Legislature(2007 - 2008)BELTZ 211

03/13/2008 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Bills Previously Heard/Scheduled
Including But Not Limited to:
Heard & Held
Moved CSSB 293(L&C) Out of Committee
Moved CSSB 160(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 13, 2008                                                                                         
                           1:18 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Johnny Ellis, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Bettye Davis                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Con Bunde                                                                                                               
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 160                                                                                                             
"An  Act establishing  an Alaska  health care  program to  ensure                                                               
insurance  coverage   for  essential  health  services   for  all                                                               
residents  of  the state;  establishing  the  Alaska Health  Care                                                               
Board  to  define  essential health  care  services,  to  certify                                                               
health care  plans that provide  essential health  care services,                                                               
and to administer  the Alaska health care program  and the Alaska                                                               
health   care  fund;   establishing   the   Alaska  health   care                                                               
clearinghouse to administer the  Alaska health care program under                                                               
the  direction  of the  Alaska  Health  Care Board;  establishing                                                               
eligibility  standards and  premium assistance  for persons  with                                                               
low income;  establishing standards  for accountable  health care                                                               
plans;  creating  the  Alaska health  care  fund;  providing  for                                                               
review  of  actions and  reporting  requirements  related to  the                                                               
health care program; and providing for an effective date."                                                                      
     MOVED CSSB 160(L&C) OUT OF COMMITTEE                                                                                       
SENATE BILL NO. 293                                                                                                             
"An  Act  relating to  electronic  communication  devices and  to                                                               
personal information."                                                                                                          
     MOVED CSSB 293(L&C) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 65(FIN)                                                                                                   
"An  Act  relating to  breaches  of  security involving  personal                                                               
information,  credit report  and credit  score security  freezes,                                                               
protection of social security numbers,  care of records, disposal                                                               
of records,  identity theft, credit  cards, and debit  cards, and                                                               
to  the jurisdiction  of the  office of  administrative hearings;                                                               
amending Rules 60 and 82, Alaska Rules of Civil Procedure; and                                                                  
providing for an effective date."                                                                                               
     SCHEDULED BUT NOT HEARD                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 160                                                                                                                  
SHORT TITLE: MANDATORY UNIVERSAL HEALTH CARE                                                                                    
SPONSOR(s): SENATOR(s) FRENCH                                                                                                   
04/23/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/23/07       (S)       HES, L&C, FIN                                                                                          
09/10/07       (S)       HES AT 1:30 PM Anch LIO Conf Rm                                                                        
09/10/07       (S)       Heard & Held                                                                                           
09/10/07       (S)       MINUTE(HES)                                                                                            
01/30/08       (S)       HES AT 1:30 PM BUTROVICH 205                                                                           
01/30/08       (S)       Heard & Held                                                                                           
01/30/08       (S)       MINUTE(HES)                                                                                            
02/18/08       (S)       HES AT 1:30 PM BUTROVICH 205                                                                           
02/18/08       (S)       Moved CSSB 160(HES) Out of Committee                                                                   
02/18/08       (S)       MINUTE(HES)                                                                                            
02/19/08       (S)       HES RPT CS  3DP 1DNP  NEW TITLE                                                                        
02/19/08       (S)       DP: DAVIS, THOMAS, ELTON                                                                               
02/19/08       (S)       DNP: DYSON                                                                                             
02/26/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/26/08       (S)       Heard & Held                                                                                           
02/26/08       (S)       MINUTE(L&C)                                                                                            
02/28/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/28/08       (S)       Heard & Held                                                                                           
02/28/08       (S)       MINUTE(L&C)                                                                                            
03/11/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/11/08       (S)       Heard & Held                                                                                           
03/11/08       (S)       MINUTE(L&C)                                                                                            
BILL: SB 293                                                                                                                  
SHORT TITLE: ELECTRONIC COMMUNICATION DEVICES                                                                                   
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
02/19/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/19/08       (S)       L&C, JUD                                                                                               
03/04/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/04/08       (S)       Heard & Held                                                                                           
03/04/08       (S)       MINUTE(L&C)                                                                                            
BILL: HB  65                                                                                                                  
SHORT TITLE: PERSONAL INFORMATION & CONSUMER CREDIT                                                                             
SPONSOR(s): REPRESENTATIVE(s) COGHILL, GARA                                                                                     
01/16/07       (H)       PREFILE RELEASED 1/5/07                                                                                
01/16/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/07       (H)       L&C, JUD, FIN                                                                                          
01/31/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
01/31/07       (H)       <Bill Hearing Canceled>                                                                                
03/28/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
03/28/07       (H)       Heard & Held                                                                                           
03/28/07       (H)       MINUTE(L&C)                                                                                            
04/04/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
04/04/07       (H)       <Bill Hearing Canceled>                                                                                
04/16/07       (H)       L&C AT 10:00 AM CAPITOL 17                                                                             
04/16/07       (H)       Scheduled But Not Heard                                                                                
04/20/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
04/20/07       (H)       Heard & Held                                                                                           
04/20/07       (H)       MINUTE(L&C)                                                                                            
04/23/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
04/23/07       (H)       Moved CSHB  65(L&C) Out of Committee                                                                   
04/23/07       (H)       MINUTE(L&C)                                                                                            
04/24/07       (H)       L&C RPT CS(L&C) 2DP 3NR 1AM                                                                            
04/24/07       (H)       DP: GATTO, NEUMAN                                                                                      
04/24/07       (H)       NR: BUCH, LEDOUX, OLSON                                                                                
04/24/07       (H)       AM: GARDNER                                                                                            
05/02/07       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
05/02/07       (H)       Heard & Held                                                                                           
05/02/07       (H)       MINUTE(JUD)                                                                                            
05/05/07       (H)       JUD AT 8:00 AM CAPITOL 120                                                                             
05/05/07       (H)       Moved CSHB  65(JUD) Out of Committee                                                                   
05/05/07       (H)       MINUTE(JUD)                                                                                            
05/07/07       (H)       JUD RPT CS(JUD) NT 4DP 2AM                                                                             
05/07/07       (H)       DP: HOLMES, LYNN, COGHILL, RAMRAS                                                                      
05/07/07       (H)       AM: DAHLSTROM, SAMUELS                                                                                 
01/23/08       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
01/23/08       (H)       Heard & Held                                                                                           
01/23/08       (H)       MINUTE(FIN)                                                                                            
02/13/08       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/13/08       (H)       Heard & Held                                                                                           
02/13/08       (H)       MINUTE(FIN)                                                                                            
02/18/08       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/18/08       (H)       Heard & Held                                                                                           
02/18/08       (H)       MINUTE(FIN)                                                                                            
02/19/08       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/19/08       (H)       Moved CSHB  65(FIN) Out of Committee                                                                   
02/19/08       (H)       MINUTE(FIN)                                                                                            
02/21/08       (H)       FIN RPT CS(FIN) NT 4DP 5NR                                                                             
02/21/08       (H)       DP: HAWKER, CRAWFORD, GARA, NELSON                                                                     
02/21/08       (H)       NR: KELLY, THOMAS, STOLTZE, MEYER,                                                                     
02/27/08       (H)       TRANSMITTED TO (S)                                                                                     
02/27/08       (H)       VERSION: CSHB 65(FIN)                                                                                  
02/29/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/29/08       (S)       L&C, JUD, FIN                                                                                          
03/04/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/04/08       (S)       Heard & Held                                                                                           
03/04/08       (S)       MINUTE(L&C)                                                                                            
03/13/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
TREVOR FULTON                                                                                                                   
Staff to Senator McGuire                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 293 for sponsor.                                                                          
DR. OLIVER HEDGECUT                                                                                                             
Professor of Logistics                                                                                                          
University of Alaska Anchorage                                                                                                  
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 160.                                                                                       
ED SNIFFEN, Assistant Attorney General                                                                                          
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 293 and HB 65.                                                                            
KAREN LIDSTER                                                                                                                   
Staff to Representative John Coghill                                                                                            
Alaska State Capitol                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on HB 65 for the co-sponsor.                                                                    
MEAGAN FOSTER                                                                                                                   
Staff to Representative Les Gara                                                                                                
Alaska State Capitol                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on HB 65 for the sponsor.                                                                       
JON BURTON, Vice President                                                                                                      
State Government Relations                                                                                                      
Choice Point                                                                                                                    
Washington, D.C.                                                                                                                
POSITION STATEMENT: Wanted changes to HB 65.                                                                                  
AUDREY ROBINSON, Manager                                                                                                        
State Government Affairs                                                                                                        
Reed Elsevier, Parent Company of LexisNexis                                                                                     
No address provided                                                                                                             
POSITION STATEMENT: Wanted changes to HB 65.                                                                                  
JENNIFER FLYNN, Director                                                                                                        
Government Affairs                                                                                                              
Consumer Data Industry Association (CDIA)                                                                                       
Washington, D.C.                                                                                                                
POSITION STATEMENT: Wanted changes to HB 65.                                                                                  
GAIL HILLEBRAND                                                                                                                 
Consumers Union                                                                                                                 
No address provided                                                                                                             
POSITION STATEMENT: Wanted changes to HB 65.                                                                                  
TERRY BANNISTER                                                                                                                 
Legislative Legal Division                                                                                                      
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on HB 65.                                                                                       
BRYAN MERRELL, Regional Counsel                                                                                                 
First American Title Insurance Company                                                                                          
and Alaska Land Title Association                                                                                               
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on HB 65.                                                                                       
ALAN VAZQUEZ                                                                                                                    
American Electronics Association                                                                                                
No address provided                                                                                                             
POSITION STATEMENT: Wanted changes to HB 65.                                                                                  
KENTON BRYNE                                                                                                                    
Property Casualty Insurers Association (PCI) of America                                                                         
No address provided                                                                                                             
POSITION STATEMENT: Wanted changes to HB 65.                                                                                  
SHEILA CALCALSURE                                                                                                               
Information Policy Officer for the Americas                                                                                     
Acxiom Corporation                                                                                                              
No address provided                                                                                                             
POSITION STATEMENT: Commented on HB 65.                                                                                       
ACTION NARRATIVE                                                                                                              
CHAIR JOHNNY ELLIS called the  Senate Labor and Commerce Standing                                                             
Committee meeting to order at 1:33:38  PM. Present at the call to                                                             
order were Senators Davis, Stevens and Ellis.                                                                                   
             SB 160-MANDATORY UNIVERSAL HEALTH CARE                                                                         
1:34:51 PM                                                                                                                    
CHAIR ELLIS announced SB 160 to be up for consideration.                                                                        
1:35:10 PM                                                                                                                    
SENATOR HOFFMAN joined the committee.                                                                                           
SENATOR  DAVIS moved  to adopt  CSSB 160(L&C),  version T.  There                                                               
were no objections and it was so ordered.                                                                                       
CHAIR  ELLIS  stated they  had  covered  the labor  and  commerce                                                               
aspects of the bill.                                                                                                            
1:36:18 PM                                                                                                                    
SENATOR STEVENS said he was  still concerned about how the health                                                               
care programs would be paid for.                                                                                                
SENATOR DAVIS moved  to report CSSB 160(L&C)  from committee with                                                               
individual recommendations and attached  fiscal notes. There were                                                               
no objections and it was so ordered.                                                                                            
            SB 293-ELECTRONIC COMMUNICATION DEVICES                                                                         
1:37:31 PM                                                                                                                    
CHAIR ELLIS announced SB 293 to be up for consideration.                                                                        
TREVOR  FULTON, staff  to  Senator McGuire,  sponsor  of SB  293,                                                               
recapped  that  this is  a  consumer  protection bill  protecting                                                               
personal privacy  and preventing theft of  personal identity. The                                                               
state  currently doesn't  have any  regulation on  the books  and                                                               
this  brings  state  statutes  up   to  date  with  this  growing                                                               
CHAIR  ELLIS  asked  him  to   explain  the  concerns  that  were                                                               
expressed since the last hearing.                                                                                               
1:38:51 PM                                                                                                                    
SENATOR BUNDE joined the committee.                                                                                             
MR.  FULTON responded  that  the proposed  CS  addressed some  of                                                               
those concerns.  In response to Senator  Bunde's question whether                                                               
SB  293 was  a proactive  bill or  addressed current  problem, he                                                               
reported  that  Ed  Sniffen,  Assistant  Attorney  General,  said                                                               
identity  theft as  a result  of  radio frequency  identification                                                               
(RFID)  would  be difficult  to  prove,  but  he thought  it  had                                                               
probably  already happened.  Senator Bunde's  second concern  was                                                               
how  SB  293 would  affect  the  use  of federal  documents  like                                                               
passports.  Mr. Fulton  said Legal  Services decided  it wouldn't                                                               
affect federal  regulations regarding  those types  of documents,                                                               
but the  CS excludes passports and  other government-issue travel                                                               
A third question  came up through public  testimony about whether                                                               
similar laws exist  in other states. The short answer  is no, but                                                               
RFID has only been on the  public radar for the last three years.                                                               
It surfaced in 2005 and since  then 50 pieces of legislation have                                                               
been introduced in 27 states about it.                                                                                          
SENATOR BUNDE said that addressed his concerns.                                                                                 
SENATOR ELLIS asked Mr. Fulton to go through the CS.                                                                            
1:41:55 PM                                                                                                                    
MR.  FULTON  said  that  after   discussions  with  the  Attorney                                                               
General's  office,  the  bill  drafter,  the  Electronic  Privacy                                                               
Information  Center   and  Dr.  Oliver  Hedgecut,   Professor  of                                                               
Logistics  at  UAA,  the  sponsor   decided  to  incorporate  the                                                               
following changes into  the draft CS. The first change  is in the                                                               
title that adds  violations of this act to a  long list of unfair                                                               
trade practices already in statute.                                                                                             
The second  change is  on page  1, line  7, and  deletes "active"                                                               
that was  used in the  RFID industry as  a very specific  term to                                                               
differentiate between  an active RFID  device and a  passive one.                                                               
It  wasn't used  in  that sense  and they  didn't  want to  cause                                                               
confusion so it was deleted. The  third change is on page 1, line                                                               
10,  and  a couple  of  other  places and  replaces  "universally                                                               
accepted   symbol"  with   "industry   recognized  symbol".   The                                                               
reasoning  is there  is no  "universally  acceptable symbol"  out                                                               
there   and  several   different  industries   use  the   symbols                                                               
differently.  They  also  wanted  to accommodate  those  who  are                                                               
already willingly labeling their products  with some sort of RFID                                                               
On page  2, lines  16-31, a paragraph  was deleted  that required                                                               
consumers to pay costs associated  with the deactivation of RFID.                                                               
It was  thought putting that  burden on the  consumer's shoulders                                                               
was unreasonable.  A new paragraph  says "a provider  must delete                                                               
any  personal information  on a  reactivated  RFID." They  didn't                                                               
want   to  discourage   reuse  of   the  devices,   but  personal                                                               
information had to be purged first.                                                                                             
The fifth  change was on page  3, line 1, that  replaced "coerce"                                                               
and "coercion" with "require" and  "requirement". "Coercion" is a                                                               
stronger term and  more open to interpretation,  which could make                                                               
proving a  violation of this  section more difficult. On  page 3,                                                               
lines 15-16, "remote" was deleted  because it is superfluous; all                                                               
RFID devices scan and read remotely.                                                                                            
On page  4, lines  12-14, the  "Enforcement" section  was deleted                                                               
because when  this was added  to the Unfair Trade  Practices Act,                                                               
there   was  no   longer  any   need  to   specifically  identify                                                               
enforcement  procedures. A  new section  was added  in its  place                                                               
entitled  "Exemption"   which  is   where  passports   and  other                                                               
international travel  documents were  exempted. On page  4, lines                                                               
16-18,  the definition  of "active"  was deleted  and definitions                                                               
for "activate" and "activated" were inserted.                                                                                   
1:47:48 PM                                                                                                                    
This next  section had  the most  substantive change,  Mr. Fulton                                                               
said.  On  page 4,  lines  28-29,  "that transmits,  receives  or                                                               
stores  personal  information"  was   added  after  "item".  This                                                               
language narrows the focus of the  bill only to RFID devices that                                                               
transmit,  receive  or   store  personal  information.  "Personal                                                               
information"  is  defined to  include  the  types of  items  that                                                               
consumers tend  to be  most sensitive about  (listed on  page 5).                                                               
They  didn't   want  to  unnecessarily   burden  all   the  other                                                               
industries,  particularly  supply  chain  management  and  retail                                                               
industries that use RFIDs quite a bit.                                                                                          
The final change in  the CS is on page 6, lines  2-3, where a new                                                               
section was inserted  entitled "Section 2" that adds  this act to                                                               
the list of Unfair Trade Practices.                                                                                             
1:49:07 PM                                                                                                                    
CHAIR ELLIS asked if all concerns had been addressed.                                                                           
MR. FULTON replied yes.                                                                                                         
DR.  OLIVER  HEDGECUT,  Professor  of  Logistics,  University  of                                                               
Alaska Anchorage,  supported SB 160.  He stated that  Alaska does                                                               
lead in this  area and started its RFID research  at UAA with the                                                               
military. "For  that very  reason we  are a  good Petrie  dish to                                                               
experiment with, not only technology,  but with laws and I'm very                                                               
proud  to be  Alaskan  and see  that we  are  talking about  this                                                               
today." He approved of the suggested changes.                                                                                   
ED  SNIFFEN,   Assistant  Attorney  General,  said   making  data                                                               
protection  and privacy  a violation  of the  Consumer Protection                                                               
Act was a good move.                                                                                                            
SENATOR ELLIS  said he supported  narrowing the bill  to personal                                                               
1:52:37 PM                                                                                                                    
SENATOR  STEVENS  moved  to  adopt  CSSB  293(L&C),  version  25-                                                               
LS1509\C. There were no objections and it was so ordered.                                                                       
1:53:02 PM                                                                                                                    
SENATOR  STEVENS moved  to report  CSSB  293(L&C) from  committee                                                               
with individual recommendations and  attached fiscal notes. There                                                               
were no objections and it was so ordered.                                                                                       
      CSHB  65(FIN)-PERSONAL INFORMATION & CONSUMER CREDIT                                                                  
1:54:04 PM                                                                                                                    
CHAIR ELLIS  announced CSHB 65(FIN)  to be up  for consideration.                                                               
[The  committee was  considering  SCS CSHB  65(L&C), version  25-                                                               
KAREN LIDSTER,  staff to Representative John  Coghill, co-sponsor                                                               
of HB 65, was available to answer questions.                                                                                    
MEAGAN FOSTER,  staff to Representative  Les Gara,  co-sponsor of                                                               
HB 65,  started reviewing the changes  to version V. On  page 11,                                                               
line  9, the  original bill  allowed $10  for placing  a security                                                               
freeze per  credit reporting agency and  the CS takes that  to $5                                                               
based on AARP testimony.                                                                                                        
SENATOR BUNDE asked what a freeze would actually cost.                                                                          
MS. FOSTER answered that states'  charges vary with $15 being the                                                               
most expensive. Indiana  has no charge for placing  a freeze. She                                                               
has not heard what actual costs are to the credit bureau.                                                                       
1:59:37 PM                                                                                                                    
MS. FOSTER  said the second  change is on  page 11, line  23, for                                                               
victims of  identity theft to receive  a freeze at no  cost. This                                                               
was requested by AARP. The original bill had no exemptions.                                                                     
SENATOR BUNDE said he was curious about the unfunded mandate.                                                                   
CHAIR ELLIS remarked that is an open issue at this point.                                                                       
MS.  FOSTER  went  to  page   12,  lines  3-6,  rights  given  to                                                               
consumers,  that  outlined  changes   in  the  fee  structure,  a                                                               
conforming change.                                                                                                              
2:01:23 PM                                                                                                                    
MS.  LIDSTER went  to page  16  and recording  of documents.  The                                                               
original  bill  dealt  with  the DNR's  concerns  by  making  the                                                               
exception for them  to be able to accept  whatever legal document                                                               
they  were required  to record.  The DNR  and the  DOL felt  that                                                               
exemption should  also be in  Section 45.48.400 on page  17, line                                                               
20. It states  that prohibitions of this section do  not apply to                                                               
a person  that is engaged  in the  business of government  and is                                                               
authorized  by law  or  when  the request  or  collection of  the                                                               
individual's  social   security  number   is  required   for  the                                                               
performance of a person's duties  or responsibilities. This makes                                                               
sure that  an individual recording  a document in  the Recorder's                                                               
Office was  not responsible for  the information that was  on the                                                               
SENATOR ELLIS  asked if  this circumstance  is particular  to the                                                               
MS.  LIDSTER replied  it was  brought to  their attention  by DNR                                                               
because it  has the unique  duty of recording documents  that may                                                               
have  personal information  and  it makes  copies available.  The                                                               
department  is not  in a  position to  start going  through those                                                               
documents and  deleting that recorded information.  The provision                                                               
relates  to other  government agencies  or  individuals that  are                                                               
authorized by law to perform this work.                                                                                         
MS.  FOSTER  went  to  page  17,  lines  28-29,  where  "from  an                                                               
individual there"  replaced "an  individual" with in  relation to                                                               
social  security numbers.  It was  requested by  Choice Point  as                                                               
clarifying language.                                                                                                            
SENATOR BUNDE asked how this applies  if you want to cash a check                                                               
at a bank that wants to see your social security number.                                                                        
MS.  FOSTER replied  the  exemptions allow  for  disclosure of  a                                                               
social security  number if it  is needed to complete  a financial                                                               
2:06:59 PM                                                                                                                    
SENATOR  BUNDE said  it  prohibits a  business  from asking,  but                                                               
asked if a  person who wants to conduct business  there can still                                                               
volunteer it.                                                                                                                   
MS. FOSTER didn't know how that would be addressed.                                                                             
2:07:50 PM                                                                                                                    
MS.  FOSTER proceeded  to page  18, lines  19-22, subsection  (5)                                                               
where "debt  collection, fraud prevention and  medical treatment"                                                               
was inserted after  "background check on an  individual". This is                                                               
because Premera  was concerned  that restricting  social security                                                               
numbers  would prevent  them from  giving a  patient his  medical                                                               
records. Doctors' offices were also concerned with this issue.                                                                  
2:10:04 PM                                                                                                                    
SENATOR BUNDE  asked if there  is a  problem in Alaska  of people                                                               
selling social security numbers.                                                                                                
MS.  FOSTER replied  that  in the  past  an information  services                                                               
company allowed  downloading of social  security numbers.  It was                                                               
advertised  on  their  website;  that is  no  longer  there.  The                                                               
numbers  were from  1988  fishing licenses.  She  said that  data                                                               
brokering companies will still sell  that information. This would                                                               
just affect Alaskan records, not those in other states.                                                                         
She  said the  next change  was requested  by Choice  Point as  a                                                               
clarification - on page 19,  lines 8-11, subsection (d), language                                                               
was  added saying  "transfer of  an individual's  social security                                                               
number for the sole purpose of  identifying a person about whom a                                                               
report or database check is  ordered, received or provided is not                                                               
a  sale, lease,  loan, trade  or  rental or  the social  security                                                               
number of this section."                                                                                                        
Finally, she said, on page 20,  lines 2-5, the same language used                                                               
in request or collection was  inserted to allow for disclosure of                                                               
social   security   numbers   for   debt   collection,   identity                                                               
verification,  fraud  prevention   and  medical  treatment.  This                                                               
change was requested by Premera.                                                                                                
2:14:20 PM                                                                                                                    
CHAIR ELLIS said they would begin public testimony on the CS.                                                                   
2:15:33 PM                                                                                                                    
JON BURTON,  Vice President,  State Government  Relations, Choice                                                               
Point, Washington, D.C. introduced himself.                                                                                     
AUDREY   ROBINSON,  Manager,   State  Government   Affairs,  Reed                                                               
Elsevier, Parent Company of LexisNexis, introduced herself.                                                                     
JENNIFER  FLYNN,  Director,  Government  Affairs,  Consumer  Data                                                               
Industry  Association (CDIA),  Washington, D.C.  said her  agency                                                               
represents consumer companies like LexisNexis and Choice Point.                                                                 
MR.  BURTON recalled  their  proposed  amendments presented  last                                                               
week  that  they  felt  were  necessary to  not  only  allow  the                                                               
consumer  protections in  this bill  to go  forward, but  also to                                                               
removed some  impediments to legitimate business  activities that                                                               
are currently  going on today  in Alaska and across  the country.                                                               
He wanted  to briefly respond  to some of  the changes in  the CS                                                               
and then go into his proposed amendments.                                                                                       
He commented  that he hadn't seen  many of the amendments  in the                                                               
CS  and the  fact that  many of  them were  attributed to  Choice                                                               
Point  came as  an utter  surprise to  him. He  asked members  to                                                               
refer to a copy of his proposed amendments from last week.                                                                      
MS.  ROBINSON  clarified that  the  amendments  presented to  the                                                               
committee were based on the CS  as it came over to the committee.                                                               
So, some  of the  line numbers  were slightly  off given  the new                                                               
2:20:19 PM at ease 2:21:52 PM                                                                                               
CHAIR ELLIS  noted his  practice of providing  CS to  the general                                                               
public as soon as possible.                                                                                                     
MR.  BURTON  said  his  primary concerns  were  with  the  social                                                               
security number provisions, the  credit freeze provisions and the                                                               
breech notification.  He started with the  social security number                                                               
provisions on  page 17, line  27, Section 45.48.410. He  said one                                                               
change was  made at  his request  and that  was the  insertion of                                                               
language from an individual on line 29.                                                                                         
2:24:00 PM                                                                                                                    
Choice  Point's second  proposed  amendment  dealt with  Sections                                                               
45.48.410,  .420  and  .430  on   pages  17-20.  The  contentious                                                               
language is on page 18, line 1,  where it says "(1) if the person                                                               
is expressly authorized  by local, state or  federal law...." His                                                               
issue with  that is  they aren't aware  of many  statutes, either                                                               
state  or federal,  that specifically  talk about  the government                                                               
use of  social security  numbers. His  company operates  under an                                                               
umbrella of  state and federal  regulatory law which  talks about                                                               
the  distribution,   the  sharing  and  transfer   of  non-public                                                               
personal  information  and these  kinds  of  definitions most  of                                                               
which include  social security numbers. Many  of their activities                                                               
are engaged by such federal  regulatory statutes such as the Fair                                                               
Credit Reporting  Act (FCRA),  the Gramm-Leach-Bliley  Act (GLB),                                                               
the Driver's  Privacy Protection  Act and  the U.S.  Patriot Act.                                                               
These laws are  what they call prohibitive statutes  in that they                                                               
set up  things they can not  do - except for  certain permissible                                                               
purposes or authorized exemptions.                                                                                              
MR. BURTON  explained that he  has asked  the sponsors to  make a                                                               
small  language  change  to  contemplate  and  conform  to  those                                                               
federal  statutes. The  language would  read, "if  the person  is                                                               
permitted or authorized by local,  state or federal law." He said                                                               
he brought the federal statutes for their review.                                                                               
2:26:00 PM                                                                                                                    
MS. FLYNN  said she had worked  on this type of  language in many                                                               
states and while it is  seemingly a simple issue, "permitted" and                                                               
"authorized"  are  necessary  for their  businesses  to  continue                                                               
providing  their services.  They  feel  that particular  language                                                               
complies  with  federal  laws.  Once  "expressly  authorized"  is                                                               
inserted they  no longer  can actually say  they comply  with the                                                               
FCRA   and  GLB   requirements,   because   those  purposes   are                                                               
"permitted," they are not "authorized."                                                                                         
MR.  BURTON said  the  language  at issue  is  in three  separate                                                               
social  security  number sections.  So  they  want the  suggested                                                               
language included in all three sections for conformity as well.                                                                 
2:27:58 PM                                                                                                                    
MR.  BURTON said  the next  language issue  applies to  all three                                                               
social  security number  sections  again. He  explained that  the                                                               
bill  sets  up prohibitions  on  what  can  be done  with  social                                                               
security numbers and  then sets out a list of  exemptions. One of                                                               
the  exemptions is  for  the GLB.  His problem  is  that the  GLB                                                               
exemption it references does not  have the legal effect they need                                                               
to  continue legitimate  business  operations. He  has asked  the                                                               
sponsors to redraft  the exemption to give what  his lawyers said                                                               
it needed to have legal effect.                                                                                                 
CHAIR ELLIS asked Ms. Bannister to address this specifically.                                                                   
2:30:38 PM                                                                                                                    
MR.  BURTON said  all three  social security  sections should  be                                                               
changed to have this legal effect.                                                                                              
MS.  FLYNN reiterated  that credit  reporting is  regulated under                                                               
FCRA  and not  being  able to  legally  transmit social  security                                                               
numbers  back and  forth  could stop  credit  reports from  being                                                               
transmitted to Alaska.                                                                                                          
CHAIR  ELLIS said  this came  up in  other states  and asked  how                                                               
those credit agencies dealt with it.                                                                                            
MS. FLYNN answered  that many states don't  particularly touch on                                                               
social security numbers  one way or another. But  the states that                                                               
have brought  it up understand  the fact that credit  reports and                                                               
the  transfer of  information not  only  from a  consumer to  the                                                               
credit reporting agency, but the  credit reporting agency to, for                                                               
instance, a  bank or to  someone who is trying  to get a  lien or                                                               
looking at a mortgage title  - all those transactions include the                                                               
social security number  and are permissible under  the FCRA. They                                                               
want language to mirror the federal language.                                                                                   
2:34:29 PM                                                                                                                    
MR. BURTON said  language in subparagraph (5), page  18, line 19,                                                               
was in  Section 45.48.410  and .430,  but not  in .420.  He asked                                                               
that it reference  all three for effect  and conformity purposes.                                                               
That   concluded  his   suggestions   on   the  social   security                                                               
2:35:48 PM                                                                                                                    
CHAIR ELLIS  asked Ms. Foster and  Ms. Lidster if they  wanted to                                                               
comment  in  terms  of  the  policy  calls,  the  impact  of  the                                                               
tradeoffs and drafting issues.                                                                                                  
MS.  FOSTER said  Representative  Gara had  discussions with  Mr.                                                               
Burton  about using  "permitted" and  the representative  thought                                                               
using it  was too broad.  Representative Gara also wanted  a word                                                               
that  wasn't as  narrow  as "expressly  authorized". They  hadn't                                                               
come to an agreement.                                                                                                           
CHAIR  ELLIS  asked  if  the   drafting  attorney  had  suggested                                                               
language and if  it would allow the business  practice that other                                                               
states  have  allowed.  He  said  this issue  really  has  to  be                                                               
ED  SNIFFEN, Department  of Law  (DOL), said  industry's concerns                                                               
were  that using  "expressly authorized"  in sections  .410, .420                                                               
and .430  was too narrow for  them to conduct business  under the                                                               
FCRA or GLB.  He looked at the acts and  even though the headings                                                               
in some of them use  terms like "permissible purposes" or "things                                                               
that  aren't prohibited,"  it seemed  to suggest  that "expressly                                                               
authorized"  wouldn't  encompass  that  same  meaning.  The  FCRA                                                               
provides that  "permissible purpose" of a  consumer report allows                                                               
that a consumer  reporting agency "may furnish to  a person which                                                               
has a reason to believe that  the information is going to be used                                                               
in connection with a credit  transaction involving the consumer".                                                               
The Act says  it is okay to furnish this  information to a person                                                               
and he  thought "expressly  authorized" could  include statements                                                               
like "may  furnish". He suggested dropping  "expressly" and using                                                               
just "authorized".  He thought "authorized" had  more import than                                                               
"permitted" because that is very  broad. He said it's likely that                                                               
existing language  would allow  them to do  business, but  he was                                                               
continuing  to work  on this  with them.  In looking  over Alaska                                                               
Supreme  Court  cases,  he hadn't  found  any  legal  distinction                                                               
between using "authorized" and "permitted."                                                                                     
MR. SNIFFEN said with respect  to the exemptions in sections .410                                                               
and .430  the "expressly authorized"  language is an  "either or"                                                               
under these sections, because regardless  of whether something is                                                               
expressly  authorized  or  not,  the   bill  does  carve  out  an                                                               
exemption for  the Gramm-Leach-Bliley  Act. It doesn't  matter if                                                               
it says  "permitted" or  "expressly authorized,"  if it's  in the                                                               
GLB Act, you are exempt.                                                                                                        
He  hadn't focused  on Mr.  Burton's point  about whether  or not                                                               
they  are  technically  a  financial   institution  and  so  that                                                               
exemption may or may not apply to  them, but he would be happy to                                                               
have that conversation with him.  The same for consumer reporting                                                               
agencies under exemption 4 on page  18, line 16, that provides an                                                               
exemption for  a communication  to or  from a  consumer reporting                                                               
agency. The FCRA defines a  consumer reporting entity to include,                                                               
he believed,  Choice Point and  others; maybe that's  where their                                                               
hang-up  was.  He thought  this  exemption  encompassed all  that                                                               
conduct. However,  he said, those  exemptions don't hinge  on the                                                               
language "expressly authorized" versus "permitted".                                                                             
CHAIR ELLIS asked him to think about what language would work.                                                                  
GAIL  HILLEBRAND,   Consumers  Union,   said  on  the   issue  of                                                               
"expressly  authorized" this  bill is  designed to  restrict some                                                               
conduct that  now occurs in the  marketplace. That is why  it was                                                               
brought forward. Her concerns with  saying simply "authorized" or                                                               
"permitted"  without some  kind of  affirmative authorization  or                                                               
permission is  that federal law  allows all sorts of  things that                                                               
it  doesn't  prohibit.   But  it  is  implied.   Federal  law  is                                                               
structured so there  are certain things you can't do  and it just                                                               
doesn't  touch the  universe  of other  things;  this measure  is                                                               
designed to  touch the  remaining universe  of other  things. She                                                               
thought this was a policy issue, not a drafting issue.                                                                          
MS. FOSTER  said the sponsors  made a policy call  when inserting                                                               
"for a purpose permitted or  authorized by the Gramm-Leach-Bliley                                                               
Act" into  sections .410 and  .430. The reason  it is not  just a                                                               
conforming amendment and wasn't put  into section .420 is because                                                               
they are trying  to prohibit the sale, lease, loan  or trade of a                                                               
social  security number  and institutions  covered under  GLB are                                                               
allowed to engage in that business. It was a hard policy call.                                                                  
2:46:48 PM                                                                                                                    
CHAIR  ELLIS asked  if the  restriction in  the CS  is common  in                                                               
other states.                                                                                                                   
MS. FOSTER answered  no other state has restrictions  as tight as                                                               
the ones being proposed.                                                                                                        
CHAIR ELLIS said they would come back to sections .410 and .430.                                                                
2:47:55 PM                                                                                                                    
MS. FOSTER  said the language  for the Fair Credit  Reporting Act                                                               
was inserted  because they didn't  want to open all  the sections                                                               
of the bill to those purposes  covered under it. On page 18, line                                                               
23, new  language was added  in the  sale, lease, loan,  trade or                                                               
rental  section for  conformity with  .410 and  .430. They  don't                                                               
necessarily want the language in  section .420 to conform exactly                                                               
with  the other  two sections.  It was  another policy  call that                                                               
they  don't feel  the  language  covering the  sale  of a  social                                                               
security number should be the  same as the language covered under                                                               
disclosure  or  request  for  collection  of  a  social  security                                                               
2:50:00 PM                                                                                                                    
CHAIR ELLIS  asked Ms.  Bannister's thoughts  on the  points that                                                               
had been made from a drafting perspective.                                                                                      
TERRY  BANNISTER,   Legislative  Legal,  said  she   could  draft                                                               
whatever is  wanted. However, "permitted"  is very broad  and she                                                               
didn't know if the parties could compromise on another word.                                                                    
CHAIR  ELLIS stated  that they  wanted to  make the  right policy                                                               
call,  but they  didn't want  to make  a compromise  for comprise                                                               
2:53:08 PM                                                                                                                    
MS.  BANNISTER  asked what  Mr.  Burton  particularly felt  using                                                               
"authorized" would not allow them to do.                                                                                        
MS.   FLYNN  (GLB)   answered   that   their  lawyers   interpret                                                               
"authorize"  specifically   to  mean   authorize;  there   is  no                                                               
definitional  ambiguity to  that word.  It means  the law  has to                                                               
"authorize"  it. The  FCRA  and  the GLB  do  not  do that;  they                                                               
"permit." If a  lawyer is looking at what they  are allowed to do                                                               
and  it  says   "authorized"  by  the  FCRA,   the  FCRA  doesn't                                                               
authorize, it permits.                                                                                                          
Her company lawyers' interpretation is  that they would no longer                                                               
be able to provide the services  under the FCRA. GLB is a broader                                                               
financial  institution law,  so the  consumer reporting  agencies                                                               
would not be  able to provide the services that  they provide. If                                                               
there  are certain  things under  federal law  the state  doesn't                                                               
want  them doing,  that's  a different  question.  But if  you're                                                               
trying to  say they should  be able to continue  doing everything                                                               
that is permissible under the FCRA  and GLB, this would not allow                                                               
them to do that.                                                                                                                
2:55:14 PM                                                                                                                    
MS. FOSTER had no response to that.                                                                                             
2:55:54 PM                                                                                                                    
MS.  BANNISTER  asked  why doesn't  subsection  (4)  [in  Section                                                               
45.48.410] allow it.                                                                                                            
MS.  FLYNN  replied as  that  particular  section is  written  "a                                                               
communication to  or from  a consumer  reporting agency"  is much                                                               
too vague.  They operate under  very strict regulatory  and legal                                                               
guidelines and  laws; it  would be  a disservice  for her  to say                                                               
this  is okay.  Ambiguity is  unacceptable and  they are  talking                                                               
about secure information.                                                                                                       
MS.   BANNISTER   asked   what   she   would   use   instead   of                                                               
"communication" that would be more concrete.                                                                                    
MS.  FLYNN  replied she  would  have  to  discuss that  with  the                                                               
companies and the lawyers.                                                                                                      
CHAIR ELLIS directed that to proceed.                                                                                           
SENATOR BUNDE  said he  thought the  crux of  the matter  is that                                                               
things  are allowed  under  the  federal law  that  the CS  won't                                                               
allow.  He  asked  if  it  was  the  sponsors'  intent  to  limit                                                               
practices that are allowed under federal law.                                                                                   
MS.  FOSTER  said the  sponsors  believe  what is  allowed  under                                                               
federal law  is really broad,  and they are not  comfortable with                                                               
that,  especially   for  social  security  numbers.   It  is  the                                                               
sponsors' intent to narrow those permitted uses.                                                                                
SENATOR BUNDE  said he didn't  think there were words  that would                                                               
solve this equation.                                                                                                            
CHAIR  ELLIS said  he thought  language could  be found  to allow                                                               
certain business practices.                                                                                                     
3:00:21 PM                                                                                                                    
MS. FLYNN asked which purposes they would be limiting.                                                                          
3:02:06 PM                                                                                                                    
BRYAN MERRELL,  Regional Counsel, First American  Title Insurance                                                               
Company and Alaska Land Title  Association, said he was concerned                                                               
about  an issue  that was  raised  by the  DNR Recorder's  Office                                                               
about making  a public record  of private information  that might                                                               
be contained  in its recorded  documents. He had been  told those                                                               
concerns were addressed by an exemption, but he wasn't sure.                                                                    
CHAIR ELLIS responded that no one  from DNR was present, but they                                                               
had  represented  to staff  that  they  were satisfied  with  the                                                               
3:05:39 PM                                                                                                                    
ALAN VAZQUEZ, American  Electronics Association, suggested adding                                                               
an  email provision  within the  methods of  notice section  as a                                                               
primary form of  notice. They believe this because  many of their                                                               
member  companies' primary  method  of  communication with  their                                                               
customers is  through email. It is  also a quicker way  to notify                                                               
consumers and customers of a potential data breach.                                                                             
Second, he  asked that a  public exception provision  be inserted                                                               
in the  definition of personal  information in  Section 45.48.090                                                               
(7) because business  should be encouraged to  focus resources on                                                               
truly  sensitive data  elements. "It's  imperative that  the data                                                               
elements include a definition that  is consistent with those that                                                               
truly lead to a significant risk of identity theft."                                                                            
Last,  Mr.  Vazquez  encouraged  them to  look  at  the  American                                                               
Legislative   Exchange  Council's   model  definition   of  "data                                                               
breach." It is their concern  that the current definition in this                                                               
bill is  too broad and would  lead to over notification  and "boy                                                               
cries wolf scenario."                                                                                                           
3:09:22 PM                                                                                                                    
KENTON  BRYNE, Property  Casualty Insurers  Association (PCI)  of                                                               
America,  said  he  had  provided  amendments  to  Representative                                                               
Coghill's office,  and their focus  is entirely on Article  2 the                                                               
credit  freeze  authorization  provision -  particularly  Section                                                               
45.48.100.  He said  roughly 43  percent  of the  home, auto  and                                                               
business insurance polices written in  America are written by PCI                                                               
member companies.  He said  some 40  states have  approved credit                                                               
freeze language;  33 of those  states have included some  kind of                                                               
language  that  allows  insurers  to continue  to  access  credit                                                               
related information  and consumer  reports for  insurance related                                                               
purposes even if a freeze has  been placed on the credit file. He                                                               
said primarily  when someone's identity  is stolen it is  for the                                                               
purpose  of falsely  getting access  to money  and loans.  He was                                                               
pretty  sure that  every state  in the  last two  years that  has                                                               
crafted  a security  freeze bill  has allowed  insurer access  to                                                               
frozen credit files.                                                                                                            
He explained  that insurers use  credit information  to determine                                                               
risk  to  determine a  rate.    In this  day  of  24/7 access  to                                                               
insurance they want  to keep the process as easy  and hassle free                                                               
for  the consumer  as possible.  So, PCI  has asked  a number  of                                                               
states,  including Idaho,  Washington  and Oregon,  to adopt  the                                                               
language they are  proposing for Section 45.48.100  in which they                                                               
define  for purposes  of a  credit freeze  a credit  report as  a                                                               
consumer report that  is accessed for the  purpose of determining                                                               
someone's eligibility  for a  loan; this  would allow  other non-                                                               
lending purposes  to go forward  even when  a freeze is  on file.                                                               
They  would  seek  to  repeat that  language  in  the  definition                                                               
section, 45.48.290(5).                                                                                                          
As   for   their   other  amendments,   after   consulting   with                                                               
Representative Coghill's  staff, they  determined the  current CS                                                               
is sufficient  to allow  insurers to treat  a consumer  fairly if                                                               
they have a credit freeze and  you're not allowed to access their                                                               
credit reports  if they won't lift  the freeze. So they  will not                                                               
seek   the  amendments   they  previously   sought  for   Section                                                               
3:14:40 PM                                                                                                                    
SENATOR BUNDE agreed that he  doubted someone would steal someone                                                               
else's identity to get lower insurance  rates, but he asked if it                                                               
is  possible someone  would try  to hack  an insurance  company's                                                               
files  to steal  identities and  what  could they  do to  prevent                                                               
that. If it did happen, how would people be notified?                                                                           
MR.  BRYNE  replied   the  answer  is  in   the  security  breach                                                               
provisions of  the bill.  Insurers would be  treated the  same as                                                               
other  entities that  are regulated  under the  legislation. They                                                               
are not seeking  any change in that. The only  change is specific                                                               
to accessing  a file  that has  been frozen at  the request  of a                                                               
consumer. He didn't  know that any insurance  company's files had                                                               
been  hacked,  accessed  or  breached,   but  if  that  occurred,                                                               
insurers  would  be  subject  to the  same  provisions  as  other                                                               
institutions  under  the  legislation. While  some  insurers  are                                                               
regulated under GLB,  it depends on the  activity; the provisions                                                               
do not apply the same way  to all companies. The protections that                                                               
have been  contemplated for other financial  institutions are the                                                               
same for insurers under the bill.                                                                                               
SENATOR BUNDE  commented to the  representatives of  the sponsors                                                               
if the argument  is about state law preempting  federal law, they                                                               
are having an academic exercise.                                                                                                
3:16:44 PM                                                                                                                    
SHEILA CALCALSURE,  Information Policy Officer for  the Americas,                                                               
Acxiom  Corporation,   said  Acxiom  is  an   information  policy                                                               
business and  providing information solutions to  its clients all                                                               
over   the   United  States   that   do   things  like   identity                                                               
authentication.  Its tools  are  permitted  under a  Gramm-Leach-                                                               
Bliley permitted  use statute  of the federal  law. She  said the                                                               
outcome of  this bill  is very  important to  the way  they serve                                                               
their clients in Alaska and the United States.                                                                                  
CHAIR ELLIS  thanked everyone for  their testimony and  said they                                                               
would continue with  the bill at a later meeting.  There being no                                                               
further business to  come before the committee,  he adjourned the                                                               
meeting at 3:18:57 PM.                                                                                                        

Document Name Date/Time Subjects