04/06/2004 02:04 PM Senate L&C
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ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 6, 2004
2:04 p.m.
TAPE(S) 04-31
MEMBERS PRESENT
Senator Con Bunde, Chair
Senator Ralph Seekins, Vice Chair
Senator Gary Stevens
Senator Bettye Davis
Senator Hollis French
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 27
"An Act relating to pesticide use; relating to program receipts
collected by the Department of Environmental Conservation for
registrations and licenses relating to pesticides; and providing
for an effective date."
MOVED CSSB 27(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 341
"An Act relating to the dive fishery management assessment."
MOVED HB 341 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 15(FIN) am
"An Act relating to fair trade practices and consumer
protection, to telephone solicitations, to charitable
solicitations; and providing for an effective date."
HEARD AND HELD
HOUSE BILL NO. 356
"An Act relating to operation of alcoholic beverage delivery
sites; and providing for an effective date."
MOVED HB 356 OUT OF COMMITTEE
SENATE BILL NO. 341
"An Act relating to the administration of the Alaska Vocational
Technical Center; and providing for an effective date."
MOVED SB 341 OUT OF COMMITTEE
2D CS FOR HOUSE BILL NO. 288(RLS)
"An Act changing the name of the Department of Community and
Economic Development to the Department of Commerce, Community,
and Economic Development."
MOVED SCS 2D CSHB 288(STA) OUT OF COMMITTEE
SENATE BILL NO. 272
"An Act relating to certain monetary advances in which the
deposit or other negotiation of certain instruments to pay the
advances is delayed until a later date; and providing for an
effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 27
SHORT TITLE: TRACKING OF PESTICIDE USE
SPONSOR(s): SENATOR(s) ELLIS
01/21/03 (S) PREFILE RELEASED 1/17/03
01/21/03 (S) READ THE FIRST TIME - REFERRALS
01/21/03 (S) L&C, RES, FIN
02/26/04 (S) L&C AT 1:30 PM BELTZ 211
02/26/04 (S) Heard & Held
02/26/04 (S) MINUTE(L&C)
04/01/04 (S) L&C AT 1:30 PM BELTZ 211
04/01/04 (S) Heard & Held
04/01/04 (S) MINUTE(L&C)
04/06/04 (S) L&C AT 2:00 PM BELTZ 211
BILL: HB 341
SHORT TITLE: DIVE FISHERY MANAGEMENT ASSESSMENT
SPONSOR(s): REPRESENTATIVE(s) WILLIAMS
01/12/04 (H) PREFILE RELEASED 1/2/04
01/12/04 (H) READ THE FIRST TIME - REFERRALS
01/12/04 (H) FSH, RES
02/04/04 (H) FSH RPT 6DP 1NR
02/04/04 (H) DP: GARA, OGG, HEINZE, WILSON,
02/04/04 (H) SAMUELS, SEATON; NR: GUTTENBERG
02/04/04 (H) FSH AT 8:30 AM CAPITOL 124
02/04/04 (H) Moved Out of Committee
02/04/04 (H) MINUTE(FSH)
02/16/04 (H) RES AT 1:00 PM CAPITOL 124
02/16/04 (H) Scheduled But Not Heard
02/25/04 (H) RES AT 1:00 PM CAPITOL 124
02/25/04 (H) Moved Out of Committee
02/25/04 (H) MINUTE(RES)
02/26/04 (H) RES RPT 8DP 1DNP
02/26/04 (H) DP: HEINZE, STEPOVICH, GATTO, LYNN,
02/26/04 (H) WOLF, KERTTULA, MASEK, DAHLSTROM;
02/26/04 (H) DNP: GUTTENBERG
03/15/04 (H) TRANSMITTED TO (S)
03/15/04 (H) VERSION: HB 341
03/17/04 (S) READ THE FIRST TIME - REFERRALS
03/17/04 (S) L&C, FIN
04/01/04 (S) L&C AT 1:30 PM BELTZ 211
04/01/04 (S) Heard & Held
04/01/04 (S) MINUTE(L&C)
04/06/04 (S) L&C AT 2:00 PM BELTZ 211
BILL: HB 15
SHORT TITLE: SOLICITATIONS/CONSUMER PROTECTION
SPONSOR(s): REPRESENTATIVE(s) FATE
01/21/03 (H) PREFILE RELEASED (1/10/03)
01/21/03 (H) READ THE FIRST TIME - REFERRALS
01/21/03 (H) L&C, STA, FIN
01/29/03 (H) L&C AT 3:15 PM CAPITOL 17
01/29/03 (H) <Bill Postponed>
02/07/03 (H) L&C AT 3:15 PM CAPITOL 17
02/07/03 (H) Moved CSHB 15(L&C) Out of Committee
02/07/03 (H) MINUTE(L&C)
02/10/03 (H) L&C RPT CS(L&C) NT 3DP 4AM
02/10/03 (H) DP: CRAWFORD, ROKEBERG, ANDERSON;
02/10/03 (H) AM: LYNN, GATTO, GUTTENBERG, DAHLSTROM
02/18/03 (H) STA AT 8:00 AM CAPITOL 102
02/18/03 (H) Heard & Held
02/18/03 (H) MINUTE(STA)
02/25/03 (H) STA AT 8:00 AM CAPITOL 102
02/25/03 (H) Scheduled But Not Heard
03/11/03 (H) STA AT 8:00 AM CAPITOL 102
03/11/03 (H) Heard & Held
03/11/03 (H) MINUTE(STA)
03/13/03 (H) STA AT 8:00 AM CAPITOL 102
03/13/03 (H) Moved CSHB 15(STA) Out of Committee
03/13/03 (H) MINUTE(STA)
03/26/03 (H) STA RPT CS(STA) NT 3DP 4NR
03/26/03 (H) DP: SEATON, GRUENBERG, WEYHRAUCH;
03/26/03 (H) NR: HOLM, LYNN, DAHLSTROM, BERKOWITZ
02/19/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/19/04 (H) Heard & Held
02/19/04 (H) MINUTE(FIN)
02/23/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/23/04 (H) Moved CSHB 15(FIN) Out of Committee
02/23/04 (H) MINUTE(FIN)
02/24/04 (H) FIN RPT CS(FIN) NT 7DP 3NR
02/24/04 (H) DP: HAWKER, CROFT, CHENAULT, FATE,
02/24/04 (H) MEYER, HARRIS, WILLIAMS; NR: STOLTZE,
02/24/04 (H) JOULE, MOSES
03/03/04 (H) TRANSMITTED TO (S)
03/03/04 (H) VERSION: CSHB 15(FIN) AM
03/04/04 (S) READ THE FIRST TIME - REFERRALS
03/04/04 (S) L&C, JUD
03/25/04 (S) L&C AT 1:30 PM BELTZ 211
03/25/04 (S) Heard & Held
03/25/04 (S) MINUTE(L&C)
04/06/04 (S) L&C AT 2:00 PM BELTZ 211
BILL: HB 356
SHORT TITLE: EXTEND ALCOHOL DELIVERY SITE SUNSET
SPONSOR(s): REPRESENTATIVE(s) JOULE
01/12/04 (H) PREFILE RELEASED 1/2/04
01/12/04 (H) READ THE FIRST TIME - REFERRALS
01/12/04 (H) L&C
02/09/04 (H) L&C AT 3:15 PM CAPITOL 17
02/09/04 (H) Moved Out of Committee
02/09/04 (H) MINUTE(L&C)
02/12/04 (H) L&C RPT 4DP
02/12/04 (H) DP: LYNN, GATTO, DAHLSTROM, ANDERSON
02/19/04 (H) TRANSMITTED TO (S)
02/19/04 (H) VERSION: HB 356
02/20/04 (S) READ THE FIRST TIME - REFERRALS
02/20/04 (S) L&C
03/02/04 (S) L&C AT 1:30 PM BELTZ 211
03/02/04 (S) Heard & Held
03/02/04 (S) MINUTE(L&C)
04/06/04 (S) L&C AT 2:00 PM BELTZ 211
BILL: SB 341
SHORT TITLE: AVTEC ADMINISTRATION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/16/04 (S) READ THE FIRST TIME - REFERRALS
02/16/04 (S) L&C, FIN
04/06/04 (S) L&C AT 2:00 PM BELTZ 211
BILL: HB 288
SHORT TITLE: CHANGING NAME OF DEPT OF COMM & ECON DEV.
SPONSOR(s): REPRESENTATIVE(s) KOHRING
04/28/03 (H) READ THE FIRST TIME - REFERRALS
04/28/03 (H) STA, L&C
05/06/03 (H) STA AT 8:00 AM CAPITOL 102
05/06/03 (H) Moved CSHB 288(STA) Out of Committee
05/06/03 (H) MINUTE(STA)
05/08/03 (H) STA RPT CS(STA) NT 3DP 1DNP 3NR
05/08/03 (H) DP: DAHLSTROM, LYNN, HOLM;
05/08/03 (H) DNP: BERKOWITZ; NR: SEATON, GRUENBERG,
05/08/03 (H) WEYHRAUCH
05/08/03 (H) CRA REFERRAL ADDED AFTER L&C
05/09/03 (H) L&C AT 3:15 PM CAPITOL 17
05/09/03 (H) Moved CSHB 288(STA) Out of Committee
05/09/03 (H) MINUTE(L&C)
05/10/03 (H) L&C RPT CS(STA) NT 3DP 1NR 2AM
05/10/03 (H) DP: GATTO, DAHLSTROM, LYNN;
05/10/03 (H) NR: ROKEBERG; AM: CRAWFORD, GUTTENBERG
05/13/03 (H) CRA RPT CS(STA) NT 2DP 3NR
05/13/03 (H) DP: WOLF, KOTT; NR: SAMUELS, CISSNA,
05/13/03 (H) MORGAN
05/13/03 (H) CRA AT 8:00 AM CAPITOL 124
05/13/03 (H) Moved CSHB 288(STA) Out of Committee
05/13/03 (H) MINUTE(CRA)
05/16/03 (H) RETURNED TO RLS COMMITTEE
05/19/03 (S) L&C AT 8:00 AM BELTZ 211
05/19/03 (S) <Above Item Removed from Agenda>
05/19/03 (S) MINUTE(L&C)
01/20/04 (H) RLS AT 9:30 AM BELTZ 211
01/20/04 (H) Moved CSHB 288(RLS) Out of Committee
01/20/04 (H) MINUTE(RLS)
01/21/04 (H) RLS RPT 2D CS(RLS) NT 2DP 1DNP 2NR
01/21/04 (H) DP: COGHILL, ROKEBERG; DNP: KERTTULA;
01/21/04 (H) NR: MCGUIRE, KOTT
01/21/04 (H) TRANSMITTED TO (S)
01/21/04 (H) VERSION: 2D CSHB 288(RLS)
01/23/04 (S) READ THE FIRST TIME - REFERRALS
01/23/04 (S) STA, L&C
02/03/04 (S) STA AT 3:30 PM BELTZ 211
02/03/04 (S) Moved SCS CSHB 288(STA) Out of
Committee
02/03/04 (S) MINUTE(STA)
02/04/04 (S) STA RPT SCS 2DP 1NR NEW TITLE
02/04/04 (S) DP: STEVENS G, STEDMAN; NR: GUESS
04/06/04 (S) L&C AT 2:00 PM BELTZ 211
BILL: SB 272
SHORT TITLE: DEFERRED DEPOSIT ADVANCES (PAYDAY LOANS)
SPONSOR(s): RULES
01/21/04 (S) READ THE FIRST TIME - REFERRALS
01/21/04 (S) L&C, FIN
04/06/04 (S) L&C AT 2:00 PM BELTZ 211
WITNESS REGISTER
Ms. Kristin Ryan, Director
Division of Environmental Health
Department of Environmental Conservation
410 Willoughby
Juneau, AK 99801-1795
POSITION STATEMENT: Supports SB 27.
Mr. Everett Walton
American Pest Management
Anchorage AK
POSITION STATEMENT: Opposes SB 27.
Mr. Tim Barry
Staff to Representative Bill Williams
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 341 for sponsor.
Ms. Julie Decker, Executive Director
Southeast Alaska Regional Dive Fisheries Association (SARDFA)
PO Box 2138
Wrangell AK 99929
POSITION STATEMENT: Supports HB 341.
Mr. Jim Pound
Staff to Representative Hugh Fate
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 15 for the sponsor.
Mr. Robert Flint
Hartig Rhodes Hoge & Lekisch
717 K St.
Anchorage AK
POSITION STATEMENT: Opposes HB 15.
Mr. Dan Smith
Direct Marketing Association
No address provided
POSITION STATEMENT: Commented on HB 15.
Ms. Ann Darr
Magazine Publishers of America
No address provided
POSITION STATEMENT: Commented on HB 15.
Mr. Guy Bell, Director
Administrative Services
Department of Labor & Workforce
Development
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Supports SB 341.
Mr. Ben Grenn
Staff to Representative Vic Kohring
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 288 for sponsor.
Representative Vic Kohring
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 288.
Ms. Sally Sadler, Legislative Liaison
Department of Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Supports HB 288.
Mr. Richard Schmitz
Staff to Senator John Cowdery
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 272 for sponsor.
Ms. Marie Darlin, Coordinator
Capital City Task Force
AARP Alaska
Juneau AK 99801
POSITION STATEMENT: Opposes SB 272.
Mr. Mark Davis, Director
Division of Banking, Securities and Corporations
Department of Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Supports SB 272.
Mr. Ed Sniffen, Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Supports SB 272.
Ms. Angela Liston
Alaska Catholic Conference
Anchorage AK
POSITION STATEMENT: Supports SB 272.
Ms. Joelle Hall
Eagle River AK
POSITION STATEMENT: Supports SB 272.
ACTION NARRATIVE
TAPE 04-31, SIDE A
SB 27-TRACKING OF PESTICIDE USE
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 2:04 p.m. Present were Senators
Gary Stevens, Ralph Seekins, Hollis French, and Chair Con Bunde.
Senator Bettye Davis arrived at 2:10 p.m. The first order of
business to come before the committee was SB 27.
SENATOR RALPH SEEKINS moved to adopt CSSB 27(L&C), version /H,
for the working document. There were no objections and it was so
ordered.
CHAIR BUNDE explained that the new version removes the public
notice warning requirement for about 1,200 retailers; it also
amends section 5 regarding farmers.
MS. KRISTIN RYAN, Director, Division of Environmental Health,
Department of Environmental Conservation (DEC), agreed with the
chair's short summary of the changes in SB 27. She clarified the
second change saying that the department considers all certified
applicators commercial; language was changed to explicitly refer
only to commercial applicators. About 200 farmers are certified.
SENATOR SEEKINS asked her to define "private applicators" on
page 1, line 4.
MS. RYAN replied that the term is used to reflect the use of
restricted use pesticides, which one must become certified to
use. She noted that the fiscal note would remain the same.
SENATOR BETTYE DAVIS arrived at 2:10 p.m.
MR. EVERETT WALTON, American Pest Management, said there are
less than 50 commercial applicators in the whole state. In
Anchorage, only about 15 people work in the business on a
regular basis.
There isn't a legitimate reason to pass this bill out
of committee. This bill will add several hundred
thousand dollars to the state budget with no guarantee
that the money can be recovered by implementing
registration fees. It would not surprise me if fully
half of the chemicals were not reregistered. After
all, we only have 600,000 people in the State of
Alaska.... This bill is all about growing government
for the sake of growth... so that it can demand a
larger budget.... All the commercial applicators in
this state use only about 5 percent of the chemicals
on this list. The rest are privately applied, thus
untrackable.
He accused that the bill would be unenforceable and wouldn't be
able to accomplish its stated purposes.
CHAIR BUNDE observed that he had a substantial amount of input
from citizens requesting that this bill be heard. It's not just
a matter of government wanting to expand.
MR. KEN PERRY, Owner and General Manager, Paratex Pied Piper
Pest Control of Alaska, said he represented the significant
number of commercial applicators doing business in Alaska and
the National Pest Management Association, the industry trade
group. He is also in contact with the chemical manufacturers
trade group called RISE.
He accused that supporters of this bill had not consulted with
industry or trade groups and he sought to provide information
that is being withheld. He stated that the $80 registration fee
is a smoke screen for saying this bill has no cost. He also
warned:
I have been informed that all the manufacturers with
current registrations in Alaska decided to review
their lists and determine which chemicals they will
continue to register. The decision is to be based on
cost of registration versus potential income and the
desirability of paying the State of Alaska to
implement anti-pesticide legislation against their own
interests....
He closed requesting a no pass on this bill.
CHAIR BUNDE reiterated that his office had a great number of
voters asking him to hear the bill. "It's called democracy."
SENATOR SEEKINS asked Ms. Ryan why a household survey is being
created and it appeared to him that there is some intent to
regulate household pesticides down the road.
MS. RYAN replied that her department has said the most common
misuse of pesticides is by private homeowners and the intent of
the survey is to understand how homeowners use pesticides so
that future outreach can be appropriately targeted. For example,
if it finds that Alaskans are frequently using Diazanon for
treating aphids, it could create outreach materials to promote
less harmful alternatives.
CHAIR BUNDE said some people want to see all pesticides go away,
but those who have been exposed to malaria would disagree with
that. He asked for her reasoning in that section.
MS. RYAN explained that her division is interested in pesticide
use statewide and, if it were practical, wanted to include the
household reporting component. However, at this point that
oversteps her intention. This bill is a good first step to look
into commercial applications, a lot of which take place in
public buildings. Some of that information could be found
already by looking through public records. A statewide household
survey would be statistically valid and provide beneficial
information to the department, which could then determine if it
needed to do more outreach.
SENATOR SEEKINS said her comment that registration is the first
step concerns him, because he doesn't see the next step and
someone else does. He asked if she thought anything accomplished
in this bill would reduce pesticide use in the State of Alaska.
MS. GAREN TARR, staff to Senator Ellis, sponsor, stepped in and
said this is not an attempt to reduce pesticide use, but more of
an attempt to know where they are being used so that appropriate
decisions can be made about public and environmental health.
That would include helping people who are susceptible to
exposure, such as people with asthma or a compromised immune
system.
SENATOR SEEKINS summarized that it won't reduce the use of
pesticides, but may change the way they are applied or which
ones are applied. He reflected that he had never seen a
definition of a pesticide and asked, "Are we regulating DEET?
Are we regulating anti-snail applications? What are we
regulating?"
MS. RYAN replied that the federal government already requires
registration of pesticides; an $80 fee is being added to help
pay for the program. The Department of Environmental
Conservation (DEC)'s website has a definition of what products
are regulated. Currently, there are about 5,700 regulated
products.
SENATOR SEEKINS asked since the state has primacy, does our list
include pesticides that are not included on the federal list.
MS. RYAN replied that the department would not be able to
register any pesticide products for sale that weren't approved
by the federal government.
SENATOR SEEKINS asked if our state regulations exceeded federal
regulations for what is registered as a pesticide.
MS. RYAN replied that about five pesticides are registered
federally that are not registered for use in the state per year.
SENATOR FRENCH moved to pass CSSB 27(L&C) from committee with
attached fiscal note and individual recommendations. Senators
Gary Stevens, Bettye Davis, Hollis French and Chair Con Bunde
voted yea; Senator Ralph Seekins voted nay; and CSSB 27(L&C)
moved from committee.
HB 341-DIVE FISHERY MANAGEMENT ASSESSMENT
CHAIR CON BUNDE announced HB 341 to be up for consideration.
MR. TIM BARRY, staff to Representative Bill Williams, sponsor,
offered to answer questions.
SENATOR HOLLIS FRENCH asked if the administration supported this
bill.
MR. BARRY answered that the administration hadn't commented on
the bill one way or the other. It has a zero fiscal note and the
Department of Revenue will administer collection of the fees,
which it already does. The assessments will change.
SENATOR FRENCH asked if the department still believed that
changing the assessments would result in a zero fiscal note.
MR. BARRY replied that currently the Dive Fish Association
assesses itself at one of four rates - 1%, 3%, 5% and 7%. This
bill allows the association to assess themselves at 2%, 4% and
6%. To that extent, the department isn't doing anything
different.
MS. JULIE DECKER, Executive Director, Southeast Alaska Regional
Dive Fisheries Association (SARDFA), said the association has
developed good relationships with the departments it worked with
along with Alan Austerman. The concept behind SARDFA has had
nothing but support.
SENATOR RALPH SEEKINS moved to pass HB 341 from committee with
attached fiscal note and individual recommendations. Senators
Gary Stevens, Bettye Davis, Ralph Seekins, Hollis French and
Chair Con Bunde voted yea; and HB 341 was moved to its next
committee of referral.
CSHB 15(FIN)am-SOLICITATIONS/CONSUMER PROTECTION
CHAIR CON BUNDE announced HB 15 to be up for consideration. He
noted that Mr. Robert Flint expressed concerns from magazine
publishers.
MR. JIM POUND, staff to Representative Hugh Fate, sponsor,
responded that the Department of Law said a lot of the
complaints it receives come from those types of businesses. Mr.
Flint admitted there are about 2,300 of them in the country.
MR. ROBERT FLINT, Hartig Rhodes Hoge & Lekisch, said he
represents the Direct Marketing Association and the Magazine
Publishers of America on the portion of HB 15, which relates to
the proposed amendments to the Telemarketing Act. He listed his
points as follows:
As I mentioned before, this statute, which is common
to about two dozen states, was aimed at fly-by-night
operators and, therefore, was deliberately made very
burdensome. As an example, the application for
registration is 20 questions long and you have to list
all your sales people. The regulations also require if
the sales people change within 90 days - either they
leave or you add on sales people - you're going to
have to file the new sales people, which includes
listing their home address.
Moreover, every mistake you make is a class C felony,
which is a $50,000 fine; for your first offense - one
year in jail all the way up to five years.
To put the magazine publishers and book people under
this is a radical change from the original purpose and
the scope. Right now there are eight companies
registered under the Alaska Telemarketing Act. This
business is a huge national business. The 2,300
magazine and newsletters are that only - I don't know
the number of CDs, videos and booksellers.
The fiscal note here estimates that maybe 30 instead
of eight will register under the Telemarketing Act if
these amendments are passed. If anybody wants to do
business in Alaska among those 2,300 people for
magazines alone, it will be far higher than that. If
those don't register, then the enforcement problem is
going to be a mess. At a minimum, you're going to have
a constant stream of paperwork and bear in mind that
this business, which has millions of transactions a
day nationwide, these callers are from all over the
country and, indeed, outside the country. So, you're
going to get the list of people from Bangladesh and
India and South Dakota filling up the cabinets of the
Department of Law on a constant daily basis.
I think one of the elements here, if you go forward,
the committee is entitled to a fiscal note, which
addresses the reality. The administrative and
enforcement costs of this - trying to regulate a very
large national industry are going to be very high.
Now, the regulations in the statute are still going to
interfere with the business. One of the things that
the regulations do not cover is mail to an individual.
So, if you get a card or an ad from Time Magazine in
your mailbox and inviting you to subscribe to this
publication, and it says you can either do so by
returning this card or you can call an 800 number and
order it over the phone. Under this bill, you would
have to do mail only; you cannot call over the
phone....
It also excludes existing customers. That is, if a
company has an existing customer they have done
business with, they would also run into this act. We
have all agreed... that cold-call marketing - the guy
who calls you at your dinner table, is absolutely
dead. We have a vast number of people who signed up
for the Do Not Call list. According to all reports we
get from the Federal Trade Commission, it is working.
So, I think that problem is solved in another
direction, which my clients have no objection to at
all. We have had no evidence of need presented to us.
As I mentioned before, I filed a Freedom of
Information Act request with the Attorney General's
Office. You know, we hear anecdotes about problems in
an area, but we cannot get the statistics. It's over
three weeks and I've had no response to that Freedom
of Information request at all. There are, however,
national statistics....
The proposed regulators have never discussed in any
detail or any generality how this is supposed to work
with this industry, which I think, is sort of a base-
line before you want to go and create this
administrative cost....
So, I would summarize, the amendments don't work.
They're unworkable from the industry standpoint, from
an administrative standpoint and from an enforcement
standpoint. They are consumer prevention, not
consumer protection.... I do believe my principal, Ann
Darr, is on the phone, who has been involved with this
for 30 years... I believe she may have some valuable
information for the committee if she may be permitted
to make some comments.
MR. DAN SMITH said he works with the Direct Marketing
Association and that Ann Darr is on at the same time if that is
acceptable to the chair who indicated it was.
MS. ANN DARR, Magazine Publishers of America, said that
telephone fraud in the 80s was a terrible problem that extended
into the 90s. Industry, the Federal Trade Commission, the FBI
and the State Attorneys General all banded together to do what
they could about it. Telephone registration helped and was most
effective in the southern states - Florida, Arizona, Orange
County, California and Las Vegas.
Every state that enacted a telephone registration law
exempted identifiable substantial sellers that the
Attorney General knew how to locate should they have a
problem with their marketing. No other state includes
magazine or books or recordings in their telephone
registration requirements.
We think that telephone fraud has largely been taken
care of. The Federal Trade Commission does not list it
as one of its chief complaints. The Consumer
Federation of American - its last list of consumer
complaints did not, even in their 12 complaints, did
not include telephone marketing or magazines. I think
the Federal Trade Commission list included magazine
complaints as one percent. When you consider the
millions of transactions we do every year, there are,
of course, going to be complaints. The question is,
are they unfair, misleading and deceptive practices.
Even if it were an unfair, misleading and deceptive
practice, to require every publisher in the country to
go through this very extensive registration process
when you think of putting down the information for
each officer, director, trustee, general partner, etc.
etc. of a company such as Time Warner, a listing of
all telephone numbers used to call consumers when they
have a nationwide operation, this would be extremely
burdensome. We don't think it would be helpful to have
companies have to go through this process. It is true
that if they receive a mail solicitation, and this is
the common way that we solicit people, and invite them
to call a telephone number to subscribe, then we would
be required to register. This would be extremely
burdensome. Many companies couldn't afford to do it -
especially the smaller publications.
The general intent of HB 15 was to make Alaska
consistent with the Federal Trade Commission Do Not
Call list. The DMA certainly has its members adhere to
that; 52.8 million American consumers have signed up
for the list. The FTC says it's working and there were
a couple of industry groups, which included the DMA,
who were challenging the law in court; the DMA has
withdrawn its challenge....
So, we have no trouble with HB 15 as introduced. It's
what was amended into the bill to delete the exemption
from registration. Twenty-four states have telephone
registration laws similar to Alaska and none of them
require registration of magazine sellers or book or
recording companies. One state, Arizona, requires
companies to do a one-page on-line simple registration
statement.
CHAIR BUNDE noted that Ms. Darr had raised some interesting
questions and asked the sponsor to work with her, Mr. Flint and
Ms. Drinkwater to resolve them.
HB 356-EXTEND ALCOHOL DELIVERY SITE SUNSET
CHAIR CON BUNDE announced HB 356 to be up for consideration. He
indicated that there was no new testimony.
SENATOR HOLLIS FRENCH moved to pass HB 356 from committee with
attached fiscal note and individual recommendations. Senators
Ralph Seekins, Hollis French, Gary Stevens, Bettye Davis and
Chair Con Bunde voted yea; and HB 356 passed to its next
committee of referral.
SB 341-AVTEC ADMINISTRATION
CHAIR CON BUNDE announced SB 341 to be up for consideration.
MR. GUY BELL, Director, Administrative Services, Department of
Labor and Workforce Development (DOLWD), explained that during
the 2002 session, the Legislature enacted SB 192, which
transferred the Alaska Vocational Technical School (AVTEC) from
the Department of Education to the DOLWD.
TAPE 04-31, SIDE B
MR. BELL continued saying that a fee review indicated that the
transfer did not include the tuition and fee-setting authority.
This bill corrects that oversight by giving the commissioner of
DOLWD the authority to set tuition and fees by regulation, which
includes a public review process, rather than administratively
as is done now and doesn't have public review. It does not
change the fees or the process in which they are established.
SENATOR FRENCH asked if his department had been administering
AVTEC unlawfully over the past year.
MR. BELL said he wasn't a lawyer and didn't know.
SENATOR GARY STEVENS asked if AVTEC supported the bill.
MR. BELL replied yes.
SENATOR FRENCH clarified that this is purely cleanup.
MR. BELL replied yes.
SENATOR STEVENS moved to pass SB 341 from committee with
attached zero fiscal note and individual recommendations.
Senators Bettye Davis, Gary Stevens, Ralph Seekins, Hollis
French and Chair Con Bunde voted yea; and SB 341 passed from
committee.
2D CSHB 288(RLS)-CHANGING NAME OF DEPT OF COMM & ECON DEV.
CHAIR CON BUNDE announced HB 288 to be up for consideration.
MR. BEN GRENN, staff to Representative Kohring, sponsor,
explained that HB 288 changes the name of the Department of
Community & Economic Development (DCED) to the Department of
Commerce, Community and Economic Development. Confusion existed
as to the actual mission of the department on whether Alaska had
an agency that is tasked with promoting commerce and economic
development, which has somewhat complicated efforts to attract
investment to the state. Adding the word commerce back into the
title also makes it consistent with numerous other states.
CHAIR BUNDE asked if community or commerce has any connection
with coalbed methane.
MR. GRENN replied no at this point in time.
REPRESENTATIVE VIC KOHRING, sponsor, joined the committee, and
exhorted the committee to pass it.
MS. SALLY SADLER, Legislative Liaison, Department of Community &
Economic Development (DCED), supported HB 288.
We believe the new name does encompass those three
core missions and functions that the department
embraces - first being the commerce, regulating
business through our banking securities corporations,
through our Division of Insurance, as well as
Occupational and Business Licensing. We believe that
it also captures the work of our Division of Community
Advocacy, which is one of our largest divisions that
reaches out and helps communities achieve that self-
sufficiency and govern themselves and last, that
certainly not least, those functions of economic
development in which we have our business development
specialists who promote economic development
opportunities not only for fishing and tourism, but
also for small business and mining....
A zero fiscal note accompanies the legislation and the costs
will be absorbed as part of the department's on-going functions.
SENATOR RALPH SEEKINS moved to pass SCS 2D CSHB 288(STA) from
committee with individual recommendations and attached zero
fiscal note. Senators Bettye Davis, Ralph Seekins, Gary Stevens,
Hollis French, and Chair Con Bunde voted yea; and SCS 2D CSHB
288(STA) moved from committee.
SB 272-DEFERRED DEPOSIT ADVANCES (PAYDAY LOANS)
CHAIR CON BUNDE announced SB 272 to be up for consideration.
SENATOR RALPH SEEKINS moved to adopt CSSB 272(L&C), version /D,
as the working document. There were no objections and it was so
ordered.
MR. RICHARD SCHMITZ, staff to Senator John Cowdery, said the CS
puts the bill in alignment with the House version.
MS. MARIE DARLIN, Coordinator, Capital City Task Force, AARP
Alaska, noted its letter in the committee packet that lays out
their concerns. She explained that the task force has worked in
partnership with The Consumer Federation of America, the
Consumer's Union, and the National Consumer Law Center over
several years and has developed a model bill, which was sent to
the committee.
That is more of what we would like to see in the bill.
Among our recommendations are that we [indisc.] no
less than two weeks for each $50 owed on the loan. And
a consumer shall be permitted to make partial payments
in amounts equal to no less than $5 increments on the
loan at any time without charge. The maximum amount of
the deferred deposit loan shall not exceed $300. I
realize right now they have a limit of $500 and the
bill wants to increase it to $1,000, which we
definitely object to. We are sure the committee is
concerned with consumer protection, as we are and that
is our main concern.... If the term of the loan is no
less than two weeks per $50, consumers will have a
better chance of paying off the loan rather than
defaulting and possibly taking court action or having
to renew the loan again at exorbitant rates. We
understand that the new version of the bill retains
the maximum amount of $500 rather than increasing
available loan to $1,000, but we believe Alaska should
reduce the available amount from $500 to $300. These
are monies paid out of someone's pocket. So it is
interest. If you and I do not pay off our credit
cards, we pay interest. If I take out a payday loan
and pay an exorbitant fee, much higher than interest
on a credit card, it's still money and a significant
amount of money and out of my pocket.
When credit card companies can make a handsome profit
on interest rates of 18% to 23%, why cannot a payday
loan outfit make a profit with an interest rate or fee
that does not go beyond 36%? Our model law also allows
for an administrative fee of no more than $5 per loan,
no matter how much the loan is for. Some states have
determined that payday lenders should not be allowed
to exist in their state. AARP does not argue that they
should be banned; we only argue that the interest rate
should be no more than 36% APR. The available loan
amount should not be more than $300 and the borrower
should be allowed to make partial repayment. If the
consumer has more than $300 in outstanding payday
loans from one or more lenders, they should be
prohibited from taking out any additional loans from
any payday lending organization. This is consumer
interest to us, but we believe this is in everybody's
best interest.
MR. MARK DAVIS, Director, Banking and Securities and
Corporations, Department of Community & Economic Development
(DCED), said he is ready to take over regulation of this
industry that is currently unregulated. Forty-four states do
regulate it. "We're basically in favor of regulation in terms of
making sure that some rules are followed."
MR. DAVIS said there is a fiscal note for one more banking
examiner. He supported a $500 limit; any greater amount would
make it incompatible with the current Small Loan Act.
CHAIR BUNDE asked how he could make this issue revenue neutral.
MR. DAVIS replied that industry has told him that there are 10
companies doing business in the state; he found 30 locations
between Anchorage and Fairbanks that would have to be checked.
Basically, another examiner would be needed to do that. He added
that the current four examiners work now to stay on schedule
with the state charter banks and credit union.
CHAIR BUNDE clarified that he wasn't suggesting doing without
another staff person, but was looking for revenues with which to
pay him.
MR. DAVIS answered that he has asked for a registration fee and
an hourly rate for the examiners. "We would at least break
even."
CHAIR BUNDE asked if he would break even under the existing CS.
MR. DAVIS replied that he wanted to charge $75 per examiner hour
on location to make the bill revenue neutral.
SENATOR FRENCH said the charge on the loan would be expressed as
a specific value - $15 per $100.
MR. DAVIS said he was only trying to make consumers aware of how
much it cost them to borrow money.
MR. ED SNIFFEN, Assistant Attorney General, Department of Law
(DOL), said he and Cindy Drinkwater, DOL, worked with the Mr.
Davis and the payday lenders to craft the CS. A section in the
bill already requires that APRs be disclosed to consumers in the
form of a placard in a payday lenders shop that identifies the
cost per $100. It is also expressed in the form of an annual
percentage rate, which is required under the Truth in Lending
Act. Another provision says that other federal requirements
impose other disclosure obligations on a payday lender, as well.
Payday lenders are not currently regulated and this bill goes a
long way to removing the problems with these kinds of
transactions. He agreed with Mr. Davis that reducing the loan
amount to $300 from $500 would be more trouble than it's worth
to be consistent with the Small Loan Act. He noted that the bill
has a limit of $15 and a $5 origination fee or 15 percent of the
amount loaned. "We put a 15 percent limit in there so if someone
wanted to borrow $150, they wouldn't get charged for the $200
cash advance fee. It would be something in between - maybe
$22.50."
MR. SNIFFEN warned that this is still a fairly significant
interest rate. Some states allow more, some less; this bill is
in the middle of what is allowed in other states.
It's been our experience that what gets consumers in
trouble with these kinds of transactions is not the
interest rate. It's not the $15 per $100 that creates
the problem. The problem comes in poor financial
management from the get-go, which brings consumers to
these types of lenders in the first place. So, I don't
know that undue emphasis needs to be directed toward
the interest rate as a percentage or even as a raw
dollar figure.... The problem, of course, is a lot
deeper than that....
He did not object to allowing partial payments and language
could be inserted to that effect, but he wanted to hear from the
payday lenders on whether or not that would be problematic.
CHAIR BUNDE said he was running out of time today and asked him
to work with the bill's sponsor to address that question, along
with the issue of trying to make this revenue neutral.
MS. ANGELA LISTON, Alaska Catholic Conference, supported
regulating the payday loan industry.
The Catholic Church, of course, has had a long history
of opposing exorbitant interest rates and we're
concerned that this type of lending, which was once
considered a social problem, is really skyrocketing,
not just here in Alaska, but nationally. The people
who use these loans are the working poor. If someone
was not desperate, they wouldn't pay $15 to borrowers
$100 for two weeks. These borrowers are people that
don't have other options. In most states, payday
lenders make their money on the renewals or what is
commonly called rollovers. In California, borrowers
average 11 loans a year. In Illinois, they average 13
loans a year.
This trend doesn't suggest a consumer service, but it
does suggest that the industry moves people into
increasing chronic and hopeless debt and every two
weeks they're incurring another $15 fee for that same
$100 loan. Happily, in Alaska, we learned from an
industry representative at a hearing in the House that
that's not the trend here. In fact, out of 26,000
loans, one industry rep says that there's 24,000
customers, which is an average closer to one loan per
person. If that's the case, to make this, a bad
situation, better, we would like to propose that we
extend the term of the loan. Right now, it's a two
weeks term and we would propose that it become a 30-
day term, giving people one extra option for another
paycheck to get that loan paid off and we also
absolutely support the idea of partial payment.... For
the industry it would result in fewer defaults and it
would have no impact on the industry since, in fact,
they have 24,000 people who are getting these loans.
If the industry is making its money off the rollovers,
then we do have problems, again, because we have to
admit that these constant rollovers and these fees
exploit the working poor.
MS. JOELLE HALL, Eagle River resident, said she is a military
wife and served in the Army from 1983 - 1989; her husband has
many years of military service, as well. She wanted to relate
the military applications of this bill. "These payday lenders
tend to ring around military installations and from my years
moving around, I know this to be the case." Her husband is a
Sergeant-Major at Fort Richardson and she thought at first to
make these places off limits if they were operating without the
CS.
I feel it's very important to regulate these
organizations. If we can't make this kind of lending
illegal, then we have to regulate it as best as we
can. My hope is that we can make this bill work better
for the military clients who I know consume an
inordinate number of these payday loans.
The 30-day limit that was mentioned earlier would be a
great benefit. Soldiers and airmen have the option of
getting paid every 15 days, but some of them only get
paid every 30 days. So, extending it to a 30-day limit
would greatly allow those soldiers and airmen to make
their payments on time. In addition, the partial
payment question seems to be one of just decency. You
should be able to pay a part of your principle any
time you take out a loan. It's the way we do business
in America with virtually every other kind of lending.
I read in the minutes that industry believes they are
providing a service to poor people by providing these
loans and I would just urge this committee to remember
that some of the people who are procuring these loans
are actually performing a real service for their
country and we should be thinking about them. If the
industry is really interested in providing a service,
the least they can do is make these loans a little bit
more compatible for their clients who wear a uniform.
CHAIR BUNDE responded that he remembered being a GI who had
fellow GIs who wanted to borrow $10 for a $20 pay back. If they
are limited commercially, their creativity would remain the
same.
MS. HALL responded, "I believe legalized and illegal are
different things."
CHAIR BUNDE thanked her for her testimony. He wanted the sponsor
and industry to address the amendments. There being no further
business to come before the committee, he adjourned the meeting
at 3:28 p.m.
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