Legislature(2015 - 2016)BELTZ 105 (TSBldg)
04/11/2015 11:00 AM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB149 | |
| SB58 | |
| SB107 | |
| SB99 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 149 | TELECONFERENCED | |
| += | SB 58 | TELECONFERENCED | |
| *+ | SB 107 | TELECONFERENCED | |
| += | SB 99 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 11, 2015
12:33 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Cathy Giessel, Vice Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Johnny Ellis
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 149 AM
"An Act relating to an amendment of the articles of
incorporation of certain Native corporations to establish a
lower quorum requirement for shareholder meetings."
- MOVED HB 149 AM OUT OF COMMITTEE
SENATE BILL NO. 58
"An Act relating to workers' compensation and transportation
network companies; and providing for an effective date."
- MOVED CSSB 58(L&C) OUT OF COMMITTEE
SENATE BILL NO. 107
"An Act relating to insurance; relating to risk based capital
for domestic insurers and within an insurance holding company
system or transactions involving a domestic fraternal benefit
societies, including provisions related to insurers subject to
risk based insurer; relating to management and examination of
domestic insurers that are part of capital and action level
event requirements; relating to review by the director of an
insurance holding company system; adding provisions relating to
participation by the insurance of an insurer's risk based
capital plan; relating to confidentiality and sharing director
of insurance in a supervisory college; relating to civil and
criminal penalties for of certain information submitted to the
director of insurance; relating to evaluating an violations by
insurers and individuals; relating to provisions for risk
management and insurance holding company and the acquisition of
control of or merger with a domestic own risk and solvency
assessments by insurers; relating to operating requirements for
insurer; relating to risk based capital, risk management, and
own risk and solvency controlling insurance producers; relating
to producer-controlled insurers; adding and assessments of
insurers; clarifying provisions related to risk based capital
plans; relating amending definitions related to insurers; and
providing for an effective date." to exemptions by the director
of insurance for certain domestic and casualty insurers from
risk based capital requirements; relating to insurance holding
companies, including filing requirements, divestiture, content
of statements, notifications, and hearings; relating to
registration requirements of insurers; relating to transactions
- HEARD & HELD
SENATE BILL NO. 99
"An Act relating to alcoholic beverages; relating to the
regulation of manufacturers, wholesalers, and retailers of
alcoholic beverages; relating to licenses, endorsements, and
permits involving alcoholic beverages; relating to the Alcoholic
Beverage Control Board; relating to offenses involving alcoholic
beverages; relating to the offense of minor consuming; relating
to revocation of a driver's license for a minor consuming
offense; relating to the effect of the revocation of a driver's
license for a minor consuming offense on a motor vehicle
liability insurance policy; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 149
SHORT TITLE: NATIVE CORP. ART. AMENDMENTS
SPONSOR(s): REPRESENTATIVE(s) PRUITT
03/18/15 (H) READ THE FIRST TIME - REFERRALS
03/18/15 (H) CRA
03/26/15 (H) CRA AT 8:00 AM BARNES 124
03/26/15 (H) Heard & Held
03/26/15 (H) MINUTE(CRA)
03/28/15 (H) CRA AT 10:00 AM BARNES 124
03/28/15 (H) Moved HB 149 Out of Committee
03/28/15 (H) MINUTE(CRA)
03/30/15 (H) CRA RPT 4DP 1NR
03/30/15 (H) DP: DRUMMOND, NAGEAK, SEATON, TILTON
03/30/15 (H) NR: HUGHES
04/02/15 (H) TRANSMITTED TO (S)
04/02/15 (H) VERSION: HB 149 AM
04/03/15 (S) READ THE FIRST TIME - REFERRALS
04/03/15 (S) L&C
04/09/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/09/15 (S) Heard & Held
04/09/15 (S) MINUTE(L&C)
04/11/15 (S) L&C AT 11:00 AM BELTZ 105 (TSBldg)
BILL: SB 58
SHORT TITLE: TRANSPORT NETWORK SVES. & WORKERS COMP
SPONSOR(s): STATE AFFAIRS BY REQUEST
02/20/15 (S) READ THE FIRST TIME - REFERRALS
02/20/15 (S) L&C, STA
03/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/19/15 (S) Heard & Held
03/19/15 (S) MINUTE(L&C)
04/02/15 (S) STA AT 9:00 AM BUTROVICH 205
04/02/15 (S) -- Public Testimony --
04/11/15 (S) L&C AT 11:00 AM BELTZ 105 (TSBldg)
BILL: SB 107
SHORT TITLE: INSURANCE; RISK MG'T; HOLDING COMPANIES
SPONSOR(s): LABOR & COMMERCE
04/11/15 (S) READ THE FIRST TIME - REFERRALS
04/11/15 (S) L&C
04/11/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 99
SHORT TITLE: ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
SPONSOR(s): MICCICHE
04/07/15 (S) READ THE FIRST TIME - REFERRALS
04/07/15 (S) L&C, JUD
04/09/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/09/15 (S) Heard & Held
04/09/15 (S) MINUTE(L&C)
04/11/15 (S) L&C AT 11:00 AM BELTZ 105 (TSBldg)
WITNESS REGISTER
BRANDON BREFCZYNSKI, Staff
Senator Bill Stoltze
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Delivered a sectional analysis for the CS
for SB 58.
ARMAND FELICIANO
Property Casualty Insurers Association of America
POSITION STATEMENT: Testified in support of the CS for SB 58.
CARLA JACOBS, Policy Team
Uber Technologies
Chicago, Illinois
POSITION STATEMENT: Testified in support of the CS for SB 58.
WESTON EILER, Aide
Senate Labor and Commerce Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 107 on behalf of the Senate
Labor and Commerce Committee.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Delivered a PowerPoint presentation to
frame the issue addressed in SB 107.
CHUCK KOPP, Staff
Senator Peter Micciche
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Delivered a sectional analysis for SB 99.
CARMEN GUTIERREZ, Contractor
Alaska Mental Health Trust Authority
Anchorage, Alaska
POSITION STATEMENT: Delivered a sectional analysis for SB 99.
CYNTHIA FRANKLIN, Director
Alcoholic Beverage Control (ABC) Board
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions and provided information
related to SB 99.
ACTION NARRATIVE
12:33:43 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 12:33 p.m. Present at the call to
order were Senators Stevens, Giessel, and Chair Costello.
Senators Meyer and Ellis arrived during the course of the
meeting.
HB 149-NATIVE CORP. ART. AMENDMENTS
12:34:41 PM
CHAIR COSTELLO announced the consideration of HB 149 am. "An Act
relating to an amendment of the articles of incorporation of
certain Native corporations to establish a lower quorum
requirement for shareholder meetings." She noted this was the
second hearing and public testimony was closed.
She asked if there were questions for the sponsor's staff, Mr.
Craft.
SENATOR STEVENS asked if the bill changes anything other than
the quorum requirements.
MR. CRAFT answered no; the bill is narrowly focused on that
issue.
12:35:48 PM
SENATOR GIESSEL moved to report HB 149 am, labeled 29-
LS0534\A.A, from committee with individual recommendations and
attached fiscal note.
CHAIR COSTELLO announced that without objection HB 149 am is
reported from the Senate Labor and Commerce Standing Committee.
12:36:48 PM
At ease
SB 58-TRANSPORT NETWORK SVES. & WORKERS COMP
12:37:49 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 58. "An Act relating to workers'
compensation and transportation network companies; and providing
for an effective date." She noted that this was the second
hearing and public testimony was open. She asked for a motion to
adopt the proposed committee substitute.
12:38:01 PM
SENATOR GIESSEL motioned to adopt the CS for SB 58, labeled 29-
LS0616\N, as the working document.
CHAIR COSTELLO objected for discussion purposes.
BRANDON BREFCZYNSKI, Staff, Senator Bill Stoltze, delivered the
following sectional analysis for the CS for SB 58:
Section 1: Amends AS 21.96 by adding a new section
21.96.018 Transportation network company insurance
provisions
Insurers may exclude coverage offered under a policy
of an owner or operator of a personal vehicle while
logged onto a transportation network company digital
network or engaged in a prearranged ride. Exclusions
of this section apply regardless of the requirements
under AS 28.20. This section does not require or
preclude a personal automobile insurance policy to
provide coverage while the driver is logged onto the
network or engaged in a prearranged ride. Holds
insurers not liable for excluding coverage of under a
personal insurance policy while logged onto a digital
network or engaging in a prearranged ride. Requires
cooperation of transportation network companies and
insurers during a claims investigation.
Section 2: Amends AS 21.96 by adding new section to
provide the following definitions:
· Digital network
· Personal vehicle
· Prearranged ride
· Transportation network company
· Transportation network company driver
· Transportation network company rider
Section 3: Amends AS 23.30.230(a) by adding new
language to exempt transportation network company
drivers and horse carriage operator from the Workers'
Compensation Act.
Section 4: Amends AS 23.30.230(c) by adding new
definitions.
Section 5: Amends AS 28 by adding a new chapter
Chapter 23 Transportation Network Companies and
Drivers
AS 28.23.010. Financial Responsibility of
transportation network companies.
Requires either the transportation network company
driver or transportation network company on behalf of
the driver to maintain primary automobile insurance
while logged onto the digital network or while
engaging in a prearranged ride. Institutes insurance
requirements for when drivers are logged into a
digital network and engaging in a prearranged ride.
Requires the transportation network company to provide
insurance if the driver's insurance has lapsed.
Required insurance may be placed with an insurer
licensed under AS 21.09.010 or AS 21.34. Insurance
requirements of this section satisfy the requirements
of AS 28.20. Requires proof of insurance.
AS 28.23.015. Transportation network company
automobile insurance disclosures.
Requires a transportation network company to disclose
in writing to transportation network company drivers
the insurance coverage provided while the driver uses
a personal vehicle in connection to a digital network
or while engaged in a prearranged ride, and that the
driver's personal insurance may not provide coverage
when logged onto a digital network or engaging in a
prearranged ride.
AS 28.23.200 Definitions
Provides new definitions for AS 28.23.
Section 6: Applicability clause.
Section 7: Retroactivity clause.
Section 8: Section 5 effective date.
Section 9: Immediate effective date for all sections
excluding section 8.
12:40:21 PM
SENATOR MEYER joined the committee.
12:42:28 PM
CHAIR COSTELLO removed her objection and version N was before
the committee.
SENATOR STEVENS asked how it works to transition from personal
to company insurance.
MR. BREFCZYNSKI explained that a driver is operating under
his/her personal insurance until he/she logs onto the app and is
seeking passengers. After that he/she is covered under a $50,000
death and bodily injury policy, $100,000 for death and bodily
injury for each incident, and $25,000 property damage provided
through the transportation network company. Once the driver has
accepted a rider, he/she is covered by a $1 million insurance
policy provided through the transportation network company
(TNC). These provisions are in Section 5. The insurance reverts
to the smaller policy once the rider is dropped off. If the
driver is no longer looking for a rider and turns the app off,
the insurance reverts to the driver's personal insurance.
SENATOR STEVENS asked if a driver is covered under his/her
personal insurance once they've logged onto the app.
MR. BREFCZYNSKI directed attention to Section 1 that says that
insurers have the option of excluding coverage when a driver is
logged onto the app or covered by a transportation network
company policy.
12:44:59 PM
CHAIR COSTELLO asked what would keep a person from dropping
their personal insurance and instead logging onto the app any
time they're driving.
MR. BREFCZYNSKI explained that state law requires drivers to
carry insurance for their private vehicle and transportation
network companies like Uber have requirements for someone to
become a driver. Insurance is one of the requirements.
CHAIR COSTELLO asked if there are protections to keep a driver
from abusing the use of the TNC insurance by logging on when
he/she didn't intend to pick up a rider.
MR. BREFCZYNSKI deferred the question to Uber.
CHAIR COSTELLO asked him to provide some background on the horse
carriage provision.
12:47:24 PM
MR. BREFCZYNSKI explained that Senator Stoltze has constituents
in his district that operate horse carriage services and he
decided they should be exempted.
CHAIR COSTELLO opened public testimony.
12:48:52 PM
ARMAND FELICIANO, Property Casualty Insurers Association of
America, testified in support of the CS for SB 58. He said the
language in the bill is part of a national agreement. Sections 1
and 5 address insurance gaps that were of concern and now will
be good for drivers, passengers, and the public because it
clarifies the law regarding insurance. The bill is flexible and
accommodates innovation and provides adequate disclosure to
drivers. As written, the bill protects liability insurance and
is a good public policy that provides insurance whenever an Uber
driver operates in Alaska.
Referencing previous questions, he explained that the insurance
falls into two periods. This bill would make it clear that if
someone is logged on without a passenger coverage could come
either from personal insurance or it could be provided by the
TNC's or a cross between a commercial and personal policy. Once
a passenger gets in the car, the TNC policy is in force.
CHAIR COSTELLO asked if there is a way that the driver indicates
on the app that he/she has a passenger.
MR. FELICIANO confirmed that the driver indicates in the app
that he/she has accepted a passenger and is on the way to pick
them up. There's an electronic record.
12:52:10 PM
CARLA JACOBS, Policy Team, Uber Technologies, Chicago, Illinois,
testified in support of the CS for SB 58. She agreed with Mr.
Feliciano that the language in the bill is part of a national
agreement that multiple states have adopted for transportation
network company insurance. The bill now provides regulatory
authority for TNC insurance and defines TNC affiliated drivers
as independent contractors.
MS. JACOBS explained that Uber is a technology platform that
connects riders with the nearest driver through a cashless
transaction. The way the process works is that drivers can apply
for an online platform. They submit information including their
driver's license, vehicle registration, insurance, and
inspection form. The applicant undergoes a thorough background
check conducted by an accredited third party. Each driver then
gets a 19-point vehicle inspection by a local certified
mechanic. The driver then partners with the Uber platform and
has the ability to log onto the platform anytime. She noted
that, on average, partners use the platform 20 hours a month.
Drivers receive requests directly from riders, not through a
dispatch service, and can choose whether to accept or not.
Partners take home 80 percent of each fare, 20 percent goes to
Uber for the use of the platform and drivers receive a 1099 form
at the end of each year. In cities where multiple TNCs operate,
the partner drivers have the freedom to partner with multiple
platforms.
12:56:39 PM
SENATOR STEVENS asked what impact Uber has had on independent
taxicab companies.
MS. JACOBS replied it varies from city to city, but often there
has been a positive impact because taxi drivers are able to
supplement their income by driving a cab and also partnering
with Uber. In cities such as Milwaukie where there was a limit
on the number of taxicab permits available, Uber worked with the
city to change the permitting structure to accommodate TNCs as
well as additional taxicab permits.
SENATOR MEYER asked what, other than use of the app and
insurance, Uber provides its drivers for taking 20 percent of
the fare.
MS. JACOBS reiterated the previous testimony that insurance can
be provided by the individual driver, the TNC or a combination
of the two.
SENATOR MEYER asked if he as a TNC driver would be covered by
the TNC insurance if he turned the app on and drove to the
grocery store for personal business.
MS. JACOBS replied it would depend on the driver's situation. If
the driver had an insurance policy that allowed coverage during
period 1 when the application is on and a ride has not been
accepted, then coverage would be through that driver's policy.
If the driver's personal insurance didn't provide coverage
during period 1, then coverage would be through Uber's policy.
1:01:46 PM
CHAIR COSTELLO closed public testimony and solicited a motion.
1:01:57 PM
SENATOR GIESSEL motioned to report the CS for SB 58, labeled 29-
LS0616\N, from committee with individual recommendations and
attached fiscal note(s).
CHAIR COSTELLO announced that without objection, CSSB 58(L&C) is
reported from the Senate Labor and Commerce Standing Committee.
1:02:14 PM
At ease.
SB 107-INSURANCE; RISK MG'T; HOLDING COMPANIES
1:07:04 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 107. "An Act relating to insurance; relating
to risk based capital for domestic insurers and fraternal
benefit societies, including provisions related to insurers
subject to risk based capital and action level event
requirements; relating to review by the director of insurance of
an insurer's risk based capital plan; relating to
confidentiality and sharing of certain information submitted to
the director of insurance; relating to evaluating an insurance
holding company and the acquisition of control of or merger with
a domestic insurer; relating to risk based capital, risk
management, and own risk and solvency assessments of insurers;
clarifying provisions related to risk based capital plans;
relating to exemptions by the director of insurance for certain
domestic and casualty insurers from risk based capital
requirements; relating to insurance holding companies, including
filing requirements, divestiture, content of statements,
notifications, and hearings; relating to registration
requirements of insurers; relating to transactions within an
insurance holding company system or transactions involving a
domestic insurer; relating to management and examination of
domestic insurers that are part of an insurance holding company
system; adding provisions relating to participation by the
director of insurance in a supervisory college; relating to
civil and criminal penalties for violations by insurers and
individuals; relating to provisions for risk management and own
risk and solvency assessments by insurers; relating to operating
requirements for controlling insurance producers; relating to
producer-controlled insurers; adding and amending definitions
related to insurers; and providing for an effective date." She
noted that this was the first hearing.
1:07:40 PM
WESTON EILER, Aide to the Senate Labor and Commerce Committee,
introduced SB 107 on behalf of the Labor and Commerce Committee
speaking briefly to the following sponsor statement:
The primary focus of the finance section of the
Division of Insurance is the financial regulation of
domestic and foreign insurers for the benefit and
protection of Alaska policyholders. Requirements for
financial supervision of insurers licensed in Alaska
are imposed by Alaska statutes and regulations. Much
of the statutory framework governing this effort comes
from model laws passed by the National Association of
Insurance Commissioners (NAIC). The financial section
is unique in the Division as it is the only section
that is accredited by the NAIC. The accreditation
program provides a process whereby solvency regulation
of multi-state insurance companies can be enhanced and
adequately monitored with an emphasis on:
· Adequate solvency laws and regulations in each
accredited state to protect consumers and
guarantee funds;
· Effective and efficient financial analysis and
examination processes;
· Appropriate organizational and personnel
practices; and
· Effective and efficient process regarding the
review of organization, licensing and change or
control of domestic insurance.
Being accredited provides a means whereby other states
will accept the examinations of Alaska's multi-state
insurers; and that we can accept the examinations of
non-domestic insurers licensed to sell in Alaska from
other accredited states without having to perform our
own examinations. Alaska has seven domestic insurers
and approximately 1,100 foreign insurers.
Finally, the importance of accreditation cannot be
understated as respects our commitment to state-based
regulation. Title V of the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (Dodd-
Frank), provided for the creation of the Federal
Insurance Office (FIO). The FIO's is charged with
monitoring the insurance industry (with the exception
of the health insurance industry) including
identifying activities within a sector that could
potentially contribute to a systemic crisis to the
broader financial system, the extent to which under-
served communities have access to affordable insurance
products and the sector's regulation. The FIO is
authorized to receive and collect data and information
on the insurance industry and can enter into
information sharing agreements with state regulators.
They also have the authority to require an insurer to
submit data to its office.
In 2013, the FIO released a mandated study titled "How
to Modernize and Improve the System of Insurance
Regulation in the United States". The report
acknowledges many of the strengths as well as the
successes of state-based insurance regulation.
Nonetheless, the framework has been set for federal
regulation if state-based regulation were to fail. It
is not thought that federal oversight of Alaska, or
any other states, will be in the best interest of the
states. However, the states are continually monitored
for adoption of and compliance of statutes regarding
financial solvency and other regulations promoting a
sound insurance industry that protects consumers. An
accredited state meets the criteria set by the NAIC
and accepted by the FIO.
MR. EILER deferred further introduction and explanation to Lori
Wing-Heier.
1:09:16 PM
At ease
1:11:06 PM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), stated she
would go through a PowerPoint presentation to frame the issue
addressed in SB 107. She said the issue of the bill relates to
the mission of the Division of Insurance, which is to regulate
the insurance industry to protect Alaskan consumers. The intent
of the bill is to ensure that the insurance companies doing
business in Alaska are solvent and whole and Alaskan consumers
are protected.
1:12:33 PM
MS. WING-HEIER spoke to the following points regarding state-
based regulation:
Unlike any other major industry, the individual state
governments are the primary regulators of the business
of insurance and are responsible for the safety and
soundness of the U.S. insurance system.
· In 1945, Congress passed the McCarran-Ferguson
Act (15 U.S.C. 1011 - 1015) which exempted: the
business of insurance from most federal
regulation. The Act provided that "[n]o Act of
Congress shall be construed to invalidate,
impair, or supersede any law by any State for
the purpose of regulating the business of
insurance, or which imposes a fee or tax upon
such business, unless such Act specifically
relates to the business of insurance."
· In the Act, Congress made clear its intent
stating that "the continued regulation and
taxation by the several States of the business
of insurance is in the public interest, and
silence on the part of Congress shall not be
construed to impose any barrier to the
regulation or taxation of such business by the
several States."
· Through the years, Congress has enacted
legislation specifically related to insurance
including flood insurance, crop insurance,
terrorism protection insurance, producer
licensing uniformity and reciprocity, uniform
standards for surplus lines eligibility and the
creation of the Federal Insurance Office (FIO)
which is, for the most part, a non-regulatory
agency.
· One of the reasons why the state-based system of
insurance regulation continues is that it has
worked.
· For example, during the 2007 - 2009 financial
crisis which hit hard the financial services
industry of which insurance is a part, the
United States Government Accountability Office,
in a 2013 report to Congress, noted "[t]he
effects of the financial crisis on insurers and
policyholders were generally limited, with a few
exceptions."
· The Independent Insurance Agents &
Brokers of America (IIABA) agreed stating in
a 2011 letter to the FIO: "Even during the
most tumultuous of times, state insurance
regulators ensure that insurers are solvent,
that claims are paid, and that consumers are
protected. IIABA remains dedicated to
preserving state insurance regulation."
MS. WING-HEIER said the McCarran-Ferguson Act put the
transaction of insurance under the states, taking it away from
federal regulation. State-based regulation holds today because
it works. An important fundamental of state-based regulation is
accreditation, which is looking for reciprocity in the solvency
standards amongst insurance companies that are domiciled in
Alaska and doing business outside Alaska or insurance companies
domiciled outside and doing business in Alaska. They are all
judged by the same standard. What this model legislation seeks
to ensure is that there is reciprocity among the statutes in the
other 55 jurisdictions - the states, territories, and the
District of Columbia.
1:15:49 PM
SENATOR ELLIS joined the committee.
SENATOR STEVENS asked if the division ensures that claims are
paid.
MS. WING-HEIER answered yes; insurance companies report in their
financials what they expect to pay and what they have paid.
She discussed the following points related to the National
Association of Insurance Commissioners:
· The National Association of Insurance
Commissioners (NAIC) is the U.S. standard-
setting and regulatory support organization
created and governed by the chief insurance
regulators from the 50 states, the District of
Columbia and five U.S. territories.
· Through the NAIC, state insurance regulators
establish standards and best practices, conduct
peer review, and coordinate their regulatory
oversight. NAIC members, together with the
central resources of the NAIC, form the national
system of state-based insurance regulation in
the U.S.
· While much of the business of insurance is local
in nature due to differences of risk and other
factors particular to a local area, the elected
or appointed state government officials who
oversee the regulation of insurance companies
and producers in their respective jurisdiction
(the members of the NAIC), recognize there often
is a need for national standards and/or
uniformity.
· The NAIC promotes national standards,
uniformity, reciprocity, and consistency at the
national level through the development of model
laws and regulations.
MS. WING-HEIER said the only time a state is required to adopt a
model is for an accreditation.
1:17:43 PM
CHAIR COSTELLO asked when the state last went through the
accreditation process.
MS. WING-HEIER replied it was in 2012 and the next accreditation
will be in 2017. A report is due in June, 2015 as to
accreditation status on the adoption of model laws.
She discussed the following points on the NAIC Model Law
Program:
· Much of the work of the NAIC is conducted through
its committees, task forces, working groups, or
subgroups and it is here where discussion most
likely begins in the consideration of a new model
law. However, these entities may not devote
resources to the actual development or drafting
of a model law unless it is determined that the
subject of the model law necessitates a minimum
national standard and/or requires uniformity
amongst all states.
· It also must be determined that the NAIC members
are committed to devoting significant regulator
and association resources to educate, communicate
and support a model that has been adopted by the
membership.
· Only model laws mandated by federal law are
exempt from these determinations.
· The model law development and drafting procedure
entails a rigorous process providing notice and
opportunity for consumer groups and industry to
comment.
· Both the parent committee with oversight for the
subject area of a model law and the entire
membership of the NAIC must adopt any proposed
model law by a two-thirds majority vote.
· The process of creating a national standard,
however, does not stop there. The decision to
implement each standard remains with the
individual states.
· Adoption of certain model laws are required if a
state insurance regulatory agency is to be
accredited under the NAIC financial regulation
standards & accreditation program.
MS. WING-HEIER relayed that Alaska sits on the Property and
Casualty Committee and the Market Regulation and Consumer
Affairs Committee. It also sits on 14 task forces, 3 liaison
committees and numerous working groups. She also vice-chairs the
American Indian and Alaska Native Liaison Committee. It's in
these committees that discussions come forward about what is
best for regulation. Once the laws come forward they have been
well vetted by all jurisdictions. They are brought out for both
industry and public comment.
1:19:03 PM
CHAIR COSTELLO asked how much time the division dedicates to the
efforts related to the NAIC.
MS. WING-HEIER replied the division tries to attend three
meetings a year. Additionally there are a lot of conference
committee calls and on occasion she'll send staff to the Kansas
City office if a new subject is coming out.
CHAIR COSTELLO asked how many other states have gone through the
process that Alaska is currently undertaking.
MS. WING-HEIER answered that all states have gone through the
process.
1:20:18 PM
MS. WING-HEIER explained that the mission of the NAIC financial
regulation standards and accreditation program is to establish
and maintain state regulator standards to promote sound
insurance company financial solvency regulation. This is a
critical function for consumer protection because an insurance
company that isn't financially solvent, cannot meet its
contractual policy obligations to pay claims in the event of a
loss.
She said the regulation and accreditations standards are
important because Alaska has about 1,100 insurance companies
that do business in the state. She continued to review the
following points:
· The accreditation program provides a process
whereby solvency regulations of multi-state
insurance companies can be enhanced and
adequately monitored.
· This is important, particularly for a small state
such as Alaska, because if another state meets
the accreditation standards of the NAIC, then
Alaska can have the confidence that insurance
companies operating here but domiciled in another
state are being adequately regulated for
financial solvency by the domiciliary state.
· Similarly, if Alaska is not accredited, other
states can no longer rely on examinations
performed by the division on insurers domiciled
here. Those insurers would become subject to
examinations by all states in which they do
business which would be a significant financial
burden.
· Alaskan consumers could be negatively impacted as
companies may decide not to operate in Alaska due
to the duplicative examination costs incurred by
operating in a non-accredited state.
1:21:22 PM
MS. WING-HEIER explained that accreditation process is for a
five-year period and the division's next full accreditation
review will be in 2017. A key component of the financial
solvency regulation accreditation review is a determination by
the NAIC accreditation review team that the state has the
necessary solvency laws and regulations to protect consumers and
guarantee funds.
She stated that the first part of the bill is about risk-based
capital (RBC), which is a method of measuring the minimum amount
of capital that is appropriate to support an insurer's overall
business operations. This surplus capital provides a cushion to
an insurer against insolvency. It is also referred to as the
insurance company's elastic measure. RBC limits the amount of
risk a company can take so a company with a higher amount of
risk has to hold a higher amount of capital.
Risk-based capital has two main components: 1) it is a formula
with an established hypothetical minimum capital level that is
compared to an insurance company's actual capital level; and 2)
the model law grants automatic authority to the state insurance
regulator to take specific actions based on the level of
impairment. The model addresses insurer reporting requirements,
the hearing process, and confidentiality concerns. It includes
provisions for exemptions, foreign insurers and immunity. The
division is updating the risk-based capital and the new
standards are effective January 1, 2016. These changes appear in
the first eight pages of the bill and amend chapter 14 in AS 21.
1:23:20 PM
MS. WING-HEIER said the second part of the bill updates the
insurance holding company chapter in AS 21 to reflect the status
or organizational structure of holding companies, and looking at
what a holding company may have besides an insurance company. If
there is more than one insurance company within that holding
company, it would be possible to see the finances of each
company to see that each can stand on its own and is not
subsidized by another company. She displayed and briefly
reviewed the following points:
· Prior to the 2010 model revisions, the model law focused on
protecting the solvency of insurers within an insurance
holding company system, by monitoring transactions between
insurers and their affiliates, dividends declared by
insurers and acquisitions of insurers.
· The model pertains to subsidiaries of insurers, acquisition
of control or merger with domestic insurers, acquisitions
involving insurers not otherwise covered, registration of
insurers, and standards and management of an insurer within
a holding company system.
· The model revisions are aimed at assessing the "enterprise
risk" within the entire insurance holding company system
(including the risk caused by non-insurer affiliates) and
determining the impact of such risk upon the solvency of
insurers within the insurance group.
· To accomplish this goal, the revisions enhance a chief
insurance regulator's ability to supervise the insurance
group by mandating reporting of information regarding the
solvency and risk of an insurer's non-insurer affiliates
and allowing examination of such entities.
· This portion of the bill incorporates changes made to Model
Law 440, Model Insurance Holding Company System Regulatory
Act.
CHAIR COSTELLO asked if the information about companies within a
holding company is sent to the division in hard copy or
available online.
MS. WING-HEIER replied there are some aspects that have to be
reported to the division. With the amendments, insurers will now
have to report to the division through a risk management
framework called an own risk solvency. The division also does
physical financial examinations of its insurers each year.
1:24:44 PM
MS. WING-HEIER discussed risk management and owner risk solvency
assessment outlined in the new chapter AS 21.23. She explained
that it puts the onus on the insurance companies to report to
the division on confidential matters involving their enterprise
risk management. She reviewed the following points:
· This new model requires insurers to maintain a risk
management framework and complete an ORSA Summary Report to
be filed with the chief insurance regulator of the
domiciliary state, unless exempt.
· The confidential filing summarizes the insurer's or group's
risk management framework, assessment of risk exposures,
group risk capital and prospective solvency assessment.
· These reports represent a proactive approach by providing
chief insurance regulators with an additional tool to
evaluate the prospective solvency of an insurer.
· This portion of the bill adopts Model Law 505, Risk
Management And Own Risk And Solvency Assessment Model Act.
CHAIR COSTELLO asked if she and the division staff sign
confidentiality agreements.
MS. WING-HEIER answered that confidentiality is built into the
insurance statutes in AS 21.06.060. The bill references the
current standards.
CHAIR COSTELLO asked how that applies to individual state
employees.
MS. WING-HEIER replied it would apply to all employees within
the division and all division contractors.
She reviewed the updates in chapter 27 relating to the operating
requirements for controlling insurance producers. She explained
that it sets out the parameters for the owner of an insurance
company who is also selling the insurance of the insurance
company. The amendments dictate when to draw the line between
the owner and agent of an insurance company. She displayed the
following points:
· There are situations in which a producer soliciting,
negotiating or procuring the making of an insurance
contract on behalf of an insured also controls directly or
indirectly the insurance company.
· In such situations, additional guidelines for business
between controlled insurers and controlling producers are
necessary for fiduciary and oversight reasons.
· This model requires specific contract provisions to be
contained in controlling producer/controlled insurer
contracts.
· This portion of the bill incorporates amendments to Model
Law 325, Business Transacted With Producer Controlled
Property/Casualty Insurer Act.
SENATOR STEVENS asked if she can deny insurance companies from
doing business in Alaska.
MS. WING-HEIER answered yes.
SENATOR STEVENS referenced her duty to protect the consumer and
asked if she looks at more than just solvency in determining
whether or not an insurance company can do business in Alaska.
MS. WING-HEIER explained that for a company to receive a
certificate of authority to conduct business within the state,
it has to meet certain financial solvency requirements. After it
is allowed to do business, it is monitored by best practices to
ensure that consumers are treated fairly.
CHAIR COSTELLO asked for the rationale for including the NAIC
model Risk Management and Own Risk and Solvency Assessment Act
in a new chapter. She asked if it was uncommon to add a new
chapter and questioned whether it was needed.
MS. WING-HEIER explained that the NAIC model law provides an
opportunity for the division as financial examiners to be
proactive looking forward 3-5 years at what an insurance company
may be planning regarding acquisitions, corporate governance and
potential growth. Under the current procedure the financial
examination is looking back, which only allows an opportunity to
be reactive. She acknowledged that while it's rare to add a new
chapter, it's not unheard of.
CHAIR COSTELLO asked if a particular situation precipitated the
change.
MS. WING-HEIER answered no and added that the new chapter was
created because it didn't particularly fit within any of the
existing chapters.
1:31:49 PM
SENATOR ELLIS asked her position on rate review authority by the
Division of Insurance.
MS. WING-HEIER replied the division has rate review authority
over most insurance products that come into the state and they
take this seriously. They have a consulting actuary and an
actuary on staff. The reviews are done very carefully and
according to a standard to ensure that the consumer isn't paying
too much or too little. "[The rate] has to come through so many
days in advance, we respond, they cannot be inadequate, they
cannot be excessive and they cannot be unfairly discriminatory."
Some people think these terms are ambiguous because it depends
on perspective, but when she looks at a rate she follows the
statute and is looking at whether it makes the company solvent
without being excessive.
SENATOR ELLIS discussed the sentiment among some legislators in
years past that previous directors of insurance did just cursory
reviews of the filings and requests from insurance companies,
particularly with regard to health insurance. He related that
several years ago he was confounded when then insurance director
Linda Hall turned down federal funds to allow states to figure
out why consumers were being charged certain rates for health
insurance. He said she may have been acting at the direction of
the governor, but it was almost willful ignorance to turn down
the ability to dig into the facts and come up with an answer for
consumers. He encouraged Ms. Wing-Heier take advantage of any
opportunity to learn the facts about why health insurance costs
in Alaska are so high.
MS. WING-HEIER said the point is well taken.
1:37:36 PM
SENATOR MEYER asked if the insurance market in Alaska is
competitive.
MS. WING-HEIER replied it is competitive in some lines of
business such as auto and homeowner, but not others. The market
in health care is limited and it is not competitive.
SENATOR MEYER asked if she gives approval when one company
transfers its customers to another because of bankruptcy, or if
it happens automatically.
MS. WING-HEIER replied the matter goes through the division but
they don't approve it. The claims go through either the
guarantee association for life and health or the guarantee
association for property and casualty. The insurance companies
and the consumers end up paying the claims of the insolvent
insurers. These provisions are in the insurance statutes.
1:39:38 PM
SENATOR GIESSEL asked her thoughts as to whether it would lower
health insurance costs if Alaskans were able to buy their health
insurance across state lines or if insurance rates are set based
on cost.
MS. WING-HEIER said she has been involved in several meetings
with the Department of Health and Social Services (DHSS),
Department of Labor and Workforce Development (DOLWD), and the
Department of Administration to look at the issue in a more
global way because it is an issue that the state faces as a
whole. It is not a silo. The cost of health care in Alaska is
very high and someone is paying for it through one program or
another.
1:41:57 PM
SENATOR ELLIS requested the committee keep track of this issue
and have an ongoing dialog with the director because this has
been a topic of concern for many years. He asked Ms. Wing-Heier
if it is her view that health insurers do not want to write
business in Alaska because it is a very small market and the
cost of health care is so high it is out of line with the rest
of the country.
MS. WING-HEIER agreed that Alaska is a small market and the
costs of health care are very high.
SENATOR ELLIS reiterated his request that the committee work
with the director to examine the reasons for the exorbitant and
escalating health care costs in Alaska that are driving both the
private market and public budgets.
CHAIR COSTELLO said she took note of the request and would
follow up.
SENATOR GIESSEL asked Ms. Wing-Heier if she was also partnering
with the health care commission, which has done studies on the
topic of health care in Alaska.
MS. WING-HEIER answered yes through the Department of Health and
Social Services.
1:44:18 PM
CHAIR COSTELLO asked if transparency can be legislated so that
consumers will know the cost of health care services when they
are shopping.
MS. WING-HEIER replied the Affordable Care Act has provisions
where the costs have to be public now. By statute rates in
Alaska have to be public the day they are effective.
1:46:47 PM
CHAIR COSTELLO related her experience calling different doctors
in Fairbanks and Anchorage to find out what it would cost to
treat a broken arm. The estimates ranged widely. She voiced
frustration on behalf of Alaskans who have no idea what the
final cost will be for a procedure and they keep getting bills
from people they didn't know had a role in the process.
MS. WING-HEIER said she'd take that under advisement.
CHAIR COSTELLO asked if she would provide a color coded
sectional showing the new chapter, the sections needed for
accreditation, the model legislation, and a combination of the
three.
MS. WING-HEIER agreed.
1:47:50 PM
CHAIR COSTELLO found no public testimony and closed it.
1:48:07 PM
CHAIR COSTELLO announced that she would hold SB 107 in committee
for further consideration.
1:48:20 PM
At ease
SB 99-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
1:51:32 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 99. "An Act relating to alcoholic beverages;
relating to the regulation of manufacturers, wholesalers, and
retailers of alcoholic beverages; relating to licenses,
endorsements, and permits involving alcoholic beverages;
relating to the Alcoholic Beverage Control Board; relating to
offenses involving alcoholic beverages; relating to the offense
of minor consuming; relating to revocation of a driver's license
for a minor consuming offense; relating to the effect of the
revocation of a driver's license for a minor consuming offense
on a motor vehicle liability insurance policy; and providing for
an effective date." She noted that this was the second hearing
and public testimony was open. She noted that the sponsor's
staff and Carmen Gutierrez would tag team to present the new
sectional for the bill.
1:52:32 PM
CHUCK KOPP, Staff, Senator Peter Micciche, informed the
committee that the Title 4 rewrite accomplishes its overall goal
by modifying the role and composition of the ABC Board,
clarifying and simplifying the three-tier system of alcohol
regulations, and changing the penalty provisions. He began
reviewing the sections of the bill.
Section 1 repeals and reenacts AS 04.06.020, relating to the
appointment and qualifications of members of the Alcoholic
Beverage Control Board. There will be one member from public
safety, one member from public health, one member who has lived
in a rural area within the last five years, and not more than
two members may be actively involved in the alcohol industry.
This section also allows the governor to take into consideration
the experience of the executive director and appoint a public
member to offset that experience/influence.
1:54:08 PM
CHAIR COSTELLO asked for an explanation of the composition of
the current ABC Board.
MR. KOPP read AS 04.06.020. The board consists of five members:
two members shall be actively engaged in the industry, three
members will represent the general public, one of which shall
reside in a rural area.
Section 2 changes "chairman" to "chair" in AS 04.06.030.
Section 3 changes "chairman" to "chair" in AS 04.06.050.
Section 4 amends AS 04.06.075 by adding a subsection requiring
the director to prepare a budget for the board. This includes
everything for the administration and enforcement of Title 4 as
well as education, training, and prevention activities.
Section 5 conforms a reference in AS 04.06.080 to reflect the
relocation of AS 04.11.070 to AS 04.06.090(b); adds the
endorsements, which expand the boundaries of a licensed premises
or the authorized activities.
Section 6 amends AS 04.06.090(b) to include the language of AS
04.11.070 relating to the exclusive power of the board to issue,
renew, transfer, relocate, suspend, or revoke a license, and
adds references to endorsements. AS 04.11.070 is repealed.
Section 7 adds new subsections to AS 04.06.090, relating to the
powers and duties of the board. Subsection (f) requires the
board to develop a comprehensive plan to educate the public on
the responsible use of alcoholic beverages and update the plan
annually. Subsection (g) requires the board to review the fees
established in AS 04 and regulations adopted under AS 04 at
least every 10 years. Subsection (h) provides that the board may
prepare an advisory opinion on legislation amending AS 04.
Section 8 amends AS 04.06.095, relating to the statewide
database on shipments to purchasers in local option areas to
require retention of the records in the database for 10 years.
It adds a reference to the new package store shipping
endorsement.
Section 9 adds a subsection to AS 04.06.095 requiring the board
to produce a report of aggregate regional and statewide data
from the database, including information on the volume of
alcohol shipped to communities and the region from which the
shipments originated.
1:58:29 PM
CARMEN GUTIERREZ, Contractor, Alaska Mental Health Trust
Authority, Anchorage, Alaska, continued the sectional analysis
of SB 99.
Section 10 revises various provisions in the existing licensing
provisions found in AS 04.11.080 - 04.11.255 and relocates them
to a new chapter, AS 04.09. It specifies fees for each license
type, and penalties for noncompliance and operating without the
appropriate license. It separates the provisions for
manufacturing of alcoholic beverages and retail sales and
sampling by manufacturers. It adds a definition of "packaging"
applicable to manufacturer licenses. Existing retail operations
of manufacturers are grandfathered for eight years. It adds a
beverage dispensary tourism license and a seasonal restaurant or
eating place tourism license. It codifies the theatre license
currently provided for in regulation.
This section codifies endorsement and permit provisions. Some of
the endorsement and permit provisions are drawn from current
licensing statutes; some are based on endorsements and permits
provided for in regulations. It replaces duplicate licenses
under existing statute with a new multiple fixed counter
endorsement, but grandfathers existing duplicate licenses for
eight years. It creates a new endorsement permitting sampling at
package stores.
MS. GUTIERREZ explained that the new chapter was created because
the revisions to the licensing chapter were significant and this
was the best way to implement the badly needed reorganized
structure. She reminded the committee that Alaska's alcohol
licensing system is based on a three-tier system of regulation.
The three types of licenses the board may issue are manufacture,
wholesale and retail.
She highlighted the major changes that the new chapter 09
provides. All the licensing types available to manufacturers
continue to exist; they are brewery, winery, and distillery.
There continues to be wholesale licenses; these are general
wholesale and limited malt beverage and wine wholesale. Then
there are the retail licenses. The new chapter simplifies the
manufacturing licenses by removing bottling works and brewpubs.
Bottling works is covered under the winery license and the
brewery manufacturing license incorporates most of the brewpub
provisions.
AS 04.09.270 adds brewery retail licenses specifically for
manufacturers to permit the opportunity for onsite consumption
and offsite sales. It also provides a separate endorsement for
free samples. This reflects the change in the market while
ensuring that the market between the retailers and the
manufacturers does not become lopsided. It provides equity among
manufactures and permits wineries and breweries to have a
restaurant or eating place license. This chapter also removes
the prohibited financial interest restrictions in AS 04.11.450.
The provision currently does not permit a manufacturer to hold a
restaurant or eating place license.
The new chapter 09 makes population limitations applicable only
to retail tier licenses. This excludes tourism and public
convenience license provisions. It also places a permanent
moratorium on issuing new public convenience licenses and
replaces the existing ones with a new license type that allows
for seasonal restaurant or eating place licenses in small
communities and unincorporated areas. This reflects the increase
in Alaska's population during the tourism season. The new
chapter clarifies the parameters that would allow and require
multiple fixed counters for an established dispensary license.
This eliminates the duplicate licensing system, but the existing
duplicates are grandfathered.
2:05:09 PM
The new chapter 09 adds a beverage dispensary tourism license
and seasonal restaurant or eating place tourism license in
recognition of summer travelers. The chapter ensures that the
definition of recreation license is applied to current and
potential recreational site holders. There is a provision to
review and revoke licenses that do not meet the plain language
of the definition of "recreation." The chapter updates every
licensee provision as well as the endorsements and permits, the
fees are updated to ensure they are proportionate to the
administrative cost of each kind of license. The intent is that
they will be sufficient to cover the ABC Board statutorily
required activities. The fees have been adjusted for both
wholesale license types.
2:07:27 PM
CHAIR COSTELLO asked for confirmation that she was still
discussing Section 10.
MS. GUTIERREZ said yes and that it probably requires more
explanation than any other section.
MR. KOPP pointed out that Section 10 is found on pages 5-44.
MS. GUTIERREZ continued to discuss Section 10. She explained
that AS 04.09.320 through AS 04.09.340, starting on page 25,
line 30, specify the penalties for noncompliance and operating
without a license.
The provisions related to the endorsements are found on pages
26-38 in AS 04.09.360 through AS 04.09.470. Endorsements are
intended to expand the boundaries of a licensed premise for
authorized additional activity.
AS 04.09.500 through AS 04.09.600 relate to permits, placing
them all in statute rather than regulation. The language in
chapter 9 is clear that the ABC Board may only issue licenses,
endorsements, and permits that are outlined in statute.
2:12:17 PM
Section 11 amends AS 04.11.010(a) to eliminate references to
manufacture and sale, and limit the prohibition in the
subsection to possession for barter, bartering, and trafficking
of alcoholic beverages. This reflects that the prohibition is in
chapter 09.
Section 12 amends AS 04.11.010(b) to change a reference from AS
04.11.150, the former location of the package store license
section, to AS 04.09.420, the new package store shipping
endorsement section.
Section 13 amends AS 04.11.010(c), relating to possession or
transport of a certain quantity of alcoholic beverages creating
a presumption that the alcoholic beverages were possessed or
transported for barter or sale. It amends the presumption to
include possession for barter, and possession for sale under AS
04.09.060, 04.09.070, 04.09.145, 04.09.320, or 04.09.3 30.
Section 14 amends AS 04.11.015(b) to specify a $100 fine for
violation of subsection (a). This is to ensure that the courts
are not able to suspend those fines and that a suspended
imposition of sentence could not be imposed by the court.
Section 15 adds a new subsection AS 04.11.015(c), changing the
penalty for purchasing alcoholic beverages from a non-licensee
from the standard penalty for a violation prescribed under AS
12.55 to a fine of $100 per liter purchased.
2:15:08 PM
Section 16 adds a specific criminal penalty provision for
transferring a license or permit or interest not in accordance
with AS 04.11.040. The penalty is a $100 fine.
Section 17 adds specific criminal penalty provisions making
failure of an LLC to report a change in member interest or
manager as required under AS 04.11.045 a violation.
Section 18 adds a specific criminal penalty provision making
failure of a corporation to report a stock transfer or change of
officers or board members as required under AS 04.11.050 a
violation.
Section 19 adds specific criminal penalty provisions making
failure by a partnership to report a transfer of partnership
interest or change of general partner as required under AS
04.11.055 a violation.
Section 20 changes a reference in AS 04.11.060 to reflect the
new section number of the general wholesale license statute.
Section 21 adds two new subsections to AS 04.11.060, defining
failure to comply with subsection (a) as a violation, with each
liter or fraction of a liter sold as a separate violation
punishable by a $100 fine.
SENATOR MEYER referenced Section 16 and questioned whether a
$100 fine is enough to deter the unwanted behavior.
MS. GUTIERREZ said the penalties in Sections 15-19 are criminal
penalties, but the ABC Board has administrative remedies that
can be very severe, including suspension or revocation of a
license and an administrative fine of up to $50,000. The
workgroup involved in the rewrite of Title 4 sanctions believe
that these kinds of violations can be better addressed by the
ABC Board than the criminal justice system.
2:19:49 PM
VICE CHAIR GIESSEL assumed the gavel.
2:20:52 PM
MR. KOPP continued the sectional analysis for SB 99.
Section 22 amends AS 04.11.260, relating to applications, to
apply to endorsements as well as licenses and permits. It
requires applications to include an annotated illustration of
the premises. It adds new requirements for various specific
types of endorsements and permits.
Section 23 amends AS 04.11.270 to cover renewal of the specified
endorsements and permit as well as licenses.
Section 24 amends AS 04.11.295(a) relating to fingerprints and
criminal justice information required for issuance and renewal
of a conditional contractor's permit.
Section 25 amends AS 04.l1.295(b)(l) relating to applications
for issuance and renewal of a conditional contractor's permit.
These are two-year licenses for construction sites in remote
areas and inside the boundaries of military reservations not
inside a municipality.
Section 26 adds a new section AS 04.11.315 relating to the crime
of making a false statement on an application under AS 04.11.260
- 04.11.310. The existing AS 04.16.210, relating to false
statements on applications, is repealed. The penalty for perjury
remains a class B felony.
Section 27 amends AS 04.11.320(a) relating to denial of licenses
by the board to encompass denial of endorsements.
Section 28 amends AS 04.11.330(a), relating to denial of an
application for renewal of a license, to include endorsements.
It changes a reference from AS 04.11.400(d) to the new AS
04.09.300 and 310, requiring the board to decline an application
for renewal of a beverage dispensary tourism license or a
seasonal restaurant or eating place tourism license if the board
finds the license has not encouraged tourist trade.
Section 29 amends AS 04.11.330(d) to conform a reference to a
section that is now in AS 04.09.
Section 30 amends AS 04.11.340 relating to grounds for refusal
of an application for relocation of a license to add a reference
to the new AS 04.09.240. It requires denial of applications to
relocate outdoor recreation lodge licenses.
Section 31 changes references in AS 04.11.360(9), the statute
relating to denial of a request to transfer a license to another
person. This statute requires denial of requests to transfer
outdoor recreation lodge licenses. It deletes paragraph (10)
relating to brewpubs because AS 04.11.135 is repealed.
2:24:33 PM
MS. GUTIERRES continued the sectional analysis.
Section 32 amends AS 04.11.365 relating to licensed premises in
residential housing developments owned or funded by the Alaska
Housing Finance Corporation to reflect the new restaurant
endorsement statute.
Section 33 amends AS 04.11.370, relating to suspension and
revocation of licenses and permits, to include endorsements.
Section 34 adds a reference to endorsements in AS 04.11.395,
relating to board imposed conditions on licenses, permits, and
endorsements.
Section 35 amends AS 04.11.400(a), relating to licenses and
population limits. It adds a limit of one brewery retail, winery
retail, or distillery retail license per [10,000] people. It
adds a radius to the population limit in paragraph (a)(l).
Section 36 repeals and reenacts AS 04.11.400(i). The subsection
currently excludes golf course licenses from the population
limits statute; the reenacted subsection includes a list of nine
license types and one permit type to which the requirements of
AS 04.11.400 do not apply. Those license types are listed on
page 57, lines 18-31,
Section 37 conforms a reference in AS 04.11.400(k).
Section 38 amends AS 04.11.450(b) to remove a reference to a
bottling works, since AS 04.11.120 is being repealed. It removes
a sentence relating to brewpubs, since AS 04.11.135, the brewpub
statute, is repealed. It adds a sentence prohibiting issuance of
a restaurant or eating place license to an owner of a wholesale
business or distillery.
Section 39 makes a conforming change to the name of a license in
AS 04.11.450(e).
Section 40 amends AS 04.11.470 to cover objections to the
issuance and renewal of endorsements.
Section 41 amends AS 04.11.480(a) to cover a local government
protest of the issuance, renewal, or operation of an
endorsement.
Section 42 amends AS 04.11.480(b) to add endorsements.
Section 43 amends AS 04.11.480(c) to cover local government
recommendations for conditions on the issuance or renewal of an
endorsement.
2:29:42 PM
MR. KOPP continued the sectional analysis.
Section 44 makes conforming changes to AS 04.11.491(a) that
speaks to the local option for a municipality and repeal of the
prohibition of importation and sale of alcoholic beverages. This
is one prohibition that the committee and the consortium decided
didn't make sense. AS 04.11.491(a)(4) is repealed in the
repealer section.
Section 45 makes conforming amendments to AS 04.11.491(b). The
repeal of paragraph (b)(3) is in the repealer section.
Section 46 makes conforming amendments to AS 04.11.491(d), the
wording requirements on ballots in local option elections.
Section 47 makes conforming amendments to AS 04.11.491(g), the
local options in both municipalities and established village
elections. Paragraph (g)(3) is repealed.
Section 48 amends AS 04.11.497 relating to the effect of
adoption of a prohibition on the sale of alcoholic beverages in
a local option area on existing licenses to conform references
to reflect renumbering. It expands the boundaries of the area
from five to 10 miles. It adds an exception permitting renewal
of existing outdoor recreation lodge licenses.
Section 49 amends AS 04.11.499(a) to delete references to
repealed paragraphs. It adds an exception to the prohibition on
importation for outdoor recreation lodges.
Section 50 creates an exception in AS 04.11.501(a) to the
prohibition on possession of alcohol in a dry community for
outdoor recreation lodge license holders, agents, employees, and
guests.
Section 51 adds a reference to AS 04.11.501(a) in AS
04.11.501(b). This addresses length of time before prohibition
of possession becomes effective after an election has occurred.
Section 52 amends AS 04.11.503, relating to the effect of a
local option election restricting sale on existing licenses, to
permit the board to renew existing outdoor recreation lodge
licenses, and provide that outdoor recreation lodge licenses are
not void 90 days after the results of a local option election
are certified. It also expands the boundary of the area from
five miles to 10 miles.
Section 53 amends AS 04.11.505(a) to change the local option
radius and permit renewal of existing outdoor recreation lodges
only in areas that opt to allow only licensed premises operated
by a municipality.
Section 54 amends AS 04.11.508(a) to expand the perimeter of a
local option area for an established village from five miles to
10 miles.
Section 55 conforms references in AS 04.11.509(b) to reflect the
repeal of AS 04.11.491(a)(4) and (b)(3). This section deals with
the notice of the results of a local option election. It
specifically reflects the repeal of both the municipal and
village sale and importation option
Section 56 amends AS 04.11.520 to limit the requirement of
notice to a local government to applications for issuance or
renewal of a license or endorsement, or transfer of a license to
another person or a new location.
Section 57 amends AS 04.11.535(a) to include endorsements and
permits, records of conviction, and judgments.
Section 58 amends AS 04.11.537, application of precedent, to
cover issuance and renewal of an endorsement.
Section 59 amends AS 04.11.540 to include endorsements.
Section 60 amends AS 04.11.560(b), relating to appeals to the
superior court, to include endorsements.
Section 61 amends AS 04.11.570, relating to refund and
forfeiture of fees, to include endorsements and permits.
Section 62 amends AS 04.11.580, relating to surrender and
destruction of a license, to add endorsements.
Section 63 amends AS 04.11.590(a), relating to disposition of
money, to include endorsements and permits.
2:37:25 PM
SENATOR STEVENS referred to page 63 and asked if he was reading
it correctly that even if the voters prohibit importation, an
outdoor recreational lodge could continue to import alcoholic
beverages.
MR. KOPP replied that is correct. The consortium agreed that
existing outdoor recreational lodges that hold a license are
grandfathered but the exception does not transfer to a
subsequent owner. He asked Ms. Gutierrez to confirm his answer.
MS. GUTIERREZ said the exception does not terminate after a
specified period of time.
SENATOR STEVENS questioned why there should be an exception for
a lodge if a community voted to be dry.
MR. KOPP asked Ms. Gutierrez if she recalled the discussion that
led to the exception.
MS. GUTIERREZ said the Local Option Subcommittee vetted the
question and decided that having lodges provide their customers
only with alcoholic beverages would not impinge on the intent of
a local option prohibition. Those lodges need the exception
because they are importing alcoholic beverages but they are not
selling to the general public. She said she wasn't involved in
that particular subcommittee but the exception was approved by
the entire steering committee.
2:43:18 PM
SENATOR STEVENS observed that the provision does not say that
only lodge guests would be served or that alcoholic beverages
would not be sold to the public. "Democracy is that if a
community decides they want no alcohol in their community,
you're leaving an opening for people that are not customers of
the lodge and also to the public." He questioned why the
language doesn't clearly say "customers only."
MS. GUTIERREZ directed attention to page 18, line 17-[20], which
is where the outdoor recreation lodge license exists. It permits
a holder of that license "to sell alcoholic beverages to a
registered overnight guest or off-duty staff of the lodge for
consumption on the licensed premises or in conjunction with
purchased outdoor recreation activities provided by the
licensee."
SENATOR STEVENS said he wouldn't pursue it but he did not agree
MR. KOPP suggested that Ms. Franklin or Mr. Jessee may have
supplementary information.
VICE CHAIR GIESSEL found neither were available and suggested
that Senator Stevens flag that for questions at a future
meeting.
2:46:45 PM
MS. GUTIERREZ continued the sectional analysis.
Section 64 changes terminology in AS 04.11.610 from "refund" to
"allocate," adds municipal reporting requirement. This relates
to the biannual fees that licensees pay and how that money is
allocated to municipalities. Subsection (b) is amended to
provide that if a municipality fails to provide a report of
Title 4 violations occurring in the municipality, the
municipality's allocation of licensing fees may be denied.
Section 65 amends AS 04.11.630(b) to require that endorsements
and permits be posted on the licensed or designated premises.
Section 66 amends AS 04.11.680(a), specifying a default term for
sampling endorsements and conditional contractor permits.
Section 67 amends AS 04.16.010(c), relating to entry on licensed
premises between five a.m. and eight a.m. to permit entry by a
person conducting business with the licensee, a person who is a
common carrier, and maintenance and construction workers.
Section 68 amends AS 04.16.010, relating to hours of sale and
presence on licensed premises, to add crime and penalty
subsections. It makes noncompliance a violation, punishable by a
fine of $100, with each hour or part of an hour constituting a
separate violation.
Section 69 amends AS 04.16.015(a) to include the concept of
"alcoholic drink" as defined in AS 04.21.080.
Section 70 amends AS 04.16.015, on pricing and marketing of
alcoholic beverages, to add crime and penalty subsections. It
makes noncompliance a violation, punishable by a fine of $50 per
alcoholic drink.
Section 71 adds a new AS 04.16.017, relating to unfair trade
practices. It is modeled on 27 U.S.C. 205.
2:52:06 PM
MR. KOPP continued the sectional analysis.
Section 72 adds subsections to AS 04.16.020 to make solicitation
of alcoholic beverages and purchase on behalf of another
violations, punishable by a fine of $100.
Section 73 adds references to AS 04.16.025(a), relating to
entering and remaining on premises where illegal sale, barter,
or trafficking of alcoholic beverages is taking place, to
include new sections on operating without a license.
Section 74 adds crime and penalty provisions to the existing AS
04.16.030 to make prohibited conduct relating to drunken persons
a violation, rather than a class A misdemeanor.
Section 75 amends AS 04.16.035 to apply the prohibition on
possession of ingredients for homebrew to all local option
areas, rather than just those that have adopted a prohibition on
sale, importation, and possession.
Section 76 adds new subsections to AS 04.16.035 specifying that
possession of homebrew ingredients is a class A misdemeanor.
Section 77 amends AS 04.16.040 to use the defined term "licensed
premises" rather than "premises licensed under this title."
Section 78 adds new subsections to AS 04.16.040 making access by
a drunken person to licensed premises a violation.
Section 79 adds new subsections to AS 04.16.045 to make
permitting unauthorized consumption on licensed premises a
violation; specifies that each drink consumed is a separate
violation punishable by a fine of $50.
Section 80 adds a subsection to AS 04.16.047 defining conduct
prohibited under (a) as a class A misdemeanor.
2:55:46 PM
MS. GUTIERREZ advised that virtually every act that violates a
provision of Title 4 is a class A misdemeanor. This change was
made because the committee determined that law enforcement was
not occurring when Title 4 was violated. She continued the
sectional analysis.
Section 81 amends AS 04.16.049(a), relating to access by minors
to licensed premises, to replace a reference to designation by
the board as a restaurant with a reference to the restaurant
endorsement issued under AS 04.09.410. It adds a reference to AS
04.09.180(g), permitting access to club premises by a person
under 21 years of age if no alcoholic beverages are present or
if the person has an active duty military card. Changes "age of
2l years" to "21 years of age" to conform to the current
drafting style.
Section 82 changes "age of 21 years" to "21 years of age" in AS
04.16.049(b) to conform to the current drafting style.
Section 83 amends AS 04.16.049(c) to replace a reference to
designation by the board as a restaurant with a reference to the
restaurant endorsement issued under AS 04.09.410 and to include
golf courses.
2:59:19 PM
Section 84 amends AS 04.16.049(d) to allow employment of persons
who are 18, 19, or 20 years old on golf courses.
Section 85 adds a new subsection (g) to AS 04.16.049 to permit
access by minors to golf courses for the purpose of playing
golf. It adds new subsections making unauthorized presence by a
minor on licensed premises a violation, punishable by a fine of
$500. The fine may be reduced by a court to $50 if the minor
shows proof of completion of an alcohol safety action program.
Section 86 repeals and reenacts AS 04.16.050 to make minor
consuming a violation.
There are conforming changes to AS 28.15.057(a), and the repeal
of AS 21.96.027, relating to motor vehicle insurance after
driver's license revocation under AS 04.16.050 (with a
conforming amendment to AS 21.36.210(a)), AS 28.15.181(h),
28.15.185(e), AS 47.12.030(b)(5), 47.12.060(b)(4) (with a
conforming amendment to AS 28.15.176, on administrative
revocation of driver's license), and AS 47.12.120(k).
3:03:46 PM
SENATOR STEVENS asked if alcohol safety action programs are
available in all communities.
MS. GUTIERREZ replied representatives with the Department of
Health and Social Services (DHSS) indicated that the department
will be able to provide the programs throughout the state,
although some may be through online or study at home programs.
SENATOR MEYER expressed concern that reducing the penalties for
minors to a violation and fine rather than a misdemeanor may
make youths think that alcohol offenses are not serious. He
asked if this is modeled in other states.
MS. GUTIERREZ said she didn't know what other states do, but
when the Underage Drinking Subcommittee reviewed court system
data and found these cases were being dismissed. The goal in
this amendment is to ensure that more minors will be held
accountable. If unpaid, their fine will be deducted from their
PFD and their parents notified of the available alcohol
education programs. The consensus of the subcommittee was that
this change would do more to get the attention of minors than
the current system. This change also does away with the status
offense, which jeopardizes federal funds. She suggested that Ms.
Franklin supplement the answer.
3:09:07 PM
CYNTHIA FRANKLIN, Director, Alcoholic Beverage Control (ABC)
Board, Department of Commerce, Community and Economic
Development (DCCED), related that she was approached several
years ago by Anchorage district judges who were dissatisfied
with some of the injustices that were occurring due to the minor
consuming statutes. Judges were unable to change the penalties
based on circumstances before them. As a prosecutor she too
witnessed these injustices and became very concerned about the
way that the minor consuming laws are not working in the state.
Young people are not supposed to be jailed for a status offense,
but that does happen.
The Underage Drinking Subcommittee studied the penalties in some
other states and found wide variation. She and several Alaska
judges attended a juvenile justice conference last year and
learned that any federal funds a state receives could be
jeopardized if it is determined that young people are
incarcerated for status offenses. They returned with an urgency
to amend the statute. She conceded that on first glance the
penalties may not seem serious, but her experience as the
Anchorage municipal prosecutor is that anything that is
consistently applied is effective. The Underage Drinking
Subcommittee concluded that this was a good approach to try,
because it will be applied consistently. It will make the ticket
easier to write and it will decrease the places in the system
where the young person ends up with no consequence.
SENATOR STEVENS asked if the penalties increase on a second
offense.
MS. FRANKLIN answered no; that's the current scheme and it
doesn't necessarily work. The consensus is that this new concept
is worth a try.
SENATOR STEVENS expressed optimism for its success.
3:17:20 PM
SENATOR MEYER asked what happens to a minor who attempts to buy
an alcoholic beverage, and if this new law will impact the civil
fines that licensed establishments rely on to discourage minors
from attempting to purchase an alcoholic beverage.
MS. FRANKLIN replied the civil penalty was not changed because
the industry views it as a useful tool. However, the hope is
that the new easier to write tickets will result in licensees
receiving more assistance from law enforcement so they will
become less reliant on pursuing their own civil penalty.
3:19:34 PM
VICE CHAIR GIESSEL polled the committee and the consensus was to
continue the sectional analysis at the next meeting.
MR. KOPP reviewed the current escalating penalties for minor
consuming.
VICE CHAIR GIESSEL announced she would hold SB 99 in committee
for further consideration.
3:21:36 PM
There being no further business to come before the committee,
Vice Chair Giessel adjourned the Senate Labor and Commerce
Standing Committee meeting at 3:21 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSSB 58 - Version N.pdf |
SL&C 4/11/2015 11:00:00 AM |
SB 58 |
| CSSB 58 Version N sponsor statement.pdf |
SL&C 4/11/2015 11:00:00 AM |
SB 58 |
| CSSB 58 Version N sectional.pdf |
SL&C 4/11/2015 11:00:00 AM |
SB 58 |
| SB 107.PDF |
SL&C 4/11/2015 11:00:00 AM |
SB 107 |
| SB 107 - Sponsor Statement.pdf |
SL&C 4/11/2015 11:00:00 AM |
SB 107 |
| SB 107 - Sectional Analysis.pdf |
SL&C 4/11/2015 11:00:00 AM |
SB 107 |
| SB 107 - Presentation.pdf |
SL&C 4/11/2015 11:00:00 AM |
SB 107 |
| SB 107 - Accreditation Brief.PDF |
SL&C 4/11/2015 11:00:00 AM |
SB 107 |
| SB 107 - NAIMC Support.PDF |
SL&C 4/11/2015 11:00:00 AM |
SB 107 |
| SB 107 - Financial Regulation Standards & Accreditation Program.pdf |
SL&C 4/11/2015 11:00:00 AM |
SB 107 |