Legislature(2017 - 2018)BELTZ 105 (TSBldg)

03/09/2017 01:30 PM LABOR & COMMERCE

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Audio Topic
01:40:28 PM Start
01:41:11 PM Confirmation Hearings
02:38:00 PM SB56
03:29:20 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Governor's Boards And Commissions Appointments: TELECONFERENCED
Alaska State Board of Public Accountancy
Fisherman's Fund Advisory & Appeals Council
Board of Pharmacy
Board of Certified Real Estate Appraisers
State Board of Registration for Architects,
Engineers, and Land Surveyors
*+ SB 56 PRODUCT WARRANTIES & REQUIRED UPDATES TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
-- Public Testimony --
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 9, 2017                                                                                          
                           1:40 p.m.                                                                                            
                                                                                                                                
                                                                                                                              
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Shelley Hughes, Vice Chair                                                                                              
Senator Kevin Meyer                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Berta Gardner                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
                                                                                                                                
Alaska State Board of Public Accountancy                                                                                        
     Marja Beltrami - Anchorage                                                                                                 
     Wayne Hogue - Kotzebue                                                                                                     
     Donavan Rulien, II - Anchorage                                                                                             
                                                                                                                                
          CONFIRMATIONS HEARD AND HELD                                                                                          
                                                                                                                                
Fisherman's Fund Advisory and Appeals Council                                                                                   
     Clay Bezenek - Ketchikan                                                                                                   
                                                                                                                                
          CONFIRMATION HEARD AND HELD                                                                                           
                                                                                                                                
Board of Pharmacy                                                                                                               
     Lana Bell -Anchorage                                                                                                       
     Taryl Giessel - Eagle River                                                                                                
     James Henderson - Soldotna                                                                                                 
                                                                                                                                
          CONFIRMATIONS HEARD AND HELD                                                                                          
                                                                                                                                
State Board of Registration for Architects, Engineers, and Land                                                                 
Surveyors                                                                                                                       
     Elizabeth Johnston - Fairbanks                                                                                             
     Richard Jones - Juneau                                                                                                     
                                                                                                                                
          CONFIRMATIONS HEARD AND HELD                                                                                          
                                                                                                                                
Board of Certified Real Estate Appraisers                                                                                       
                                                                                                                                
          SCHEDULED BUT NOT HEARD                                                                                               
                                                                                                                                
SENATE BILL NO. 56                                                                                                              
"An Act relating  to product warranties and  services for certain                                                               
products;   relating  to   certain  dealers,   distributors,  and                                                               
manufacturers; and  establishing an  unfair trade  practice under                                                               
the Alaska Unfair Trade Practices and Consumer Protection Act."                                                                 
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  56                                                                                                                  
SHORT TITLE: PRODUCT WARRANTIES & REQUIRED UPDATES                                                                              
SPONSOR(s): SENATOR(s) GIESSEL                                                                                                  
                                                                                                                                
02/13/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/13/17       (S)       L&C                                                                                                    
03/09/17       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MARJA BELTRAMI, Appointee                                                                                                       
Alaska State Board of Public Accountancy                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified as appointee to the Alaska State                                                                
Board of Public Accountancy.                                                                                                    
                                                                                                                                
WAYNE HOGUE, Appointee                                                                                                          
Alaska State Board of Public Accountancy                                                                                        
Kotzebue, Alaska                                                                                                                
POSITION STATEMENT: Testified as appointee to the Alaska State                                                                
Board of Public Accountancy.                                                                                                    
                                                                                                                                
DONAVAN RULIEN, Appointee                                                                                                       
Alaska State Board of Public Accountancy                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified as appointee to the Alaska State                                                                
Board of Public Accountancy.                                                                                                    
                                                                                                                                
CLAY BEZENEK, Appointee                                                                                                         
Fisherman's Fund Advisory and Appeals Council                                                                                   
Ketchikan, Alaska                                                                                                               
POSITION  STATEMENT: Testified  as appointee  to the  Fisherman's                                                             
Fund Advisory and Appeals Council.                                                                                              
                                                                                                                                
MARK SALDI, representing himself                                                                                                
Skagway, Alaska                                                                                                                 
POSITION STATEMENT: Testified in  support of the reappointment of                                                             
Clay  Bezenek  to  the  Fisherman's  Fund  Advisory  and  Appeals                                                               
Council.                                                                                                                        
                                                                                                                                
JERRY MCCUNE, President                                                                                                         
United Fishermen of Alaska                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in  support of the reappointment of                                                             
Clay  Bezenek  to  the  Fisherman's  Fund  Advisory  and  Appeals                                                               
Council.                                                                                                                        
                                                                                                                                
LANA BELL, Appointee                                                                                                            
Board of Pharmacy                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified as  an appointee  to the  Board of                                                             
Pharmacy.                                                                                                                       
                                                                                                                                
TARYL GIESSEL, Appointee                                                                                                        
Board of Pharmacy                                                                                                               
Eagle River, Alaska                                                                                                             
POSITION STATEMENT:  Testified as  an appointee  to the  Board of                                                             
Pharmacy.                                                                                                                       
                                                                                                                                
JAMES HENDERSON, Appointee                                                                                                      
Board of Pharmacy                                                                                                               
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified as  an appointee  to the  Board of                                                             
Pharmacy.                                                                                                                       
                                                                                                                                
ELZABETH JOHNSTON, Appointee                                                                                                    
State Board  of Registration for Architects,  Engineers, and Land                                                               
Surveyors                                                                                                                       
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified as an  appointee to the State Board                                                             
of Registration for Architects, Engineers, and Land Surveyors.                                                                  
                                                                                                                                
RICHARD JONES, Appointee                                                                                                        
State Board  of Registration for Architects,  Engineers, and Land                                                               
Surveyors                                                                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified as an  appointee to the State Board                                                             
of Registration for Architects, Engineers, and Land Surveyors.                                                                  
                                                                                                                                
SENATOR CATHY GIESSEL                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SB 56.                                                                                         
                                                                                                                                
AKIS GIALOPSOS, Staff                                                                                                           
Senator Cathy Giessel                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided a sectional analysis for SB 56.                                                                  
                                                                                                                                
ED SNIFFEN, Deputy Attorney General                                                                                             
Civil Division                                                                                                                  
Regulatory Affairs & Public Advocacy (RAPA)                                                                                     
Department of Law                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions related to SB 56.                                                                      
                                                                                                                                
CHRIS GERONDALE                                                                                                                 
Construction Machinery Industrial, LLC                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SB 56.                                                                           
                                                                                                                                
STEVE SEWARD, Attorney                                                                                                          
Construction Machinery Industrial, LLC                                                                                          
Seattle, Washington                                                                                                             
POSITION STATEMENT:  Answered questions related to SB 56.                                                                     
                                                                                                                                
JIM HALLORAN                                                                                                                    
Caterpillar Inc.                                                                                                                
Peoria, Illinois                                                                                                                
POSITION STATEMENT:  Testified in opposition to SB 56.                                                                        
                                                                                                                                
NICK YAKSICH, Senior Vice President                                                                                             
Association of Equipment Manufacturers                                                                                          
POSITION STATEMENT:  Testified in opposition to SB 56.                                                                        
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:40:28 PM                                                                                                                    
CHAIR MIA COSTELLO called the  Senate Labor and Commerce Standing                                                             
Committee meeting  to order at 1:40  p.m. Present at the  call to                                                               
order were  Senators Hughes, Gardner,  Stevens, Meyer,  and Chair                                                               
Costello.                                                                                                                       
                                                                                                                                
^CONFIRMATION HEARINGS                                                                                                          
                     CONFIRMATION HEARINGS                                                                                  
            Alaska State Board of Public Accountancy                                                                          
          Fisherman's Fund Advisory & Appeals Council                                                                         
                       Board of Pharmacy                                                                                      
 State Board of Registration for Architects, Engineers, & Land                                                                
                           Surveyors                                                                                          
                                                                                                                                
1:41:11 PM                                                                                                                    
CHAIR COSTELLO  announced the  first order  of business  would be                                                               
confirmation   hearings   for   governor   board   &   commission                                                               
appointments. She  thanked the nominees and  advised that members                                                               
have  information about  the individuals  in  their packets.  She                                                               
noted that the names of all  appointees would be forwarded in one                                                               
batch at a later date.                                                                                                          
                                                                                                                                
1:42:38 PM                                                                                                                    
CHAIR  COSTELLO asked  Marja Beltrami  of Anchorage  to tell  the                                                               
committee about  her interest in serving  in the CPA seat  on the                                                               
Alaska State Board of Public Accountancy.                                                                                       
                                                                                                                                
1:43:09 PM                                                                                                                    
MARJA  BELTRAMI,   Appointee,  Alaska   State  Board   of  Public                                                               
Accountancy, Anchorage, Alaska, said she  has been a CPA for more                                                               
than 20 years  and has her own business. Her  interest in serving                                                               
on  this board  is  to  keep her  profession  moving forward  and                                                               
ensure a good future for her staff.                                                                                             
                                                                                                                                
CHAIR COSTELLO  asked if she  sees any particular  challenges the                                                               
board will address in the coming year.                                                                                          
                                                                                                                                
MS. BELTRAMI  replied she is  not aware  of any major  changes on                                                               
the horizon.                                                                                                                    
                                                                                                                                
SENATOR GARDNER asked her to  talk about the possible conflict of                                                               
interest  given the  business she  owns  and the  work with  this                                                               
board.                                                                                                                          
                                                                                                                                
MS. BELTRAMI said she is subject  to all the decisions that board                                                               
makes  so she  may potentially  be affected  both positively  and                                                               
negatively.  "That's  why  I answered  'yes'  I  may  potentially                                                               
benefit from  any decisions  the board would  have, as  would any                                                               
CPA that sits on this board and is in current practice."                                                                        
                                                                                                                                
SENATOR GARDNER,  noting that five  of the seven members  of this                                                               
board are  CPAs, commented that  it makes sense  applicants would                                                               
have an interest in serving in their area of expertise.                                                                         
                                                                                                                                
CHAIR COSTELLO  thanked Ms. Beltrami  for being willing  to serve                                                               
and reiterated that the names would  be forwarded in one batch at                                                               
a later date.                                                                                                                   
                                                                                                                                
1:46:55 PM                                                                                                                    
CHAIR  COSTELLO  asked  Wayne  Hogue  of  Kotzebue  to  tell  the                                                               
committee about  his interest  in serving in  the public  seat on                                                               
the Alaska State Board of Public Accountancy.                                                                                   
                                                                                                                                
1:47:19 PM                                                                                                                    
WAYNE   HOGUE,   Appointee,   Alaska  State   Board   of   Public                                                               
Accountancy, Kotzebue,  Alaska, stated that  he is not a  CPA and                                                               
thus  has  no potential  conflict  of  interest serving  on  this                                                               
board. He wants to serve in  order to fulfill his civic duty. The                                                               
Governor's  Office  asked  him  to serve  and  he  submitted  his                                                               
application.                                                                                                                    
                                                                                                                                
CHAIR COSTELLO noted  that in the past he served  on the Kotzebue                                                               
Alcohol Beverage Control Board.                                                                                                 
                                                                                                                                
MR. HOGUE  confirmed that  service and  explained that  he helped                                                               
implement  the  first city-owned  liquor  store  in Kotzebue.  It                                                               
provided good experience in  rule-making and bringing regulations                                                               
in line with the rest of the nation.                                                                                            
                                                                                                                                
SENATOR  STEVENS asked  if most  of  the meetings  of the  Alaska                                                               
State Board of  Public Accountancy are audio  conference or face-                                                               
to-face.                                                                                                                        
                                                                                                                                
MR. HOGUE replied his first  meeting was audio conference, but he                                                               
found it  difficult to participate  because the  applications the                                                               
board was  evaluating were physical  files. The next  meeting was                                                               
in  Juneau and  he traveled  there  to meet  with legislators  to                                                               
discuss potential  changes; it was  very productive. He  said the                                                               
board is trying  to get permission to bring him  to the quarterly                                                               
meetings since he  is remote. He and one other  member are not on                                                               
the road system.                                                                                                                
                                                                                                                                
SENATOR STEVENS agreed that face-to-face  meetings are better and                                                               
said he assumes that attending  occasional meetings will not be a                                                               
hardship.                                                                                                                       
                                                                                                                                
MR. HOGUE confirmed it would not be a problem.                                                                                  
                                                                                                                                
1:50:50 PM                                                                                                                    
SENATOR  HUGHES noted  his employment  history and  asked what  a                                                               
virtualization consultant is.                                                                                                   
                                                                                                                                
MR.   HOGUE  explained   that  virtualization   is  consolidating                                                               
computer  resources  into  a  centralized   stack.  He  has  been                                                               
involved with  virtualization since the  1990s; it is the  way of                                                               
the future.                                                                                                                     
                                                                                                                                
SENATOR  HUGHES   asked  if  a  virtual   meeting  would  include                                                               
synchronous  video  teleconferencing  and  if  that  would  be  a                                                               
possibility for some of the state boards.                                                                                       
                                                                                                                                
MR. HOGUE  replied that is a  possibility, but it won't  work for                                                               
this board until  everything under review is  digitized. He noted                                                               
that teleconferencing  is used extensively  in the  medical field                                                               
and that WebEx  (which is a shared meeting)  would enhance online                                                               
meetings and save on travel.                                                                                                    
                                                                                                                                
SENATOR HUGHES  suggested he  help usher that  in for  all boards                                                               
and commissions to save travel costs.                                                                                           
                                                                                                                                
MR. HOGUE  agreed that is a  possibility and admitted he  is very                                                               
pro technology.                                                                                                                 
                                                                                                                                
CHAIR COSTELLO thanked  Mr. Hogue for being willing  to serve and                                                               
noted that  public testimony  would remain open  on this  and all                                                               
nominees.                                                                                                                       
                                                                                                                                
1:56:36 PM                                                                                                                    
CHAIR  COSTELLO asked  Donavan Rulien  of Anchorage  to tell  the                                                               
committee about his interest in  continuing to serve on the Board                                                               
of   Public  Accountancy.   She   noted  his   long  history   of                                                               
volunteering.                                                                                                                   
                                                                                                                                
1:57:27 PM                                                                                                                    
DONAVAN  RULIEN,   Appointee,  Alaska   State  Board   of  Public                                                               
Accountancy, Anchorage,  Alaska, said  he and  his wife  moved to                                                               
Alaska 33 years  ago and they believe it is  important to be part                                                               
of  and give  back  to the  community. He  advised  that he  just                                                               
finished his  first term  on this board  and currently  serves as                                                               
chair. He  listed other  organizations he has  and does  serve on                                                               
that have  given him a good  background to help serve  Alaska CPA                                                               
licensees.  He  stressed that  protection  of  the public  is  of                                                               
paramount importance.                                                                                                           
                                                                                                                                
SENATOR  GARDNER  noted his  service  as  an expert  witness  and                                                               
wondered of many were divorce cases.                                                                                            
                                                                                                                                
MR.  DONAVAN answered  yes, to  establish fair  valuations before                                                               
property is divided.                                                                                                            
                                                                                                                                
CHAIR COSTELLO thanked Mr. Rulien for being willing to serve.                                                                   
                                                                                                                                
2:00:05 PM                                                                                                                    
CHAIR  COSTELLO asked  Clay Bezenek  of Ketchikan  to comment  on                                                               
serving on the Fisherman's Fund Advisory and Appeals Council.                                                                   
                                                                                                                                
2:00:43 PM                                                                                                                    
CLAY BEZENEK,  Appointee, Fisherman's  Fund Advisory  and Appeals                                                               
Council,  Ketchikan, Alaska,  said  he has  been  on the  appeals                                                               
council for 11  years and is honored to be  nominated to continue                                                               
to serve. He  has been a fisherman  for 34 years and  has a clear                                                               
understanding  that health  concerns are  very important  for the                                                               
fleet, particularly since it is  graying. The current board has a                                                               
good  mix  of fishermen  statewide  and  historical knowledge  is                                                               
transferred to  newer members. He  discussed the solvency  of the                                                               
fund,  licensing  scams  the legislature  helped  eliminate,  and                                                               
tipped his hat to the people  who started the fisherman's fund in                                                               
1952.                                                                                                                           
                                                                                                                                
SENATOR  STEVENS asked  if  the board  becomes  involved after  a                                                               
fisherman has  been hurt or  become sick and a  negative decision                                                               
has been reached on his/her coverage.                                                                                           
                                                                                                                                
MR. BEZENEK said that's correct;  the board looks at things after                                                               
it is deemed that the general criteria have not been met.                                                                       
                                                                                                                                
2:04:49 PM                                                                                                                    
MARK SALDI,  representing himself, Skagway, Alaska,  testified in                                                               
support of  the reappointment of  Mr. Bezenek to  the Fisherman's                                                               
Fund Advisory and Appeals Council.  He related that he has worked                                                               
with Mr. Bezenek for  nine years and finds him to  be a top notch                                                               
guy who likes to get things  done. "Besides that, Clay knows just                                                               
about everybody in the state when it comes to fishing."                                                                         
                                                                                                                                
2:05:50 PM                                                                                                                    
JERRY  MCCUNE, President,  United  Fishermen  of Alaska,  Juneau,                                                               
Alaska,  testified  in  support  of  the  reappointment  of  Clay                                                               
Bezenek to the Fisherman's Fund  Advisory and Appeals Council. He                                                               
has  served   the  longest  of   any  member  and  has   a  clear                                                               
understanding   of  what   is  going   on  with   insurance.  His                                                               
reappointment  is  essential  to   the  council.  He  noted  that                                                               
fishermen have  to use their own  insurance if they have  it, but                                                               
many do not.                                                                                                                    
                                                                                                                                
CHAIR COSTELLO agreed that  continuity is important, particularly                                                               
on the  small boards. She  thanked Mr. Bezenek for  being willing                                                               
to serve  and noted that  public testimony would remain  open and                                                               
that all the names would be forwarded in one batch.                                                                             
                                                                                                                                
2:07:39 PM                                                                                                                    
CHAIR  COSTELLO  asked  Lana  Bell   of  Anchorage  to  tell  the                                                               
committee about her interest in  serving on the Board of Pharmacy                                                               
in the pharmacist seat.                                                                                                         
                                                                                                                                
2:08:07 PM                                                                                                                    
LANA  BELL,  Appointee,  Board of  Pharmacy,  Anchorage,  Alaska,                                                               
stated that she was licensed in  Alaska in 1988 and spent most of                                                               
her career  in retail  pharmacy. For  the last  14 years  she has                                                               
worked  for  the  state  at Pioneer  Home  Pharmacy.  Alaska  has                                                               
provided her  great opportunities  throughout her career  and she                                                               
would like to  give back. She discussed her  participation as the                                                               
pharmacy  board  representative   on  the  Governor's  Controlled                                                               
Substance  Advisory  Council.  It   is  an  important  topic  for                                                               
pharmacists. She  shared that in  retail pharmacy she  always had                                                               
to work  closely with law  enforcement because people will  go to                                                               
great lengths  to obtain  prescription opioids. It  is not  a new                                                               
problem; "it's just out of control now."                                                                                        
                                                                                                                                
CHAIR  COSTELLO thanked  Ms. Bell  for her  contribution and  for                                                               
being willing to serve.                                                                                                         
                                                                                                                                
SENATOR GARDNER  observed that  she has  expertise that  could be                                                               
valuable to  the legislature when it  contemplates legislation to                                                               
address the opioid epidemic. She asked  if in her role as a board                                                               
of pharmacy  member or  as a member  of the  controlled substance                                                               
council she is  able to testify on legislation  that would affect                                                               
her work at the state or federal level.                                                                                         
                                                                                                                                
MS. BELL replied she would need  to ask if she could testify, but                                                               
she is always available as a resource.                                                                                          
                                                                                                                                
SENATOR HUGHES  asked if  she could talk  about the  frequency of                                                               
requests  for prescription  opioids  now compared  to five  years                                                               
ago.                                                                                                                            
                                                                                                                                
MS. BELL  replied she  no longer  works retail;  she works  in an                                                               
institutional pharmacy  where access is more  controlled so there                                                               
isn't abuse. She clarified that  street drugs have a large impact                                                               
on the out of control situation she referenced.                                                                                 
                                                                                                                                
SENATOR  HUGHES   asked  if   she  is   seeing  an   increase  in                                                               
prescriptions with an opioid base.                                                                                              
                                                                                                                                
MS.  BELL  said  she  believes that  many  prescribers  are  more                                                               
careful  now than  in years  past.  She discussed  how a  certain                                                               
number of  people will become  addicted if they  are legitimately                                                               
prescribed  opioids. She  said it's  a balance  to give  a person                                                               
enough to heal without chancing addiction.                                                                                      
                                                                                                                                
2:20:11 PM                                                                                                                    
SENATOR MEYER  said his experience  with pharmacists  and getting                                                               
prescriptions filled  is that the insurance  companies are always                                                               
changing the  rules on supply. He  asked if she hears  about that                                                               
difficulty and if  there is anything that the  legislature can do                                                               
to help the situation.                                                                                                          
                                                                                                                                
MS.  BELL  said  her  pharmacy does  long-term  billing  and  the                                                               
nightmare it has  faced is on the federal level  from the Centers                                                               
for  Medicare and  Medicaid Services  (CMS)  regarding the  short                                                               
cycle.  They can  only  dispense up  to a  14  day supply,  which                                                               
results  in copay  issues. What  she has  learned is  that it  is                                                               
critically important to do every claim correctly the first time.                                                                
                                                                                                                                
2:25:11 PM                                                                                                                    
SENATOR  GARDNER  asked  the  reason  for  the  14-day  limit  on                                                               
prescriptions.                                                                                                                  
                                                                                                                                
MS.  BELL  said   it  is  a  Medicare   rule  for  long-term-care                                                               
facilities.                                                                                                                     
                                                                                                                                
2:25:44 PM                                                                                                                    
CHAIR COSTELLO thanked Ms. Bell for being willing to serve.                                                                     
                                                                                                                                
2:26:05 PM                                                                                                                    
CHAIR COSTELLO  asked Taryl  Giessel of Eagle  River to  tell the                                                               
committee about her interest in  continuing to serve on the Board                                                               
of Pharmacy in public seat.                                                                                                     
                                                                                                                                
2:26:31 PM                                                                                                                    
TARYL  GIESSEL,  Appointee,  Board   of  Pharmacy,  Eagle  River,                                                               
Alaska, said  she is a homemaker  who has served one  term on the                                                               
board in the second public member  seat. It is an excellent board                                                               
that is doing  a lot to further public safety  and to protect the                                                               
profession. Her  focus as  a public member  is public  safety and                                                               
how  to  serve  the  public   without  tying  the  hands  of  the                                                               
professionals practicing in this field.                                                                                         
                                                                                                                                
CHAIR  COSTELLO  found  no  questions  or  public  testimony  and                                                               
thanked Ms. Giessel for being willing to serve.                                                                                 
                                                                                                                                
2:28:08 PM                                                                                                                    
CHAIR  COSTELLO asked  James Henderson  of Soldotna  to tell  the                                                               
committee about his interest in  serving on the Board of Pharmacy                                                               
in a pharmacist seat.                                                                                                           
                                                                                                                                
2:28:32 PM                                                                                                                    
JAMES HENDERSON, Appointee, Board  of Pharmacy, Soldotna, Alaska,                                                               
said he has been  in Alaska for 10 years and  a pharmacist for 22                                                               
years. Most of his career has  been in retail pharmacy and now he                                                               
has a home  infusion pharmacy business. He was asked  to serve on                                                               
the board and he  feels it would be a good  way to provide public                                                               
service and shape his profession.                                                                                               
                                                                                                                                
2:29:33 PM                                                                                                                    
CHAIR  COSTELLO  found  no  questions  or  public  testimony  and                                                               
thanked Mr. Henderson for being willing to serve.                                                                               
                                                                                                                                
2:30:05 PM                                                                                                                    
CHAIR COSTELLO asked  Elizabeth Johnson of Fairbanks  to tell the                                                               
committee about  her interest  in serving on  the State  Board of                                                               
Registration  for Architects,  Engineers, and  Land Surveyors  in                                                               
the electrical engineer seat.                                                                                                   
                                                                                                                                
2:30:46 PM                                                                                                                    
ELIZABETH JOHNSTON,  Appointee, State  Board of  Registration for                                                               
Architects,  Engineers, and  Land  Surveyors, Fairbanks,  Alaska,                                                               
said she is a registered  electrical engineer and registered fire                                                               
protection engineer, which  are two of the  disciplines the board                                                               
governs for professional registration and practice.                                                                             
                                                                                                                                
2:30:58 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:31:02 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and  asked   if  she                                                               
anticipates any challenges the board will face in the next year.                                                                
                                                                                                                                
MS.  JOHNSTON replied  an  issue  she sees  is  the debate  about                                                               
whether or not  to include software engineering as a  new form of                                                               
registration in Alaska.                                                                                                         
                                                                                                                                
CHAIR  COSTELLO  found  no  questions  or  public  testimony  and                                                               
thanked Ms. Johnston for being willing to serve.                                                                                
                                                                                                                                
2:33:15 PM                                                                                                                    
CHAIR  COSTELLO  asked  Richard  Jones  of  Juneau  to  tell  the                                                               
committee about  his interest  in serving on  the State  Board of                                                               
Registration  for Architects,  Engineers, and  Land Surveyors  in                                                               
the public seat.                                                                                                                
                                                                                                                                
2:33:38 PM                                                                                                                    
RICHARD  JONES,  Appointee,  State   Board  of  Registration  for                                                               
Architects, Engineers,  and Land Surveyors, Juneau,  Alaska, said                                                               
that before he  retired from the state he  worked in professional                                                               
licensing.  In  that  capacity  he worked  with  this  board  for                                                               
several years. He enjoyed that  work and found the board provided                                                               
a valuable  service. He said he  is also aware of  the importance                                                               
of  an outside  perspective  and that  is why  he  would like  to                                                               
serve.                                                                                                                          
                                                                                                                                
2:34:29 PM                                                                                                                    
CHAIR  COSTELLO  found  no  questions  or  public  testimony  and                                                               
thanked Mr. Jones for being willing to serve.                                                                                   
                                                                                                                                
She reiterated  her thanks  to the  nominees for  providing their                                                               
time  and expertise  to the  boards. She  advised that  there are                                                               
over 200  boards in Alaska  and many are significant  in managing                                                               
the profession across the state.                                                                                                
                                                                                                                                
2:35:19 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
          SB  56-PRODUCT WARRANTIES & REQUIRED UPDATES                                                                      
                                                                                                                                
2:38:00 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of SB 56.                                                                                                         
                                                                                                                                
2:38:29 PM                                                                                                                    
SENATOR  CATHY GIESSEL,  sponsor of  SB 56,  introduced the  bill                                                               
speaking to the following sponsor statement:                                                                                    
                                                                                                                                
     Senate  Bill  56  proposes fair  treatment  to  Alaskan                                                                    
     consumers and businesses.  Heavy equipment is expensive                                                                    
     and complicated. Most  resource companies, contractors,                                                                    
     and  many   other  consumers   are  dependent   on  the                                                                    
     availability  of equipment  to  keep Alaskans  employed                                                                    
     and businesses running.                                                                                                    
                                                                                                                                
     Our   state's  remote   locations  and   transportation                                                                    
     challenges,  coupled with  high  shipping costs,  often                                                                    
     can  result   in  high  costs  to   local  dealers  and                                                                    
     distributors  when   delivering  warranty   and  update                                                                    
     services  for a  manufacturer's defective  or deficient                                                                    
     products. Many of these services  are not reimbursed by                                                                    
     the  manufacturers who  require  this  high cost  work.                                                                    
     This  results   in  our  local  businesses,   or  their                                                                    
     customers,    absorbing    expenses    for    shipping,                                                                    
     transportation, and  labor that  should be paid  by the                                                                    
     company  that manufactures  the defective  or deficient                                                                    
     products,  provides  the  warranty,  and  requires  the                                                                    
     updates.                                                                                                                   
                                                                                                                                
     Senate Bill 56 protects  buyers of heavy equipment. If,                                                                    
     during the  term of a  warranty or, if  earlier, within                                                                    
     one year  after the  date equipment  is delivered  to a                                                                    
     buyer, the  manufacturer or dealer is  unable to repair                                                                    
     equipment after  a  reasonable number  of attempts, the                                                                    
     bill   requires  a   refund  or   replacement  of   the                                                                    
     equipment.                                                                                                                 
                                                                                                                                
     Senate  Bill 56  also would  ensure that  local dealers                                                                    
     and  distributors of  heavy  equipment, machinery,  and                                                                    
     tools  used  for construction,  maintenance,  resources                                                                    
     development  and  similar   activities  are  adequately                                                                    
     compensated  when providing  required warranty  service                                                                    
     and  manufacturer's required  updates  on the  products                                                                    
     they sell.                                                                                                                 
                                                                                                                                
     Senate Bill 56 builds  on existing state law pertaining                                                                    
     to   boats,  and   all-terrain  vehicles   (ATVs).  The                                                                    
     legislation  provides clarity,  and certainty,  for the                                                                    
     consumers that  use and  the manufacturers  and dealers                                                                    
     that provide  the equipment  that keeps  Alaska's heavy                                                                    
     equipment industries running. Senate  Bill 56 would not                                                                    
     apply  to vehicles  licensed for  use on  roads, boats,                                                                    
     and ATVs; those items are  covered under a separate and                                                                    
     current statute.                                                                                                           
                                                                                                                                
     Senate  Bill 56  protects  consumers  and balances  the                                                                    
     interests of local dealers to  be adequately made whole                                                                    
     for  meeting  their  obligations  to  customers,  while                                                                    
     setting  clear guidelines  for  manufacturers of  heavy                                                                    
     equipment products.                                                                                                        
                                                                                                                                
SENATOR GIESSEL said her staff, Mr. Gialopsos, is available to                                                                  
take the committee through a sectional analysis if the chair                                                                    
wishes.                                                                                                                         
                                                                                                                                
2:44:10 PM                                                                                                                    
AKIS GIALOPSOS, Staff, Senator Cathy Giessel, provided a                                                                        
sectional analysis for SB 56 speaking to the following prepared                                                                 
document:                                                                                                                       
                                                                                                                                
     Section 1: Enacts 45.45.772  - 45.45.788, which outline                                                                  
     the   obligations   and    duties   of   manufacturers,                                                                    
     contractors, dealers,  and distributors  when providing                                                                    
     "required  services"   which  include   warranty  work,                                                                    
     corrective  work  on  defective products,  and  updates                                                                    
     required by  manufacturers. For simplification  of this                                                                    
     sectional,  the  word  "dealer"   is  used  instead  of                                                                    
     "dealer  or distributor,"  the phrase  that appears  in                                                                    
     the bill.                                                                                                                  
                                                                                                                                
     Sec.  45.45.772  Requires  a   dealer  to  provide  any                                                                  
     manufacturer's warranty  in effect at the  time of sale                                                                    
     to  the purchaser.  Outlines  the  obligations of  each                                                                    
     party when  a contractor  provides warranty  service on                                                                    
     behalf of the manufacturer.                                                                                                
                                                                                                                                
     Sec.  45.45.773  Requires  a   dealer  to  explain  the                                                                  
     warranty    coverage,   including    disclaimers,   and                                                                    
     limitations;   prohibits  a   dealer   from  making   a                                                                    
     representation  about a  warranty that  is not  made in                                                                    
     the  warranty;  and  requires  the  dealer  to  provide                                                                    
     manuals to the purchaser.                                                                                                  
                                                                                                                                
     Sec. 45.45.774 Requires the  dealer to provide warranty                                                                  
     service   and  to   make   all   claims  for   warranty                                                                    
     reimbursement   in  the   manner  established   by  the                                                                    
     manufacturer.                                                                                                              
                                                                                                                                
     Sec.   45.45.775   Prohibits    a   manufacturer   from                                                                  
     restricting  the nature  or extent  of  labor or  parts                                                                    
     that are needed to perform  the work in accordance with                                                                    
     generally accepted standards.                                                                                              
                                                                                                                                
     Sec. 45.45.776 Requires the  manufacturer to follow the                                                                  
     process  outlined in  this bill  and standard  industry                                                                    
     claim  procedures when  paying  a  dealer for  required                                                                    
     services.                                                                                                                  
                                                                                                                                
     Sec.  45.45.777  Establishes the  minimum  compensation                                                                  
     for  work  performed  by  a   dealer  on  behalf  of  a                                                                    
     manufacturer. Specifies  the minimum rate and  time for                                                                    
     labor costs. Also requires the  manufacturer to pay for                                                                    
     transportation and  lodging costs if the  dealer has to                                                                    
     send an employee to the field to perform the work.                                                                         
                                                                                                                                
     Sec. 45.45.778  Requires a manufacturer to  reimburse a                                                                  
     dealer  for  parts  used  at  the  manufacturer's  full                                                                    
     suggested retail price.                                                                                                    
                                                                                                                                
     Sec.  45.45.779 If  a part  needed that  is not  in the                                                                  
     dealer's  inventory, requires  the manufacturer  to pay                                                                    
     the cost to send the item,  as soon as possible, to the                                                                    
     purchaser's choice  of either the dealer  that sold the                                                                    
     product or the dealer closest to the purchaser.                                                                            
                                                                                                                                
     Sec.  45.45.780 Requires  the  manufacturer  to pay  or                                                                  
     disapprove a claim  within 30 days or  it is considered                                                                    
     approved and accrues a penalty of 1.5% per month.                                                                          
                                                                                                                                
     Sec.   45.45.781   Requires  a   manufacturer's   claim                                                                  
     disapproval to be in writing  and issued within 30 days                                                                    
     of receipt of the claim.                                                                                                   
                                                                                                                                
     "Lemon Law" Provisions:                                                                                                  
                                                                                                                                
     Sec. 45.45.782  Requires the manufacturer or  dealer to                                                                  
     repair a product defect that  is covered under warranty                                                                    
     when reported by the purchaser.                                                                                            
                                                                                                                                
     Sec. 45.45.783 If a product  cannot be repaired after a                                                                  
     "reasonable number" of attempts  during the term of the                                                                    
     warranty or  one year  after purchase,  whichever comes                                                                    
     first, requires the manufacturer  to either replace the                                                                    
     product  with a  new  comparable product  or refund  an                                                                    
     amount  equal  to  the  full  purchase  price  minus  a                                                                    
     "reasonable amount"  for the period that  the purchaser                                                                    
     was able to  use the product. The  purchaser can choose                                                                    
     whether to  get a new  product or refund.  Outlines how                                                                    
     to calculate the "reasonable amount" for a refund.                                                                         
                                                                                                                                
     Sec. 45.45.784 Establishes a  process for the purchaser                                                                  
     to  make a  claim under  45.45.783. The  purchaser must                                                                    
     make  a   written  claim  by  certified   mail  to  the                                                                    
     manufacturer within 60  days of the end of  the term of                                                                    
     the  warranty  or one  year  after  the purchase  date,                                                                    
     whichever comes  first. Outlines  what must be  in that                                                                    
     written claim. Allows the manufacturer  to make a final                                                                    
     attempt to fix the item within 30 days.                                                                                    
                                                                                                                                
     Sec. 45.45.785  States that  the manufacturer  does not                                                                  
     have to  replace/refund if  the claimed  product defect                                                                    
     is  either not  a defect  or resulted  from alteration,                                                                    
     abuse or neglect  by a person who is  not an authorized                                                                    
     dealer.                                                                                                                    
                                                                                                                                
     Sec.  45.45.786 Creates  a rebuttable  presumption that                                                                  
     if the product  has been in the shop  for repairs three                                                                    
     separate  times  or for  30  days  during the  warranty                                                                    
     period  or  first  year   of  ownership,  whichever  is                                                                    
     shorter, a  "reasonable number of attempts"  to fix the                                                                    
     product has been made.                                                                                                     
                                                                                                                                
     Definitions for language enacted in this bill:                                                                           
                                                                                                                                
     Sec.  45.45.787 Defines  what products  are covered  by                                                                  
     this legislation.                                                                                                          
                                                                                                                                
     Sec.   45.45.788  Establishes   what  qualifies   as  a                                                                  
     "warranty service."                                                                                                        
                                                                                                                                
     Section 2:  Amends the  definition of  "merchandise" in                                                                  
     AS  45.45.790 to  include "covered  products" -  a term                                                                    
     used in this bill.                                                                                                         
                                                                                                                                
     Section 3:  Adds definitions to AS  45.45.790 for terms                                                                  
     used in this legislation.                                                                                                  
                                                                                                                                
     Section  4:  Adds  violations   to  the  provisions  in                                                                  
     Section 1 to the list  of unfair methods of competition                                                                    
     and unfair or  deceptive acts or practices  found in AS                                                                    
     45.50.471.                                                                                                                 
                                                                                                                                
     Section [5]:  Applicability - specifies that  this bill                                                                  
     applies  to agreements  entered into  on and  after the                                                                    
     effective date of this act.                                                                                                
                                                                                                                                
2:54:01 PM                                                                                                                    
SENATOR STEVENS asked if passing this bill might result in a                                                                    
manufacturer such as Caterpillar deciding it isn't worth doing                                                                  
business in Alaska.                                                                                                             
                                                                                                                                
SENATOR  GIESSEL  clarified  that   the  vendor  travels  to  the                                                               
locations,  not  the  manufacturer. She  posed  the  hypothetical                                                               
scenario  of a  vendor in  Anchorage  who is  required to  either                                                               
travel  to the  remote location  to provide  warranty service  or                                                               
ship the equipment  back to Anchorage for repair.  Right now, the                                                               
vendor is  required to  do that  to cover  the warranty,  but the                                                               
manufacturer  may decline  to pay  the vendor's  full costs.  The                                                               
Alaska  vendor assumes  the extra  costs. SB  56 seeks  to remedy                                                               
that; the manufacturer must agree to cover the full costs.                                                                      
                                                                                                                                
SENATOR   STEVENS  voiced   concern  about   potential  harm   if                                                               
manufacturers decided  not to do  business in Alaska if  they had                                                               
to cover what could be enormous additional costs.                                                                               
                                                                                                                                
SENATOR GIESSEL suggested that he  ask the vendors who are online                                                               
to offer their perspective, but  she believes it is unlikely that                                                               
the bill  would cause  a company like  Caterpillar to  stop doing                                                               
business in Alaska.                                                                                                             
                                                                                                                                
2:57:48 PM                                                                                                                    
SENATOR GARDNER  said she too shares  that concern. It may  be an                                                               
unintended consequence that Alaskans  would have to buy equipment                                                               
in Seattle and  the warranty would only be valid  in the state of                                                               
Washington.                                                                                                                     
                                                                                                                                
She  referred to  Sec. 45.45.787  on page  7 that  refers to  the                                                               
products that are  covered under the bill. She asked,  if this is                                                               
a good idea, why not apply it to all products sold in Alaska?                                                                   
                                                                                                                                
MR. GIALOPSOS  explained that this legislation  was introduced at                                                               
the   request  of   some  of   the  affected   stakeholders  that                                                               
specifically  work with  off the  road  system manufacturing  and                                                               
dealer  issues. The  language is  based on  the legislation  that                                                               
passed in  2009 when all-terrain  vehicles, boats,  snow machines                                                               
and  other  off-road vehicles  were  brought  under coverage  for                                                               
warranty  service in  remote regions.  The legislative  intent in                                                               
2009  was  clear  that  there was  a  delineation  between  items                                                               
registered  for   operation  on  a   road  and  those   that  are                                                               
specifically purposed for off-road use.                                                                                         
                                                                                                                                
SENATOR GARDNER  continued to question  limiting the  coverage to                                                               
items  involved  in  resource development  or  construction.  She                                                               
pointed out that it could  be similarly expensive to get warranty                                                               
work done on  a commercial refrigerator that was  shipped to Cold                                                               
Bay, for example.                                                                                                               
                                                                                                                                
MR.  GIALOPSOS said  the individuals  who will  testify can  talk                                                               
about the relationship between a  dealer of industrial commercial                                                               
pieces of equipment versus a home  appliance from a big box store                                                               
that provides a  direct, through-the-manufacturer warranty. Those                                                               
purchases are different for several  reasons, one of which is the                                                               
exclusivity  clause for  some franchise  holders and  dealers. He                                                               
said  it  was  the  sponsor's   intent  to  narrowly  tailor  the                                                               
legislation to cover the products it does.                                                                                      
                                                                                                                                
SENATOR GARDNER asked if the  provisions in subsections (b), (c),                                                               
(d), and (e) that start on page  3, line 1, are the same in other                                                               
parts of the country or unique to Alaska.                                                                                       
                                                                                                                                
MR. GIALOPSOS deferred the question to the Department of Law.                                                                   
                                                                                                                                
CHAIR COSTELLO indicated the question would be held until later.                                                                
                                                                                                                                
SENATOR GARDNER reviewed the provision  in subsection (e) on page                                                               
3, lines  17-20, that  requires the  manufacturer to  reimburse a                                                               
dealer  or distributor  for transportation  and lodging  costs to                                                               
travel to a location to perform  required service. She said a lot                                                               
of her questions  are about whether this is done  in other states                                                               
or is unique to Alaska.                                                                                                         
                                                                                                                                
3:03:49 PM                                                                                                                    
SENATOR GIESSEL  responded that it  is impossible to  compare the                                                               
challenges associated  with doing  business in  a remote  area of                                                               
Indiana, for example, versus the  challenges of doing business in                                                               
remote areas  of Alaska that can  only be reached by  air. "It is                                                               
in fact true that Alaska is different."                                                                                         
                                                                                                                                
SENATOR GARDNER referred  to Sec. 45.45.785 on page  6 that talks                                                               
about exceptions. She asked if  a manufacturer would to need send                                                               
somebody  to Cold  Bay,  for  example, to  show  that an  alleged                                                               
defect either is  not a defect or is the  result of an alteration                                                               
by somebody who is not the dealer or distributor.                                                                               
                                                                                                                                
MR. GIALOPSOS deferred the question  to the people online waiting                                                               
to testify. They can recount specific case studies, he said.                                                                    
                                                                                                                                
3:05:27 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
3:06:22 PM                                                                                                                    
CHAIR COSTELLO  reconvened the meeting  and asked Mr.  Sniffen to                                                               
respond to Senator Gardner's questions.                                                                                         
                                                                                                                                
3:06:43 PM                                                                                                                    
ED SNIFFEN,  Deputy Attorney General, Civil  Division, Regulatory                                                               
Affairs &  Public Advocacy (RAPA), Department  of Law, Anchorage,                                                               
Alaska, said he  is not aware of what other  states do with lemon                                                               
laws  for  large  construction  equipment.  He  agreed  with  Mr.                                                               
Gialopsos that some of the dealers  who are online to testify may                                                               
have  a  more comprehensive  understanding  of  how other  states                                                               
handle this.                                                                                                                    
                                                                                                                                
3:07:26 PM                                                                                                                    
SENATOR HUGHES referred to the  list of products that are covered                                                               
starting  on page  7,  line 7.  She asked  if  the Department  of                                                               
Transportation and  Public Facilities  (DOTPF) will  benefit from                                                               
the bill, resulting in a cost savings to the state.                                                                             
                                                                                                                                
SENATOR GIESSEL offered  to follow up after  doing research about                                                               
whether DOTPF purchases equipment through  a local vendor or goes                                                               
directly to the manufacturer.                                                                                                   
                                                                                                                                
SENATOR  HUGHES  said if  the  department  does deal  with  local                                                               
vendors, the list should be reviewed to ensure it is complete.                                                                  
                                                                                                                                
CHAIR  COSTELLO  asked Mr.  Sniffen  why  contract law  fails  to                                                               
address the concerns  that prompted the sponsor  to introduce the                                                               
bill.                                                                                                                           
                                                                                                                                
MR.  SNIFFEN said  most of  these  franchise relationships  start                                                               
with  contract negotiations  and over  time it  becomes something                                                               
like an adhesion contract where the  dealer doesn't have a lot of                                                               
bargaining  power.  That's  why  states  like  Alaska  have  auto                                                               
franchise laws.                                                                                                                 
                                                                                                                                
SENATOR  STEVENS asked  if a  manufacturer could  declare that  a                                                               
warranty is not covered in distant or remote locations.                                                                         
                                                                                                                                
MR.  SNIFFEN   said  that  would   be  difficult  to  do   for  a                                                               
manufacturer that  sells equipment into  a state knowing  that it                                                               
is likely  it will  be transported to  a remote  area. Warranties                                                               
generally  follow the  equipment and  unless there  is a  clearly                                                               
stated exception, the manufacturer  would probably be required to                                                               
provide that service.                                                                                                           
                                                                                                                                
SENATOR  STEVENS observed  that  it is  simple  economics; if  it                                                               
costs too  much to do business  you find a  way not to do  it. He                                                               
said he  agrees with Senator  Gardner's comment  about unintended                                                               
consequences but Mr. Sniffen doesn't seem to agree.                                                                             
                                                                                                                                
MR. SNIFFEN  clarified that he  is saying the  manufacturer might                                                               
adjust the  warranty after  getting stuck with  a large  bill. He                                                               
added,  "It's  hard   to  say  what  the   consequences  of  this                                                               
legislation might be."                                                                                                          
                                                                                                                                
3:12:50 PM                                                                                                                    
SENATOR  HUGHES asked  the estimated  annual  dollar amount  that                                                               
dealers are paying for unreimbursed warranty work.                                                                              
                                                                                                                                
SENATOR  GIESSEL  suggested  the  franchise  dealers  answer  the                                                               
question. She added that she  has anecdotal evidence that they do                                                               
not  pass those  unreimbursed  costs on  to  the consumer.  "They                                                               
absorb that  cost as Alaskan  businesses themselves,  and therein                                                               
lies the problem."                                                                                                              
                                                                                                                                
3:13:36 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
3:13:55 PM                                                                                                                    
CHAIR COSTELLO  reconvened the meeting  and asked Mr.  Sniffen if                                                               
lemon laws are in current statute.                                                                                              
                                                                                                                                
MR.  SNIFFEN replied  Alaska has  two  lemon laws.  The 2009  ATV                                                               
lemon law  that was predicated  on the existing  automobile lemon                                                               
law.  Alaska also  has a  distributorship  law in  Title 45  that                                                               
protects distributors  of all products from  certain practices of                                                               
manufacturers.                                                                                                                  
                                                                                                                                
CHAIR  COSTELLO   observed  that  the  committee   heard  similar                                                               
legislation last week; the legislature  is being asked to set the                                                               
guidelines in  certain areas because  it doesn't appear  that the                                                               
contracts are addressing the issues.                                                                                            
                                                                                                                                
MR.  SNIFFEN  said  this  bill  does  not  have  the  retroactive                                                               
provision that SB 47 has. It would only apply to new contracts.                                                                 
                                                                                                                                
3:16:23 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on SB 56.                                                                                
                                                                                                                                
3:16:37 PM                                                                                                                    
CHRIS   GERONDALE,   Construction  Machinery   Industrial,   LLC,                                                               
Anchorage, Alaska, testified in support  of SB 56. He stated that                                                               
his  family has  been  in the  construction  and heavy  equipment                                                               
industry  in Alaska  since  the  1930s. He  works  in the  family                                                               
business and  also does contract  work for other  heavy equipment                                                               
contractors and several  mines in Southeast Alaska.  He said that                                                               
he can see this issue from both sides.                                                                                          
                                                                                                                                
He discussed  heavy equipment warranties and  product updates and                                                               
noted that in both instances  the manufacturer is not required to                                                               
cover all labor  or freight associated with these  repairs. SB 56                                                               
would  require  manufacturers to  cover  a  higher percentage  of                                                               
those  costs.  This  will  be   particularly  helpful  for  small                                                               
contractors, farmers, loggers, and placer miners.                                                                               
                                                                                                                                
MR. GERONDALE explained  the process when there is  a failure and                                                               
the equipment is  under warranty. First, the end user  has to pay                                                               
the airfare,  travel labor, and  travel costs to get  the problem                                                               
diagnosed. Once diagnosed, the part  is ordered on a stock order,                                                               
which can  take four weeks  or 15-20 percent of  the construction                                                               
season in Alaska. To speed the  process the end user often elects                                                               
to  pay for  expedited freight.  Once the  part arrives,  the end                                                               
user will again  have to pay the costs to  have the mechanic come                                                               
back out and  fix the piece of equipment. He  estimated that on a                                                               
$4,000-$5,000  warranty work  order,  the  manufacturer may  only                                                               
cover $500.                                                                                                                     
                                                                                                                                
Product updates  are similarly problematic. The  costs can easily                                                               
be $3,000-$4,000 on a repair that  only takes two hours, which is                                                               
what  the  manufacturer will  cover  plus  maybe $450  in  travel                                                               
costs. The balance is put on the vendor or the end user.                                                                        
                                                                                                                                
MR.  GERONDALE said  the only  opposition to  SB 56  that he  has                                                               
heard  comes   from  the  manufacturers.  They   argue  that  the                                                               
additional cost  will increase  the price  of equipment,  but the                                                               
reality is  that the end user  already assumes the burden  of the                                                               
additional  costs. SB  56 puts  some of  the burden  back on  the                                                               
manufacturer that  built a  piece of equipment  that needs  to be                                                               
repaired.                                                                                                                       
                                                                                                                                
Responding to  the concern expressed that  manufacturers may stop                                                               
doing  business in  Alaska,  he  pointed out  that  boat and  ATV                                                               
manufacturers  did not  pull  out  after the  ATV  lemon law  was                                                               
enacted in 2009.                                                                                                                
                                                                                                                                
3:22:13 PM                                                                                                                    
SENATOR GARDNER  asked where product  updates are covered  in the                                                               
bill.                                                                                                                           
                                                                                                                                
MR. GERONDALE deferred the question to Steve Seward.                                                                            
                                                                                                                                
3:22:44 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
3:22:48 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
                                                                                                                                
3:23:10 PM                                                                                                                    
STEVE  SEWARD, Attorney  for  Construction Machinery  Industrial,                                                               
LLC, Seattle, Washington, directed attention  to page 8, line 12.                                                               
It is part of the definition of required services.                                                                              
                                                                                                                                
3:23:52 PM                                                                                                                    
JIM HALLORAN, Caterpillar Inc.,  Peoria, Illinois, said he wanted                                                               
to make three points. First,  N.C. Machinery and Caterpillar have                                                               
had an  agreement in place since  1926 and there has  not been an                                                               
issue. Second,  because Caterpillar's  agreements are  global, he                                                               
disputes  the   statement  that  Alaska  is   unique.  Third,  he                                                               
maintained  that Caterpillar's  contracts  are  working and  have                                                               
allowed the company  to service its Alaska customers  for over 90                                                               
years.                                                                                                                          
                                                                                                                                
SENATOR STEVENS  asked how much  of the  burden would go  back on                                                               
the manufacturers if the bill were to pass.                                                                                     
                                                                                                                                
MR. HALLORAN explained  that Caterpillar pays for  parts. They do                                                               
not pay for time and travel,  but they will discount the price of                                                               
the machine  to cover  things like  that. The  dealer appreciates                                                               
that unique twist because they can  use the money as they see fit                                                               
if  warranty service  isn't required.  For example,  it could  be                                                               
used to  provide an  incentive for the  customer to  purchase the                                                               
machine.                                                                                                                        
                                                                                                                                
3:27:01 PM                                                                                                                    
NICK  YAKSICH, Senior  Vice President,  Association of  Equipment                                                               
Manufacturers  (AEM),   stated  that  AEM  represents   over  950                                                               
companies that  manufacture off-road  highway equipment.  He made                                                               
four points  and reinforced Mr. Halloran's  comments. First, they                                                               
work  with  and   support  the  dealer  and   manufacturer  as  a                                                               
partnership to  ensure customer satisfaction. Second,  he has yet                                                               
to hear  any specific problems  that have arisen with  dealers in                                                               
Alaska. In  any event,  they would prefer  to work  directly with                                                               
the dealer  to resolve  an issue. Third,  this bill  infringes on                                                               
the  private contractual  relationship  between the  manufacturer                                                               
and the dealer.  Fourth, they would prefer to  work directly with                                                               
the  dealer  and  outside  the  legislative  process  to  find  a                                                               
solution to ultimately serve the customer.                                                                                      
                                                                                                                                
3:28:43 PM                                                                                                                    
CHAIR  COSTELLO held  SB 56  in committee  with public  testimony                                                               
open.                                                                                                                           
                                                                                                                                
3:29:20 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Costello adjourned the Senate Labor and Commerce Standing                                                                 
Committee meeting at 3:29 p.m.                                                                                                  

Document Name Date/Time Subjects
SB 56 - Fiscal Note - Dept. of Law.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 - Opposition Letter - John Deere.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 - Sectional Analysis.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 - Sponsor Statement.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 - Support Letter - Chad Gerondale.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 - Support Letter - State Chamber.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56.PDF SL&C 3/9/2017 1:30:00 PM
SB 56
Accountancy - Fact Sheet.pdf SL&C 3/9/2017 1:30:00 PM
Accountancy Resume - Beltrami.pdf SL&C 3/9/2017 1:30:00 PM
Accountancy - Roster.pdf SL&C 3/9/2017 1:30:00 PM
Accountancy Resume - Hogue.pdf SL&C 3/9/2017 1:30:00 PM
Accountancy Resume - Rulien.pdf SL&C 3/9/2017 1:30:00 PM
Architects, Engineers, Land Surveyors - Fact Sheet.pdf SL&C 3/9/2017 1:30:00 PM
Architects, Engineers, Land Surveyors - Roster.pdf SL&C 3/9/2017 1:30:00 PM
Architects, Engineers, Land Surveyors Resume - Johnston.pdf SL&C 3/9/2017 1:30:00 PM
Architects, Engineers, Land Surveyors Resume - Jones.pdf SL&C 3/9/2017 1:30:00 PM
Architects, Engineers, Land Surveyors Resume - Kerr.pdf SL&C 3/9/2017 1:30:00 PM
Architects, Engineers, Land Surveyors Resume - Koonce.pdf SL&C 3/9/2017 1:30:00 PM
Fishermens Fund Advisory Appeals Council - Fact Sheet.pdf SL&C 3/9/2017 1:30:00 PM
Fishermens Fund Advisory Appeals Council - Roster.pdf SL&C 3/9/2017 1:30:00 PM
Fishermens Fund Advisory Appeals Council Resume - Bezenek.pdf SL&C 3/9/2017 1:30:00 PM
Pharmacy - Fact Sheet.pdf SL&C 3/9/2017 1:30:00 PM
Pharmacy Resume - Bell.pdf SL&C 3/9/2017 1:30:00 PM
Pharmacy - Roster.pdf SL&C 3/9/2017 1:30:00 PM
Pharmacy Resume - Giessel.pdf SL&C 3/9/2017 1:30:00 PM
Pharmacy Resume - Henderson.pdf SL&C 3/9/2017 1:30:00 PM
Real Estate Appraisers - Fact Sheet.pdf SL&C 3/9/2017 1:30:00 PM
Real Estate Appraisers - Roster.pdf SL&C 3/9/2017 1:30:00 PM
Real Estate Appraisers Resume - Piszczek.pdf SL&C 3/9/2017 1:30:00 PM
SB 56 - Opposition Letter - AEM.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 - Support Letter - Melissa DeGroat.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 - Support Letter -Dana Pruhs.pdf SL&C 3/9/2017 1:30:00 PM
SB 56
SB 56 -Support Letter -Eric Holst.pdf SL&C 3/9/2017 1:30:00 PM
SB 56