POSITION STATEMENT: Supported SB 84.
SENATOR HOLLIS FRENCH
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 68.
ALLISON BIASTOCK
Staff to Senator French
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Supported SB 68.
DUANE BANNOCK, Director
Division of Motor Vehicles (DMV)
Department of Administration (DOA)
Anchorage AK
POSITION STATEMENT: Commented on SB 68.
KENTON BRINE, Manager
Northwest Region
Property Casualty Insurers Association of America
No address provided
POSITION STATEMENT: Opposed SB 68.
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community & Economic Development
Juneau AK
POSITION STATEMENT: Neutral position on SB 68.
ACTION NARRATIVE
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing
Committee meeting to order at 1:32:20 PM. Present at the call to
order were Senators Stevens, Bunde, Davis, and Ellis.
SB 84-TESTING & PACKAGING OF CIGARETTES
CHAIR ELLIS announced SB 84 to be up for consideration.
SENATOR DONNY OLSON, sponsor of SB 84, invited his staff to the
witness table. He said that children are a major portion of burn
statistics and that SB 84 mandates that only fire-safe
cigarettes can be sold in Alaska and establishes the testing and
certification requirements. He said that so-called fire-safe
cigarettes are reduced ignition propensity cigarettes. They are
designed to be less likely than a conventional cigarette to
ignite soft furnishings such as a couch or a mattress. The bill
also provides for the marking of cigarette packaging in an
approved and easily identifiable manner to indicate that the
contents are fire-safe.
He stated that cigarettes are the leading cause of home
fatalities in Alaska and the U.S. The most common materials
first ignited in home fires are mattresses and bedding,
upholstered furniture and floor coverings. Often cigarettes are
lit, then forgotten by a smoker; it can smolder for hours. He
said this legislation was brought to his attention by the Fire
Chiefs and it is also supported by Phillip Morris.
CHAIR ELLIS stated that a committee substitute, version M, was
before the committee.
1:37:06 PM
DENISE LICCTOLI, staff to Senator Olson, sponsor of SB 84,
explained the differences in the CS are predominantly wording
changes. The title has been shortened to reflect a change at the
end of the bill, which removed some sections that were
referenced in it.
CHAIR ELLIS said he supported that and asked for the major
changes to be explained first.
1:37:56 PM
MS. LICCTOLI said that Sec. 18.74.065 was added to allow the
fire marshal to perform testing under the terms of this chapter.
The preferences given to the package markings are standards that
are already being used in the State of New York. New language
was added on page 6, lines 6 - 9, saying "FSC" meaning "fire
standards compliant" would be accepted as a marking on the
cigarettes.
She said the next substantial change was on page 9, lines 9 -
12, where language now says the state fire marshal shall use the
standards of New York as persuasive authority rather than
requiring the implementation as done in New York.
CHAIR ELLIS said he knew the industry was worried about 50
different standards in 50 different states and asked if the New
York standards were more regular.
MS. LICCTOLI answered yes; the tobacco industry's concern from a
business perspective is that each state has its own way of
dealing with this law - and that would mean different types of
cigarettes. However, because there is currently no federal law,
most states that have adopted this measure have adopted the New
York law. So consistency is there.
1:41:52 PM
Sections 2, 3, 4, and 5 were eliminated from the original bill
because they regarded tobacco tax laws that are not appropriate
to reference in talking about the burning propensity of
cigarettes.
1:42:43 PM
SENATOR BUNDE noted there was no fiscal note from the state fire
marshal.
MS. LICCTOLI said the fire marshal was on line to testify if he
wanted to ask him that question.
CHAIR ELLIS said the committee would come back to him.
SENATOR STEVENS asked if the sponsor statement is applicable to
the CS.
SENATOR OLSON replied that it applies to version M as well.
1:43:56 PM
SENATOR BUNDE asked if this bill would raise the cost of
cigarettes in Alaska since they are special manufacture.
MS. LICCTOLI replied that other states have found that their
price doesn't go up.
CHAIR ELLIS asked if "self-extinguishing" was an accurate way to
characterize these cigarettes.
MS. LICCTOLI replied that another name used is reduced cigarette
propensity (RCP), which means they tend not to burn when left
unattended.
SENATOR OLSON said he has also heard them called fire-safe
cigarettes. The Coalition for Fire Safe Cigarettes has a
comparison of the ones proposed in this legislation to regular
cigarettes.
SENATOR STEVENS asked if this had worked in other states.
SENATOR OLSON replied that those facts exist, but he would let
the fire marshal present them.
CHAIR ELLIS noted that people can testify on either version.
1:47:30 PM
STEVE "RUSTY" BELANGER, State Fire Marshal, Anchorage, supported
SB 84. In reference to the fiscal note, he said that 254
different brands of cigarettes are recognized by the state of
Alaska and the bill requires the manufacturer of each cigarette
to pay a $250 fee, which comes to about $263,000.
MR. BELANGER said because the legislation is so recent in
several other states the statistics were being tabulated as they
spoke. However, New York is seeing good results.
1:51:23 PM
SENATOR BUNDE said it sounded like the fiscal note would be
positive, but he wanted to know how much the testing would cost
the fire marshal and he thought the DOR might want to have a
fiscal note regarding bootlegging.
1:52:17 PM
DOUG SCHRAGE, Anchorage fireman, said that cigarettes are the
major cause of structural fires, both fatal and non-fatal.
Frequently it's not the smoker who gets killed or injured, but
rather innocent children.
1:53:06 PM
WARREN CUMMINGS, Alaska Fire Chiefs Association, Fairbanks, said
he preferred the term "self-extinguishing cigarettes" instead of
the "Coalition for Fire-safe Cigarettes." He said this
legislation is about saving lives and cigarettes are the leading
cause of home fire fatalities in the United States - killing 700
to 900 people, smokers and non-smokers alike per year. In 2003,
smoking material structure fires killed 760 people and injured
1,520 others in the US; in Alaska 5 people died. One-quarter of
the victims of smoking material fire fatalities are not the
smokers whose cigarette started the fire, 34 percent are their
children, 25 percent are neighbors or friends, 14 percent are
the spouses or partners and 13 percent are the parents.
Research from the mid-1980s predicted that fire-safe cigarettes
would eliminate 3 out of 4 cigarette fire-related deaths.
Research from New York shows that fatalities declined by one-
third in not quite a half-year.
1:55:36 PM
MR. CUMMINGS said this bill also has penalties for selling non-
self-extinguishing cigarettes, which are pretty substantial. So,
he reasoned there would be added revenue to the state if regular
cigarettes get bootlegged. He closed saying the Alaska Fire
Chiefs support the committee substitute for this bill.
1:56:18 PM
SENATOR BUNDE said he heard that unattended cooking was the
leading cause of housing fire fatalities.
MR. CUMMINGS responded that there are more cooking fires, but
they don't result in fatalities.
CHAIR ELLIS said he hoped the Department of Revenue could answer
Senator Bunde's question about fiscal notes.
1:57:06 PM
JOANNA BALES, Excise Audit Manager, Department of Revenue (DOR),
said she is the program manager of the state cigarette tax and
asked if the CS removes the DOR from the bill.
MS. LICCTOLI replied that it removes the department from the
tobacco tax section, but it does not remove the Department of
Revenue from the bill.
CHAIR ELLIS said he would hold the bill in committee.
1:58:14 PM
SENATOR BUNDE said he was concerned about bootlegging of regular
cigarettes to avoid the tax and asked if this would cause the
DOR additional challenges.
MS. BALES replied that under this bill, the department would be
trading one job for another. Currently a directory of cigarettes
that are approved for sale in the state is maintained. Those
cigarettes have to meet all the state and federal requirements
before they can be sold. So, this would be a new requirement
that would be added to the other requirements for cigarettes.
Experience has shown that people try to bring in cigarettes that
aren't on the approved directory anyway - sometimes ordering
them over the Internet. The department's challenges wouldn't be
any different and its fiscal note wouldn't be either. She said
it's important to have this kind of legislation and the majority
of people who buy cigarettes buy the ones that come through
legal channels.
She noted that the state of New York put out a preliminary
report in 2005 about the fire-safe cigarettes it required to be
sold since August of 2000. It talks about all the issues brought
up in committee. It found that consumers don't want to smoke the
old cigarettes versus the fire-safe ones.
SENATOR BUNDE asked if the packets would be stamped like the
current tax stamp and he asked who would stamp them.
MS. BALES replied that the packets would still come through a
distributor who would stamp them. This bill requires all
retailers in the state to get pictures of what the packaging
will look like so they know they are stamping product that is in
compliance with the law.
2:02:39 PM
RAY BIZAL, Western Regional Manager, National Fire Protection
Association (NFPA), supported SB 84. He said that six states -
New York, Massachusetts, Vermont, New Hampshire, Illinois and
California - have already passed similar laws. One quarter of
the U.S. population is protected by this law and as is the
entire nation of Canada. Statistics are available for the first
six months in New York and indicate that there has been no
reduction in cigarette tax revenue as a result of the law and
further the New York Office of Fire Prevention reports a one-
third reduction in cigarette-related fire fatalities and an even
higher reduction in the number of cigarette-related fires. He
said 22 other legislatures are considering this issue this year.
2:06:11 PM
SENATOR STEVENS moved to adopt the CS to SB 84, version M. There
were no objections and it was so ordered.
CHAIR ELLIS said he would hold the bill until Thursday.
SB 68-MOTOR VEHICLE INSURANCE
CHAIR ELLIS announced SB 68 to be up for consideration and that
there was a new CS, version L.
SENATOR FRENCH, sponsor of SB 68, said he wanted to streamline
the bill and make it more cost effective, but the fundamental
goal of trying to reduce uninsured drivers remains. It allows
for the Department of Motor Vehicles (DMV) to check at the time
of registration to see if a vehicle is insured - a missing link
right now. Another goal is to take uninsured cars off the road
until insurance is purchased. It also seeks to increase the
penalty for driving uninsured.
2:10:50 PM
ALLISON BIASTOCK, staff to Senator French, explained that the
original bill had reporting deadlines for insurance companies
directly to the DMV. The CS leaves the implementation of that
program to the executive branch. "We believe the department will
work with all the parties involved and the industry to come up
with a method that works for everybody." Additionally the CS
requires proof of insurance at the time of registration and
renewal. The CS keeps the provision on impoundment of the
vehicle if it's not insured.
2:12:36 PM
MS. BIASTOCK went through the bill section by section. The first
section requires the motor vehicle liability insurers to provide
information to the commissioner of the DMV. Section 2 allows
municipalities to impound vehicles for failure to have mandatory
insurance. Section 3 requires proof of mandatory insurance when
a person applies for vehicle registration [a new section].
Section 4 requires proof of insurance when renewing a vehicle
registration every two years.
She said the difference between this CS and the last version is
that in the prior bill, the DMV would get information from the
created database. It would compare that list to the list of
insured vehicles to discover who wasn't insured. The department
would then send out letters to the uninsured vehicle owners
requiring them to comply with the insurance laws within 30 days.
However, the DMV pointed out that would be a very difficult
task. So that portion has been removed. Now the verification of
insurance is going to happen at points of contact -
registration, renewal of registration and if you were going to
be pulled over and have your plates run for one reason or
another.
SENATOR BUNDE noted that renewal can be done by mail.
MS. BIASTOCK agreed and added that it can be done over the
Internet or at an organization like Jiffy Lube, as well. That's
where the electronic verification comes in to play.
SENATOR BUNDE asked if the DMV would need access to the
insurance companies' database to verify that a person has
vehicle insurance.
MS. BIASTOCK replied that was the major change.
2:15:57 PM
CHAIR ELLIS began taking public testimony.
DUANE BANNOCK, Director, Division of Motor Vehicles (DMV),
Department of Administration (DOA), informed them that the
department had reviewed the CS. He explained the way the
division verifies insurance today is by someone certifying that
he has insurance when he signs the application for registration
or its renewal. Often the division is lead to believe people
have insurance when in fact they don't. This proposal will allow
them to have electronic access to every insurance company that
is authorized to do business in Alaska for online verification
that a policy is in place. He didn't use the word "database"
because he is not considering warehousing all the insurance
policies, but rather just creating a conduit to access that
information from the insurance companies.
He said that two things will happen as a result of this bill.
One is that staff will get a better grip of when a vehicle does
not have insurance and they will be able to say no to the
registration. Second, they will spend less time with the current
labor-intensive process of attempting to verify an insurance
policy.
Regarding Senator Bunde's question about registering by mail, he
stated when the information is entered into the computer is when
the electronic signal will be sent to the insurance company for
verification. With a positive match, the transaction will
continue to be processed and the registration will be received
in the mail three to four days later. If they are unable to
electronically verify an insurance policy, then the process
would come to a "screeching halt."
2:20:03 PM
SENATOR BUNDE asked if it would be correct to assume if he
bought a used car today, got insurance and registered it, that
he could cancel the insurance tomorrow - the same as with the
mail-in renewal.
MR. BANNOCK replied, "That is an accurate assessment." It is his
professional opinion that the majority of those scofflaws
probably did not have insurance, but rather told the division
they did.
2:21:01 PM
SENATOR BUNDE commented that this law would result in scofflaws
having insurance for two weeks longer than they do now. He asked
if he bought a new car and the insurance company provided a
binder so he could drive off the lot, would that get put into
the insurance database so the registration process could
continue.
2:21:36 PM
MR. BANNOCK replied that in his opinion, when car dealership
processes the transaction, it's not done for several days until
the actual transaction is recorded into his name. But he also
thought the insurance company would update its records
immediately.
He related that the Alaska DMV intends to model its business
practices after a couple of states that have created a work-
around for that scenario - even if he hadn't yet contacted his
insurance company to add the new vehicle. If he had a verifiable
policy in force, the DMV would continue to honor it in that
instance.
2:22:31 PM
SENATOR BUNDE asked what the experience has been in other
states.
MS. BIASTOCK added that this process is relatively new.
California started contacting drivers without insurance within
the year. Texas and Florida have an on-line verification system.
Other states have programs in place that take a sampling of
vehicles and run a check on those and notify the driver if he
isn't insured.
2:23:27 PM
SENATOR STEVENS commented that this sounds like it has the
potential to be more user-friendly to the general public and
asked if consumers would need to carry proof of insurance cards
in their automobiles if the department has immediate access to
insurance information.
MR. BANNOCK opined that he didn't think the coupons should be
done away with. They facilitate getting information at an
accident.
SENATOR STEVENS didn't agree. He thought this was an opportunity
to be more user-friendly to the public and allow them to not
have to carry a coupon.
KENTON BRINE, Northwest Regional Manager, Property Casualty
Insurers Association of America, said his company represents
roughly 40 percent of the auto insurance market place across the
United States. He had a number of concerns with the original
bill, mostly with the effectiveness and cost of using database
programs to identify uninsured motorists and he still held that
opinion about the CS.
He repeated that these programs are in place in various shapes
in some other states, but their effectiveness shows mixed
results. A study from the Motor Vehicle Administrators of
America on statistics from 1989 to 1999 gathered by the
Insurance Research Council showed that of the 18 states with
reporting programs in place for five years or more, 12 showed an
increase in uninsured motorists, while only 6 experienced
improvement. He supposed that some of that has to do with how
successes or failures are reported, the accuracy of the reported
data and difficulty in tracking VIN numbers.
With regards to the CS, he said that while the amendment was
well-intended that a program could be worked out, he was not
aware of a state using a live link to verify insurance coverage.
He said insurers have been interested in the reverse situation
where they have on-line access in real time to motor vehicle
driver abstracts for rating purposes. So he thought that could
be provided in reverse, but he didn't want to say for sure it
could be done. He was a little troubled with language that says
trust us and we'll work the details out later. He was opposed to
this bill, but offered to work with the department to structure
language to clarify what kind of program it intends to develop.
2:30:34 PM
SENATOR BUNDE asked if he said other states had not had enough
experience with these kinds of programs to get an actuarial
feeling for how this might impact insurance rates.
MR. BRINE replied that start up costs for these programs have
run from $1 million to $5 million. The programs from state to
state aren't consistent with each other and neither is their
reporting system to their legislature. "The improvement is
always temporary at best as people figure out a way around it."
SENATOR BUNDE asked if the fiscal note would be passed on to the
customers.
MR. BRINE answered that he thought companies would pass the cost
on to the customer.
2:34:14 PM
CHAIR ELLIS asked if others had comments or rebuttal to his
testimony.
MR. BANNOCK commented that he was very familiar with Mr. Brine's
comments, including the department's ability to get good quality
real time information back to insurance companies, an issue that
is on its short-range project list. As to the concept of
mandatory insurance, that is the law in Alaska and this bill
doesn't address whether that is good or bad public policy.
Finally, he said this law replaces a paper-driven certify-driven
process policy with an electronic process. Clearly, however,
some people will continue to manipulate the system.
MS. BIASTOCK concluded saying this bill tried to update with the
use of technology.
2:37:54 PM
LINDA HALL, Director, Division of Insurance, had Sarah McNair-
Grove, Division Actuary, with her. She said she had not taken a
position on this bill because it did not affect her division.
She worked with Senator French regarding not duplicating things
insurance companies have to do.
MS. GROVE declined to comment.
SENATOR BUNDE noted that she has always said that Alaska has a
small pool of insurers and he was concerned that putting an
added burden on them might help them decide to not write here at
all.
MS. HALL said that is her concern. One of her goals has always
been to walk the fine line between insurance protection for
consumers and having choices for insurance.
CHAIR ELLIS recapped that he didn't want to adopt the CS right
now. He might want another one drafted that would include more
changes.
2:42:39 PM
SENATOR BUNDE asked if the committee could get input from
automobile dealerships as to how they would fit in with this
mix.
CHAIR ELLIS agreed and announced that SB 68 would be held. There
being no further business to come before the committee, he
adjourned the meeting at 2:43:45 PM.
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