Legislature(2001 - 2002)

05/02/2001 03:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                    
                SENATE LABOR & COMMERCE COMMITTEE                                                                             
                           May 2, 2001                                                                                          
                             3:40 pm                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Randy Phillips, Chair                                                                                                   
Senator Alan Austerman                                                                                                          
Senator Loren Leman                                                                                                             
Senator John Torgerson                                                                                                          
Senator Bettye Davis                                                                                                            
MEMBERS ABSENT                                                                                                                
All Members Present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 208                                                                                                             
"An Act relating  to the labeling of, the advertising  of, and the                                                              
disclosure of  certain information about halibut,  salmon, halibut                                                              
products, and salmon products."                                                                                                 
     MOVED CSSB 208(L&C) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 152(RLS)                                                                                                  
"An  Act  relating  to brewpub  licenses;  and  providing  for  an                                                              
effective date."                                                                                                                
     MOVED CSHB 152(RLS) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 181(JUD)                                                                                                  
"An  Act relating  to  the obligations  of  spouses, to  insurance                                                              
policies of  spouses, to  the nonprobate  transfer of property  on                                                              
death  to a  community  property  trust, to  the  division of  the                                                              
community  property  of  spouses  at  death,  and  to  the  Alaska                                                              
Community  Property  Act;  amending  Rule  301,  Alaska  Rules  of                                                              
Evidence; and providing for an effective date."                                                                                 
     MOVED CSHB 181(JUD) OUT OF COMMITTEE                                                                                       
PREVIOUS COMMITTEE ACTION                                                                                                     
SB 208 - No previous action to consider.                                                                                        
HB 152 - See Labor and Commerce minutes dated 5/1/01.                                                                           
HB 181 - No previous action to consider.                                                                                        
WITNESS REGISTER                                                                                                              
Ms. Loretta Brown, Staff                                                                                                        
Senator Jerry Ward                                                                                                              
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Commented on SB 208.                                                                                      
Mr. Kevin Hand, Staff                                                                                                           
Representative Andrew Halcro                                                                                                    
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Commented on HB 152.                                                                                      
Ms. Amy Erickson, Staff                                                                                                         
Representative Lisa Murkowski                                                                                                   
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Supported HB 181.                                                                                         
Mr. Dave Shaftel                                                                                                                
Estate Planning Attorney                                                                                                        
No address provided                                                                                                             
POSITION STATEMENT: Supported HB 181.                                                                                         
Representative Lisa Murkowski                                                                                                   
State Capitol Bldg.                                                                                                             
Juneau AK 99811                                                                                                                 
POSITION STATEMENT: Sponsor of HB 181.                                                                                        
ACTION NARRATIVE                                                                                                              
TAPE 01-27, SIDE A                                                                                                            
Number 001                                                                                                                      
                SB 208-FARMED SALMON DISCLOSURES                                                                            
CHAIRMAN RANDY PHILLIPS called the Senate Labor & Commerce                                                                    
Committee meeting to order at 3:40 pm and announced SB 208 to be                                                                
up for consideration.                                                                                                           
MS. LORETTA BROWN, Staff to Senator Ward, read the sponsor                                                                      
statement as follows:                                                                                                           
     SB 208 adds  a new section relating to the  labeling and                                                                   
     advertisement  of  halibut  and  salmon  products.  This                                                                   
     section  will  allow  a  person  to  sell  or  advertise                                                                   
     halibut  or  salmon  products  as  "wild,"  "antibiotic-                                                                   
     free," "hormone  free," and dye-free" if the  product is                                                                   
     harvested  from a  river or  an ocean and  has not  been                                                                   
     raised in captivity.                                                                                                       
     We  have  all  seen the  beautiful  displays  of  farmed                                                                   
     salmon   at  fish   counters   or  restaurants   without                                                                   
     realizing   that  the   varying  shades   of  pink   are                                                                   
     artificially created.  Almost 100% of all  farmed salmon                                                                   
     is  artificially colored  with  either canthaxanthin  or                                                                   
     astaxanthin,   a   process   sometimes   called   "color                                                                   
     finishing"  to give  farmed  salmon the  attractive  red                                                                   
     color associated  with wild  salmon and salmon  products                                                                   
     that consumers expect.                                                                                                     
     Federal regulations  call for declaration of  the use of                                                                   
     canthaxanthin  or astaxanthin at  the retail level,  but                                                                   
     that information  is rarely  passed on to the  consumer.                                                                   
     Additionally, it  is common practice to  add antibiotics                                                                   
     and other supplements to farmed finfish diets.                                                                             
     This legislation  will allow a clear distinction  to the                                                                   
     consumer  informing  them  of the  natural  benefits  of                                                                   
     "wild salmon" and "wild halibut."                                                                                          
CHAIRMAN PHILLIPS asked for a current fiscal note.                                                                              
MS. BROWN responded that it wasn't ready yet.                                                                                   
SENATOR LEMAN  noted on page 3, line  24 talks about how  a person                                                              
can  label  and  advertise  halibut and  salmon.  It  says,  "…may                                                              
indicate that the product or the  halibut or salmon in the product                                                              
is free  from colors  and additives, if  the product  is harvested                                                              
from a  river or  ocean and has  not been  raised in captivity  or                                                              
under control  for its entire  life." and  it should say,  "if the                                                              
product  is free from  colors and  additives".  We don't want  the                                                              
condition  to be  saying you  can  advertise that  it's free  from                                                              
colors  and additives  just because  it  was raised  in the  wild.                                                              
"What if  someone takes  pink or chum  salmon, which is  light and                                                              
wants to add  artificial colors to it? We shouldn't  allow them to                                                              
advertise that as being additive-free."                                                                                         
MS. BROWN agreed.                                                                                                               
SENATOR  LEMAN moved  a conceptual  amendment saying  that it  may                                                              
indicate the product or salmon in  the product is free from colors                                                              
and additives, if it is free. There  were no objections and it was                                                              
so ordered.                                                                                                                     
SENATOR LEMAN  moved to pass CSSB  208(L&C) out of  committee with                                                              
individual recommendations.  There were  no objections and  it was                                                              
so ordered.                                                                                                                     
                     HB 152-BREWPUB LICENSES                                                                                
CHAIRMAN PHILLIPS announced HB 152 to be up for consideration.                                                                  
MR. KEVIN HAND,  Staff to Representative Halcro,  thanked them for                                                              
bringing this legislation up again  today. He reviewed that HB 152                                                              
is a stopgap  measure to ensure the unencumbered  operation of new                                                              
highly successful industry in the State of Alaska.                                                                              
     It  incorporates a  band aid solution  involving a  one-                                                                   
     year  sunset   clause  that  will  enable   brewpubs  to                                                                   
     continue  their operation  through  a  full year  rather                                                                   
     than  shutting  down  due  to   the  somewhat  draconian                                                                   
     production  that are  put in  place  currently in  state                                                                   
He said the sunset  is June 30, 2002 and it  raises the production                                                              
cap on brewpubs  to 150,000 gallons  total, of which no  more than                                                              
75,000 gallons  can be  sold in-house  and of  which no  more than                                                              
75,000 gallons can be sold wholesale.                                                                                           
MR. HAND said:                                                                                                                  
     These  businesses do  employ hundreds  of people in  the                                                                   
     Anchorage  area,  alone.  They   represent  millions  of                                                                   
     dollars  and,  in  fact, multi-millions  of  dollars  in                                                                   
     capital  investments,  which   in  Anchorage  has  taken                                                                   
     previously abandoned decrepit  buildings and revitalized                                                                   
     them into  a very  popular spot right  in the middle  of                                                                   
     Spenard and old Anchorage.                                                                                                 
     Brewpubs do represent a diversification  of economies in                                                                   
     Alaska encouraging  increased employment outside  of our                                                                   
     historically  limited industries,  which have  obviously                                                                   
     been  heavily dependent  upon  resource extraction.  The                                                                   
     sunset clause  does allow  an operational timetable  for                                                                   
     the  brewpub operators  to sit  down  with the  industry                                                                   
     associations to  find a consensus, which can  be a long-                                                                   
     term solution.                                                                                                             
     I do concur as does Representative  Halcro that this, in                                                                   
     fact, is  not a long-term fix.  Hence the reason  we are                                                                   
     before you  with a one-year  band aid that  will provide                                                                   
     the time without putting encumbrances  upon a successful                                                                   
     operation here  within the state that has  enjoyed great                                                                   
SENATOR TORGERSON said he was not going to support this                                                                         
legislation, because he thought it was:                                                                                         
     …a travesty  that the  House sat on  it for five  months                                                                   
     and couldn't  get it worked  out and I don't  see really                                                                   
     that  it'll  be  worked  out over  the  summer.  At  any                                                                   
     degree, this  is not the fix  that should be  before us.                                                                   
     They should go to the heart  of the thing and try to fix                                                                   
     it instead of  trying to put band aids on  it and expect                                                                   
     us  to do it  in a  couple of  days. I  won't block  the                                                                   
     move, but I'll sign 'no recommendation.'                                                                                   
SENATOR DAVIS moved to pass SB 152 from committee with individual                                                               
recommendations. There were no objections and it was so ordered.                                                                
        HB 181-COMMUNITY PROPERTY/OBLIGATIONS OF SPOUSES                                                                    
CHAIRMAN PHILLIPS announced HB 181 to be up for consideration.                                                                  
MS. AMY ERICKSON, Staff to Representative Murkowski, said:                                                                      
     In  1998,  the  legislature  passed  Alaska's  Community                                                                   
     Property   Act,   which  allows   married   couples   to                                                                   
     characterize  some or all of  their assets as  community                                                                   
     property.  Since  enactment,  those  dealing  in  estate                                                                   
     planning and trusts on a day-to-day  basis have realized                                                                   
     that  the  statutes  need  minor   adjustment  and  that                                                                   
     happens  in  four  areas.  The  first  provides  that  a                                                                   
     creditor of a debtor spouse  may only reach the separate                                                                   
     property of that debtor spouse  and the spouse's jointly                                                                   
     held  property. It  also allows  property  such as  life                                                                   
     insurance  and IRAs  to be  transferred  to a  community                                                                   
     property   trust   by  designating   the   trust  as   a                                                                   
     beneficiary  of  the  property. It  also  clarifies  the                                                                   
     sources  of funds  used to purchase  life insurance  and                                                                   
     expands   categories  of  family   members  to   include                                                                   
     ancestors or  descendents of  either spouse. So,  it not                                                                   
     only allows a surviving spouse  to be a beneficiary, but                                                                   
     also a grandchild.                                                                                                         
     Since  current  statute  does not  address  division  of                                                                   
     property at  death, HB 181  clarifies that on  the death                                                                   
     of a spouse, certain property  items can be allocated to                                                                   
     the  spouse's  heirs  as long  as  each  spouse's  heirs                                                                   
     receive half the total value of a community property.                                                                      
MS. ERICKSON said there was a question  in Judiciary about whether                                                              
this impacts  family law practice.  She asked the  Bar Association                                                              
and they  located all their  family law  members and there  was no                                                              
adverse reaction from them.                                                                                                     
MR. DAVE  SHAFTEL said he  was one of  a group of  estate planning                                                              
attorneys who has  worked on Alaska's estate  planning legislation                                                              
over the  past four years. The  Community Property Act of  1998 is                                                              
popular  with his  clients and  others. However,  they have  found                                                              
some gaps in the law that this legislation  addresses. He said the                                                              
Act was  originally taken from  the Uniform Marital  Property Act,                                                              
which was  drafted in 1981 and  was initially enacted in  only one                                                              
state, Wisconsin.  He said Alaska is the tenth  community property                                                              
This particular  bill clarified  four areas.  It clarifies  if you                                                              
have  an obligation  incurred by  one spouse,  then that  spouse's                                                              
creditor  can  reach  that spouse's  separate  property  and  that                                                              
spouses  one-half of  the families'  community property.  Existing                                                              
statute is ambiguous on this point.  This clarifies that community                                                              
property will be treated the same  as other jointly held property.                                                              
If you had  jointly held property without community  property held                                                              
by  both  spouses,  a  creditor  could  only  reach  the  separate                                                              
property of  the debtor  spouse and that  debtor spouse's  half of                                                              
jointly held property.                                                                                                          
The next clarification  deals with transfers of  certain assets to                                                              
a community property trust, like  life insurance, IRAs, 401K plans                                                              
and  assets  that  have  beneficiary  designations.  They  can  be                                                              
transferred  by designating  the community  property trust  as the                                                              
beneficiary of  such property. This  is important when you  get to                                                              
the fourth change.                                                                                                              
The  third  change  deals  with   life  insurance.  There  can  be                                                              
complications when  a person uses funds from a  community property                                                              
account,  like a bank  account to  buy life  insurance. There  are                                                              
both ownership  and tax  complications. If  it's unclear  that the                                                              
spouse  who  is   not  making  the  contribution   agreed  to  the                                                              
contribution,  this  legislation   creates  some  presumptions  of                                                              
agreement, as long as the policy  is benefiting family members. It                                                              
also clarifies  an area  in the estate  gift tax law  if community                                                              
property  funds are  being used  by one  spouse to  create a  life                                                              
insurance trust for  the surviving spouse. It makes  it clear that                                                              
the  presumption is  the surviving  spouse agreed  that the  funds                                                              
used  would  be  first the  community  property,  which  would  be                                                              
changed  to  separate property,  so  that  the insured  spouse  is                                                              
contributing these funds  to the trust. The end result  of this is                                                              
to make sure  the life insurance proceeds are not  included in the                                                              
surviving  spouse's estate  and taxed  at  his or  her death.  The                                                              
presumptions  are safety  nets when  dealing with  funds that  are                                                              
community property and are used to purchase life insurance.                                                                     
The last clarification  deals with the provision  that talks about                                                              
what  happens at  death to  the community  property. It  clarifies                                                              
that at death,  one half of the community property  belongs to the                                                              
surviving spouse and the other one  half belongs to the decedent's                                                              
estate.  It  also adopts  the  "aggregate  theory of  division  of                                                              
community property assets," which  allows for "non-prorata funding                                                              
of trusts."  Basically, this means  that you don't have  to divide                                                              
every item of community property  exactly in half and give half to                                                              
the deceased  spouse's estate  and half  to the surviving  spouse.                                                              
Rather,  you just have  to make  sure that  the deceased  spouse's                                                              
estate  gets  one  half  of the  total  aggregate  value  and  the                                                              
surviving spouse gets only one half  of the total aggregate value.                                                              
This  is  important,  because  they often  find  that  the  couple                                                              
together may  have had retirement  assets, all of which  should go                                                              
to the surviving spouse. This is  because there is a better income                                                              
tax result  if all the  other assets  go to the deceased  spouse's                                                              
estate, so  they can fund  a bypass trust.  This kind of  trust is                                                              
for the benefit  of the surviving  spouse, but then it  goes on to                                                              
the children without any further transfer taxation.                                                                             
MR. SHAFTEL said  these changes would strengthen the  act and make                                                              
it a  lot more  useable. It  will also  make it  available in  the                                                              
retirement  plan  the  life insurance  area  for  nonresidents  of                                                              
Alaska  who  have  chosen  to  use   Alaska's  optional  community                                                              
property system. He hasn't run into any opposition to it.                                                                       
Number 330                                                                                                                      
REPRESENTATIVE  MURKOWSKI said  that  these changes  seem to  make                                                              
CHAIRMAN PHILLIPS asked what triggered this legislation.                                                                        
REPRESENTATIVE  MURKOWKSI   replied  that  she  is   not  a  trust                                                              
attorney,  which is  a  very select  group  of practitioners.  Mr.                                                              
Shaftel is her constituent, as well as a trust attorney.                                                                        
SENATOR DAVIS said  she had someone called her last  week with the                                                              
concerns that were addressed in this bill.                                                                                      
SENATOR LEMAN  said he  thought the change  of not requiring  each                                                              
item to  be divided  in half was  good, but asked  if he  ran into                                                              
cases  where an  estate  argued over  pieces  of property  because                                                              
someone values  it as  being important to  them. "In  those cases,                                                              
does this help bring resolution or not or does it make any                                                                      
change?…Are we neither harming or helping?"                                                                                     
MR. SHAFTEL  replied that was right  and he thought  good drafting                                                              
could solve that  problem, but good administration would  do it if                                                              
good drafting  didn't. This legislation  does not affect  that one                                                              
way or the other.                                                                                                               
SENATOR LEMAN moved to pass CSHB 181(KUD) from committee with                                                                   
individual recommendations and the $0 fiscal note. There were no                                                                
objections and it was so ordered.                                                                                               
CHAIRMAN PHILLIPS adjourned the meeting at 4:20 pm.                                                                             

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