Legislature(1997 - 1998)
02/24/1998 01:42 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
February 24, 1998
1:42 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Jerry Mackie, Vice Chairman
Senator Tim Kelly
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Mike Miller
COMMITTEE CALENDAR
HOUSE BILL NO. 73 "An Act extending the termination dates of the
salmon marketing programs of the Alaska Seafood Marketing Institute
and the salmon marketing assessment; and providing for an effective
date."
- HEARD AND HELD
SENATE BILL NO. 268
"An Act relating to the assignment to the Department of Labor of
certain wage claims; and providing for an effective date."
- MOVED SB 268 OUT OF COMMITTEE
SENATE BILL NO. 283
"An Act relating to noneconomic damages resulting from an
automobile accident."
- HEARD AND HELD
PREVIOUS SENATE COMMITTEE ACTION
HB 73 - No previous action to consider
SB 263 - See Transportation minutes dated 2/19/98.
SB 283 - See Labor and Commerce minutes dated 2/19/98.
WITNESS REGISTER
Representative Bill Hudson
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Sponsor of HB 73.
Ms. Barbara Belknap, Executive Director
Alaska Seafood Marketing Institute
1111 N. Franklin St, #150
Juneau, AK 99801
POSITION STATEMENT: Supported HB 73.
Ms. Liz Cabrera
Petersburg Vessel Owners Association
Petersburg, AK 99833
POSITION STATEMENT: Supported HB 73.
Mr. Jerry McCune
United Fisherman of Alaska
211 4th St. Ste. 112
Juneau, AK 99801
POSITION STATEMENT: Supported HB 73.
Mr. Jeff Stephan
United Fishermen's Marketing Association
P.O. Box 1035
Kodiak, AK 99615
POSITION STATEMENT: Supported HB 73.
Mr. Theo Matthews, Executive Director
United Cook Inlet Driftnetters Association
Kasilof, AK 99610
POSITION STATEMENT: Supported HB 73.
Mr. Al Dwyer, Director
Division of Labor Standards and Safety
Department of Labor
P.O. Box 107022
Anchorage, AK 99802-1149
POSITION STATEMENT: Supported SB 268.
Mr. Dwight Perkins, Special Assistant
Department of Labor
P.O. Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Commented on SB 268.
Mr. John George
National Association of Independent Insurers
3328 Fritz Cove Rd.
Juneau, AK 99801
POSITION STATEMENT: Supported SB 283.
Mr. Jeff Bush, Deputy Director
Department of Commerce and Economic Development
P.O. Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Opposed SB 283.
Mr. Mike Lessmeier
State Farm Insurance
124 5th Street
Juneau, AK 99801
POSITION STATEMENT: Supported SB 283.
ACTION NARRATIVE
TAPE 98-8, SIDE A
Number 001
HB 73 - SALMON MARKETING ASSESSMENT & ASMI
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee
meeting to order at 1:42 p.m. and announced HB 73 to be up for
consideration.
REPRESENTATIVE HUDSON, sponsor, testified that this bill would
extend the current one percent domestic salmon marketing assessment
when the law is scheduled to sunset on June 30, 1998. This
assessment is essential to continue funding the needs of the Alaska
Seafood Marketing Institute (ASMI) and its various programs. It is
fishermen and women taxing themselves and trusting the legislature
to appropriate it back to them, which it has always done. This
fund accompanied with a self-assessment by the processors and a
fund available through the federal overseas marketing program are
the three funding essentials of the entire seafood industry for the
State of Alaska. This has broad support from the harvesters in
Alaska and ASMI.
SENATOR HOFFMAN stated that one of the biggest contributors to the
fund presently are the Bristol Bay fishermen and they feel that
ASMI does little to assist them in their markets which are
primarily Japanese. They feel that they are unduly taxed by this
program.
REPRESENTATIVE HUDSON responded that a majority of fishermen and
women have indicated strong support for this legislation, but he
understands the situation Senator Hoffman is talking about.
Representative Hudson said, however, that it is absolutely
imperative to have some funds to replace the farmed salmon products
that are competing with Alaska salmon markets, particularly in the
domestic marketplace. The Japanese market is largely handled by
the federal assessment which manages for the sale and export of all
Alaska salmon, including those from Bristol Bay. He said those
people benefit indirectly by the fact that they are creating a
"bigger pie" and a higher perception of value among competing
protein sources.
Number 127
MS. BARBARA BELKNAP, Executive Director, ASMI, responded to Senator
Hoffman that she was sympathetic to his concerns. She was pleased
with the Southwest Alaska Municipal Conference resolution to
support funding of ASMI. She said they had struggled with this
issue since the tax was enacted in 1993, but their problem is that
they don't control the supply of product to market. Last year they
were able to do a nationwide Safeway promotion for reds and most of
the stores also put Bristol Bay salmon on the adds. If they are
able to get the product, they do sockeye salmon promotions along
with their canned salmon promotions. She noted that the sale of
canned red salmon overseas has been boosted tremendously by ASMI's
programs.
CHAIRMAN LEMAN said he has seen results that he is pleased with
while the organization hasn't been perfect from his perspective.
He asked if the one percent was more than replaced by the good
accomplished in the marketplace.
MS. BELKNAP answered "unquestionably." She also noted that the
Norwegians have recently doubled their marketing budget to $40
million and they have a very good product and control a great deal
of the market. ASMI still felt that marketing was necessary and
that it is important to expand. The feedback she is getting from
fishermen and their organizations is that they see the necessity
for an overall marketing program simply to keep Alaska salmon a
viable product in the marketplace.
CHAIRMAN LEMAN asked how the Fishermen-in-Stores program worked
this past year.
MS. BELKNAP said ASMI cut most of its programs except for the basic
in-store demonstrations. Five fishermen went out in the spring and
it went real well as it always does. It's a question of having the
money, because it costs $1,100 - $1,600 a piece to send them out.
CHAIRMAN LEMAN said some legislators have suggested that the
marketing directors of ASMI shouldn't be located in Bellevue, but
should reside in Alaska, although ASMI has done studies to show
that the Bellevue location is more appropriate.
MS. BELKNAP answered that it is a good business decision to have
them in Bellevue. When the lease expires in August 1999, they are
going to move to another area in Ballard. They have found that it
would increase their costs 20 - 30 percent to move them to Alaska.
Efficiency would be impaired. A very expensive study was done
three years ago for Senator Donley in which the industry across the
board said the best business decision was to keep it in Seattle.
The Board is working with only industry money now and feel they
have a fiduciary responsibility to spend that money as wisely as
possible.
SENATOR HOFFMAN asked what ASMI was planning on doing to assist the
new facility in Anchorage in marketing.
MS. BELKNAP said they would be producing value-added products and
the facility would be another client for their marketing programs.
MS. LIZ CABRERA, Petersburg Vessel Owners Association, supported HB
73. She said they recognize ASMI's work as essential in
maintaining our share of the domestic salmon market.
MR. JERRY MCCUNE, United Fishermen of Alaska, supported HB 73 to
help keep our share of the domestic salmon market. He said that
they don't agree with everything that's done in ASMI, but they were
going to get together and work through some of the problems they
see as fishermen, including Bristol Bay fishermen.
MR. JEFF STEPHAN, United Fishermen's Marketing Association,
supported HB 73. He said a large component of their membership are
salmon seiners. ASMI has been very important to UFMA and to all
the members (crab, halibut, salmon, whitefish, etc.). "As bad as
our position in the salmon market is, we would be far worse off
without the good efforts of ASMI over the years." He said that
Alaska salmon needs to have a continual marketing program that hits
retail, food service, consumer, food service magazines, T.V.,
promotions, etc. ASMI knows exactly where to put money, he said,
and the only thing they need is money to put in.
CHAIRMAN LEMAN asked if the salmon fishermen are assessing
themselves one percent and the processors are assessing themselves
3/10 percent, would it be appropriate for the fishermen of other
seafood products in Alaska to do a comparable assessment.
MR. STEPHAN said at this time he wouldn't support adding on any
direct taxes like the salmon marketing tax for any other species
until there is a chance to discuss it as an industry.
MR. THEO MATTHEWS, Executive Director, Cook Inlet Driftnetters
Association, said his group is in the same situation as Bristol
Bay. Eighty percent of their harvest is sockeye and 95 percent of
their value of harvest is sockeye salmon which is sold directly to
Japan. When his Board voted unanimously to support this tax, their
primary concern was that the legislative funding has been cut so
drastically and so rapidly to ASMI that without this tax, ASMI,
itself, might be in jeopardy. That is not acceptable at all.
There is a place for ASMI in both foreign and domestic marketing.
CHAIRMAN LEMAN noted that he is a seller of salmon and has a
potential conflict of interest.
Number 373
SENATOR HOFFMAN said he didn't want to delay this bill, but he
would like to hold it over and bring it up as soon as possible. He
wanted to call his constituents first, although he knows they
support the tax.
SENATOR KELLY said he supported the bill.
CHAIRMAN LEMAN said he would schedule the bill for next Tuesday.
SB 268 - WAGE CLAIM ASSIGNMENTS TO DEPT. OF LABOR
CHAIRMAN LEMAN announced SB 268 to be up for consideration.
MR. AL DWYER, Director, Division of Labor Standards and Safety,
said this legislation allows the Department of Labor to accept and
pursue wage claims for straight wage and hour violations in small
claims court up to the maximum jurisdiction of that court. Until
last year, the Department prosecuted claims up to $5,000 in Small
Claims Court. When the Small Claims jurisdiction increased to
$7,500, a gap was created between the statutory limits of the small
claims and the statutory limit for the claims assigned to the
Department which is $5,000. This bill will correct the deficiency
and will avoid similar problems in the future by tying the two
jurisdictional limits together and setting the Department's
jurisdictional limit at the Small Claims limit.
SENATOR KELLY asked who represents the Department, attorneys?
MR. DWYER answered that they are represented by the Wage and Hour
section of the Department of Labor.
SENATOR KELLY asked if Small Claims Court requires legal
representation.
MR. DWYER answered that a claimant would call Wage and Hour and if
it's less than $5,000, the Division would fill out the paperwork,
go to Small Claims Court and get the money for them. If it's over
$5,000 he advised that they get an attorney.
SENATOR KELLY remarked that we're back in the collection business,
again.
CHAIRMAN LEMAN asked what they charge for this service.
MR. DWYER answered that it's free.
CHAIRMAN LEMAN said he is surprised that there isn't a phrase
similar to what's in the Permanent Fund that we recover, if not the
actual cost, the incremental costs for collection.
MR. DWYER said he would check into it.
SENATOR KELLY asked how many incidents we have on an average.
MR. DWYER answered that there are about 600 claims per year and out
of those possibly 60 are over $5,000.
SENATOR KELLY noted that if there was a fee, it wouldn't have to
come from the workers.
MR. DWYER responded that they usually don't have a problem in
collections. It's just a matter of helping the employee fill out
the form and bringing it down to Small Claims Court where they see
that they get the money. There are penalties for employers who do
this and they do pay them.
SENATOR MACKIE said we have been doing this for a long time and the
only reason it's being raised is because the cost of Small Claims
has gone up.
MR. DWYER said that is correct.
SENATOR MACKIE asked if this was just allowing them to do the same
thing they have always done.
MR. DWYER said that is correct.
MR. DWIGHT PERKINS, Special Assistant, Department of Labor, said
this is seen as more of a housekeeping measure to keep up with what
this legislature passed last year for Small Claims.
SENATOR KELLY asked if information on the penalty fees could be
forwarded to the Judiciary Committee.
CHAIRMAN LEMAN indicated he would.
SENATOR MACKIE moved to pass SB 268 out of Committee with
individual recommendations and the accompanying fiscal note. There
were no objections and it was so ordered.
SB 283 - AUTOMOBILE CIVIL LIABILITY
CHAIRMAN LEMAN announced SB 283 to be up for consideration.
Mr. JOHN GEORGE, National Association of Independent Insurers,
supported SB 283 because it represents public fairness. When he
was the Director of the Division of Insurance, and before that, a
lot of people would complain about uninsured drivers that have
accidents and sue you, if you run into them; but if they run into
you, you don't get anything. It's been a real problem, and this
bill really addresses the personal responsibility issue. There is
a law that says you must have insurance and this bill rewards those
people who do have insurance. While there is a penalty for people
without insurance, if they are involved in an accident where they
are not at fault, they can still get their car fixed and their
medical bills paid, but they won't have the opportunity to go after
the noneconomic awards. The real crux of this bill should go to
reduce the number of uninsured motorists with additional incentive
to become insured.
The Insurance Commissioner in the state of California, when
California passed an initiative which did essentially the same
thing, said they have had at least a five percent reduction in
automobile insurance premiums since its passage. Some of the
member companies in the NAII believe it's many times that. They
see a significant reduction in uninsured motorists' claims being
filed and it could be because there is no need to file a lawsuit,
because the medical bills and the repairs to the car are fairly
straight-forward costs. Pain and suffering, noneconomic awards,
are more difficult to put a number on and, therefore, that's where
most of the litigation would come from.
SENATOR KELLY asked if this was ever part of tort reform packages
in the past.
MR. GEORGE answered that he wasn't the person to answer that,
although it does have some aspects of tort reform.
SENATOR KELLY asked if it was an initiative on its own in
California or was it a package.
MR. GEORGE said it was an initiative on its own.
CHAIRMAN LEMAN said he thought it was linked with commission of a
felony.
MR. GEORGE agreed and added that they also had a retroactive
provision which has been upheld on appeal in California, that says
after 60 days, you could not bring suit. This bill would not do
that. He noted that our tort reform package had already addressed
people in commission of a felony.
SENATOR KELLY said he is concerned that, as written, this might
include any passengers involved in an accident through no knowledge
of their own in an uninsured car. He proposed adding language to
subsection (a) saying "does not apply to a person unless the person
is an owner or operator of a vehicle involved in the accident," so
that any innocent passengers would be able to have the same rights
as the guilty person.
MR. GEORGE said he thought as it's currently worded, only the
driver or an owner of the vehicle who failed to buy the insurance
would be affected. He thought the language Senator Kelly suggests
further clarifies that. However, he understands this is not the
case in California. If you are a passenger in an uninsured
vehicle, you are not entitled to sue for noneconomic awards.
Number 560
CHAIRMAN LEMAN asked if he was uninsured and driving a vehicle and
his wife is riding with him and is a co-owner of the vehicle, he
assumed that she, too, could not place that claim. But what if
they have one of their children with them, can they as passengers
bring that suit or would they be excluded as minor children of the
owners.
MR. GEORGE thought they should ask attorneys, but his opinion is if
a child is not an owner of the vehicle, they would be entitled to
recover. The spouse who is a co-owner would be excluded from
recovery of noneconomic awards. The spouse would have the equal
obligation to have insurance on an owned vehicle.
SENATOR KELLY said he didn't see this as a case where they are
rewarding the uninsured parent. Rather you're protecting the child
whose not responsible for their parent who didn't have insurance.
MR. JEFF BUSH, Deputy Commissioner, Department of Commerce and
Economic Development, said that the Administration has some
concerns about this bill. Driving under the influence sections of
this bill are inconsistent with the tort reform measure that was
passed last year that says if you are drunk while operating a
vehicle that is involved in an accident, if your state of
inebriation was a significant cause to the accident, you are denied
recovery. That was the way the discussions related to drunk
driving went last year. This particular bill appears to not
necessarily be in conflict with that, but to extend it one step
further to the case where if you are operating a vehicle while
drunk and are totally innocent in the accident, you would be denied
a claim. You would already be denied, if being drunk had anything
to do with the accident in the first place.
TAPE 98-8, SIDE B
His second point is that this proposal as it relates to the
uninsured motorist may conflict with financial responsibility laws
in AS 28.20. As explained to him by DMV, they are required to take
administrative action against a license while that person cannot
get compensated for noneconomic damages.
The third point is that this is a tort reform bill and the
Administration spent a lot of time last year dealing with tort
reform. This particular proposal should have been brought to the
table at that time. He said the Administration opposes any more
tort reform and for that reason they oppose this bill.
CHAIRMAN LEMAN said his first point was somewhat convincing, the
second point has been resolved by Ms. Juanita Hensley, and the
third point he finds unconvincing.
SENATOR MACKIE said he would like to hear from the Administration
about how they could make this work.
MR. BUSH responded that the arguments are things they have heard
over and over again. This bill will set up a system where a person
who is perfectly innocent in an accident, although they may not be
innocent in their private behavior in a sense that they are not
insured or may be drunk and driving and those facts do not have any
impact on the accident that results in their being injured, will be
denied recovery because of that. The Administration believes that
people who are innocent should not be denied recovery simply
because of some other behavior they've engaged in.
SENATOR MACKIE asked what happens to someone who is uninsured in
that a situation like he just described. They may be innocent, but
uninsured.
MR. BUSH said he understands if someone is in that situation, they
take administrative action against the license, even if the person
is innocent in terms of the accident, itself. It comes to their
attention that a State law is being violated.
CHAIRMAN LEMAN said they would work with Mr. Bush and the drafters
to address some of his concerns.
MR. MICHAEL LESSMEIER, State Farm, supported SB 283. He thought
that a quote from a Supreme Court Justice in California summarized
his feeling, "Tax paying law abiding citizens will no longer need
to support those who choose to break the law." He said people who
do follow the law and buy liability insurance end up supporting
those who choose not to. This bill, the intent of which is to
decrease the number of uninsured drivers, is a good and fair bill.
He didn't think it was anyone's intent that innocent passengers be
precluded from recovering. He thought that should be clarified.
There is a difference in how an intoxicated driver is treated in
last year's discussions.
Number 481
SENATOR KELLY commented that his concern remains about passengers.
He wanted staff to find out the relationship between what they did
last year and this bill on the noneconomic damages. He didn't want
to go backwards from last year on tort reform legislation.
MR. BUSH responded that this bill does not go back; it adds another
step. If a person is intoxicated and substantially contributes to
an accident, that person is denied recovery of any damages. This
bill says in those cases where the intoxication did not
substantially contribute to the accident, they can't recover
noneconomic damages. They would be able to recover medical
expenses and lost wages.
SENATOR KELLY asked if drunk driving was one element and uninsured
is the second element.
MR. BUSH answered that is correct and this bill deals with both
situations in the same way.
SENATOR KELLY asked about a scenario where a couple of people go
to a party, the owner drives and has three drinks, throws the keys
to his buddy and says, "you be the driver." They take off and
somebody hits them from behind and the owner of the vehicle, who's
legally intoxicated, gets hurt. What's the status under this
legislation?
MR. BUSH answered, assuming the buddy was not legally drunk at the
time and, therefore, driving legally, and assuming there was
insurance for their vehicle, this legislation wouldn't affect the
case at all. If the driver was legally drunk, this legislation
would affect it or if the owner had not insured his vehicle, this
legislation would affect it.
SENATOR KELLY said the intoxication part might be a little too
complicated.
CHAIRMAN LEMAN said he would like to work on that issue, also.
SENATOR KELLY said he thought they should use the word passenger
somewhere as opposed to owner or operator.
CHAIRMAN LEMAN said they would work further on the bill and
adjourned the meeting at 3:05 p.m.
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