Legislature(1995 - 1996)
03/19/1996 01:33 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE TRANSPORTATION March 19, 1996 1:33 p.m. MEMBERS PRESENT Senator Steve Rieger, Chairman Senator Robin Taylor, Vice Chair Senator Lyda Green Senator Al Adams MEMBERS ABSENT Senator Georgianna Lincoln COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 210(STA) am "An Act relating to issuance of motor vehicle registrations and titles, and to licenses and permits to operate a motor vehicle." PREVIOUS SENATE ACTION HB 210 - No previous action to record. WITNESS REGISTER Representative Al Vezey State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Prime sponsor of HB 210. Joe Ryan, Staff Representative Al Vezey State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Answered questions. Steve Findsen, Vice-President Knightwatch Security Services PO Box 33246 Juneau, Alaska POSITION STATEMENT: Supported HB 210. Juanita Hensley, Chief Driver Services Division of Motor Vehicles Department of Public Safety PO Box 20020 Juneau, Alaska 99811-0020 POSITION STATEMENT: Discussed HB 210. Anne Carpeneti, Assistant Attorney General Criminal Division Department of Law PO Box 110300 Juneau, Alaska 99811-0300 POSITION STATEMENT: Answered questions. ACTION NARRATIVE TAPE 96-6, SIDE A HB 210 PRIVATE MOTOR VEHICLE LICENSING/TESTING CHAIRMAN RIEGER called the Senate Transportation meeting to order at 1:33 p.m. and introduced HB 210 as the only order of business. Number 014 REPRESENTATIVE VEZEY, Prime Sponsor, explained that HB 210 would provide a mechanism to allow and encourage Alaska to place a government service, currently performed in house, in the private sector. Currently, there are some private entities in Alaska who issue motor vehicle tags and registrations. HB 210 merely provides a structure to allow services to be contracted. The bill establishes the rights and obligations of Alaska and the contracting party with regards to the expectations of each and the grounds for termination of the contract. Representative Vezey pointed out that an earlier version of HB 210 contained more grounds for contract termination than the version before the committee today; some of the discretionary areas were taken out because the Division of Motor Vehicles (DMV) did not want that authority. HB 210 would not cost Alaska anything, the cost of the privatization program is born by the contractor. The contractor also pays 100 percent of the mandated fees to the state. Representative Vezey said that the contractor will determine the charge to the customer. Number 059 SENATOR GREEN asked if it was assumed that there would be savings to the state at some point. REPRESENTATIVE VEZEY replied no. HB 210 does not address the DMV budget. Representative Vezey believed that any savings the state received would be a result of the receipts from the fee structure without any state labor involved. In response to Senator Green, REPRESENTATIVE VEZEY hesitated to say that a revenue increase could be projected in five or six years because HB 210 does not mandate this. SENATOR TAYLOR asked why the entire contract was placed in the bill. REPRESENTATIVE VEZEY explained that there has been poor success in achieving privatization in Alaska. If this does not work, then the administration would be forced to return to the legislature to explain why this did not work. The information learned from this would hopefully be utilized in other areas. SENATOR ADAMS inquired as to why a three year contract was chosen. REPRESENTATIVE VEZEY believed that three years was drawn from other privatization programs in other states. The DMV is comfortable with three years as well as the potential users. Number 110 SENATOR ADAMS did not see a definition for "in a professional manner" in the bill; is there one? REPRESENTATIVE VEZEY did not believe that there is a statutory definition. Representative Vezey said that the bill attempts to provide the department the ability to require that the contractors exercise professional standards. If the department feels the need to go through the appeals process over professional standards, then the department should be able to do so. CHAIRMAN RIEGER asked if HB 210 is primarily oriented toward licensing heavy equipment and commercial vehicles or private passenger cars. REPRESENTATIVE VEZEY believed that commercial users would be the first to take advantage of HB 210. HB 210 is set up with the following different types of contracts: the issuing of driver's licenses, the issuing of tags, registration and license plates or any combination of those three. CHAIRMAN RIEGER asked if the examiner function would be for private passenger cars or commercial vehicles. REPRESENTATIVE VEZEY said that HB 210 does not contain an authorization for CDLs. In response to Senator Taylor, REPRESENTATIVE VEZEY explained that the authorization for CDLs was not included in HB 210 because that created a technical question with regard to federal regulations governing CDLs. Representative Vezey did believe CDLs should be addressed. Number 157 SENATOR TAYLOR expressed concern with the civil immunity for liability provision on page 18. REPRESENTATIVE VEZEY said that HB 210 establishes a gross negligence standard of liability. This would create a level playing field between the liability that a state employee would have and a private sector employee. The state is not liable for anything that a DMV employee does. CHAIRMAN RIEGER was worried that an agent, registrar or examiner could set their own fee. Perhaps, someone having difficulty in obtaining a license might go to a "license shark" who has a high fee. He asked if there had been debate in other committees regarding the possibility of the department or the division being allowed to approve the fees. REPRESENTATIVE VEZEY indicated that was the most debated aspect of HB 210. The philosophy behind allowing the private contractor to establish his/her own fee is that the customer does not have to go this route. Furthermore, a high degree of accuracy and accountability is required from the agents, examiners, and registrars. Representative Vezey believed it best to allow the market determine the fee structure. Number 199 JOE RYAN, Staff to Representative Vezey, explained that the Federal Aviation Act of 1958 designated pilot examiners who give tests from private pilots to 747 pilots and these examiners establish a fee. The agency as in HB 210 would reserve the right to retest someone. CHAIRMAN RIEGER inquired as to where that was located in the bill. JOE RYAN explained that since the agency gives the authority to test by inference the agency has the authority to test or review the private contractors. If there is suspicion of a "license shark" contractor, the agency could check that. Also the number of people being handled by an examiner could indicate the need to review an examiner. REPRESENTATIVE VEZEY informed the committee that HB 210 was modelled after California's privatization statute and the Federal Aviation Association's regulations regarding licensing and registration of aircraft pilots. SENATOR ADAMS inquired as to how agents could be prevented from misusing their powers. For example, registering and relicensing stolen vehicles. REPRESENTATIVE VEZEY pointed out that HB 210 requires a high standard of accuracy and the ultimate penalty is the revocation of the license. Any criminal activity would be a separate offense. Number 242 STEVE FINDSEN, Vice-President of Knightwatch Security Services, believed HB 210 would be an opportunity for the private sector to provide a valuable service while saving the state money. Mr. Findsen envisioned that the private contractors could have more convenient hours; he did not however, envision price gouging. Furthermore, this should be a money making opportunity for the private sector. He noted that the fee for the service would depend upon the volume of people served, the type of service provided, and the expertise and professionalism with which the public was met. Mr. Findsen said that the private sector would be involved to make a profit and therefore, would be as efficient as possible. While, state workers do not have the incentive to work as fast. Mr. Findsen pointed out that HB 210 requires 95 percent accuracy and the private contractor could be subject to audits at any time. He felt those stipulations were appropriate and necessary. Perhaps, the insurance language should be stronger. He suggested that the private contractor should be required to put up an honesty bond. Mr. Findsen supported HB 210. SENATOR ADAMS commented that he did not see any savings from HB 210, no employees are eliminated from the DMV. STEVE FINDSEN said that he did not know that HB 210 would save Alaska money, but the bill will provide a service to the public that is not currently provided. The burden on the local DMV would be decreased. Number 325 JUANITA HENSLEY, Drivers Services with the Division of Motor Vehicles, requested that Anne Carpeneti from the Department of Law also come to the table in order to answer any legal questions. Ms. Hensley informed the committee that contracting, using commissioned agents, and vendors is not new to the DMV. Commissioned agents were utilized before statehood. In 1975, when the DMV was developed as it currently exists, the DMV was fairly exclusive to contract and commissioned agents. Currently, 13 commissioned agents who are paid a fee are being used. These vendors are paid 15 percent of the motor vehicle documents they process and 50 percent of any of the drivers license work they process. Ms. Hensley informed the committee that Alaska paid the 13 commissioned agents a total of $174,516 last year. There are also 20 I/M vendors who are contracted to process vehicle registration; the I/M vendors are working well. Over a years time, 13 percent of the renewal registrations were done at the I/M stations which decreases the stress on the DMV. Ms. Hensley reiterated that contracting is not new to the DMV. She was then available for questions. SENATOR ADAMS asked if a contract agent's price would be more or less. JUANITA HENSLEY clarified that contract agents are only utilized when the agent would cost less than opening a facility in an area. Currently, the contract agents charge the fee established in statute and then the agent is paid 50 percent of the fee that is collected for driver's license work and 15 percent of the fee for registration work. Of the 13 commissioned agents, only the Petersburg agent processes only registration work and receives 15 percent of the funds collected for the DMV. The 20 I/M vendors did not cost the state any additional funds, except for personnel to audit the vendors' programs and work. SENATOR ADAMS reiterated that he has yet to see any savings as noted in the fiscal note. There would not be a need for state employees in areas where contract agents would be utilized; will that be considered and produce another fiscal note. JUANITA HENSLEY viewed HB 210 as allowing an expansion of the services provided, not an eliminate state employees. HB 210 would alleviate some of the DMV's workload by utilizing these contract agents or vendors. Number 397 SENATOR ADAMS asked Ms. Carpeneti if she agreed with the three year provision in the bill. ANNE CARPENETI, Assistant Attorney General for the Department of Law, informed the committee that she had not done a lot of civil work and was unfamiliar with contracts. However, she believed it very unusual to place contract provisions in statute. A contract is a negotiation between two parties and has unique features. If there was a point at which the provisions in statute did not work, then the question would have to come before the legislature to be revised rather than through negotiations between the parties. Ms. Carpeneti said that she had concerns about placing contract provisions in statutory form. Certainly, guidelines to be covered by a contract could be established. Ms. Carpeneti did not believe the particulars including the three year provision to be practical. Ms. Carpeneti referred to page 15, line 26 when stating that she had questions about the termination provisions. The contract provides for termination by giving written notice of 60 days while no time period is stated in the provision before the contract. What about an emergency? Furthermore, the immunity provision requires that the people entering into these contracts have insurance while those injured by their negligent acts could not bring action to recover. CHAIRMAN RIEGER commented that contracts are placed in statute at times when a document is relied upon against liability. ANNE CARPENETI said that there are good reasons for limiting liability and subsection (b) of the bill does limit the state's liability for acts or admissions of the third party agent. This is a policy question for the legislature. Ms. Carpeneti did not believe that it was consistent to require that the contract agent carry insurance, but not make them liable for bad or negligent actions. Number 438 SENATOR GREEN asked if the complex network of forms would be replicated in each local agency and who would bear the cost? JUANITA HENSLEY said that the contract agent would be required to bear the cost of all the necessary equipment and employee process to be on the department's system. CHAIRMAN RIEGER directed everyone to page 2, line 10 and asked if that was standard language. Would there be times when a corporation would be the registrar and any employee could do the work? ANNE CARPENETI did not know. SENATOR ADAMS interjected that an individual can be a corporation. He pointed out that this had been discussed on the floor with regards to private airports. SENATOR TAYLOR believed that the language seemed to be reaching towards an individual person, a human being. The language may not be wise if privatization is the goal. CHAIRMAN RIEGER said that he would check with the sponsor on that question. He directed everyone to page 2, line 31 when asking if the word "shall" should be "may." Would the language "shall" create an undue burden on the department? JUANITA HENSLEY said that "shall" could be changed to "may." Ms. Hensley clarified that HB 210 is Representative Vezey's bill and the department is neutral on this bill. Number 483 CHAIRMAN RIEGER referred to page 3, lines 19-21 when asking if this would be a constitutional problem. Can one be required to provide information regarding a criminal complaint against the person? ANNE CARPENETI believed that criminal charges that are filed in criminal cases are public information. CHAIRMAN RIEGER assumed that as an agent, the agent would have to bear witness against him/herself if the state has filed a criminal charge. Chairman Rieger clarified that he was questioning the wording. ANNE CARPENETI agreed that this language should be rewritten. CHAIRMAN RIEGER noted that one would be considered under the influence commercially at .04 while non commercially it would be .10. He inquired as to which definition of "under the influence" on page 5, line 8, would be used. ANNE CARPENETI said that the standard should be specified. JUANITA HENSLEY explained that HB 210 would allow the DMV to contract with a trucking firm to do CDL testing, but the federal guidelines would be followed. The bill requires that an examiner be licensed in the class of vehicle for which he/she gives tests. Therefore, a commercial examiner with a Class A CDL would be subject to the .04 driving under the influence law. A passenger car examiner would be subject to .10 BAC level. Ms. Hensley clarified that a CDL is a commercial driver's license. In response to Chairman Rieger, Ms. Hensley said that a taxi driver is not a CDL licensee. The vehicle must be registered as a commercial vehicle, but a taxi driver is not required to have a CDL. Ms. Hensley informed the committee that a vehicle weighing 26,000 pounds or more, a vehicle carrying hazardous materials or passengers require a CDL. A CDL is also required when there are 15 or more passengers. Number 520 ANNE CARPENETI said that she and Ms. Hensley agreed that a blood alcohol level should be stated in the bill. CHAIRMAN RIEGER agreed. SENATOR TAYLOR pointed out that this would be a violation of law anyway; it is not necessary to restate current law. SENATOR TAYLOR asked why under HB 210 only fleet operators are allowed to conduct CDLs other than the department. JUANITA HENSLEY explained that HB 210 would allow the department to contract with individual persons who meet the requirements to administer CDL testing. The CDL federal requirements only allow someone to administer the skills test if the department did the third party testing for CDLs. The examiner or third party tester must be an employee of the company for which he/she is administering the test. That examiner can only administer tests to employees of the company for which he/she works. According to federal law, an individual person cannot be a third party tester to test other CDL operators. SENATOR TAYLOR asked how an individual would change status merely because they are employed by a trucking company. JUANITA HENSLEY specified that the company is the third party tester. SENATOR TAYLOR surmised then that a company can do the examination of its own employees for CDL purposes, but that company cannot administer an exam or give CDLs to other persons not in the company. JUANITA HENSLEY said that was a correct assessment. SENATOR TAYLOR asked if there was a manner in which HB 210 could allow these third party agents to administer CDLs. JUANITA HENSLEY said that would violate federal law. Any violation of the Commercial Driver's License Safety Act, would result in a loss of 5-10 percent of the highway funds. SENATOR ADAMS seemed to think that only applied to CDLs on roads, not off road testing. JUANITA HENSLEY explained that anyone operating a commercial vehicle on a roadway is required to have a CDL. The FHWA granted Alaska a waiver to issue CDLs with an off systems restriction; such persons are only allowed to drive in specific areas and not on the state maintained roadway. SENATOR TAYLOR could not believe that federal law would allow a trucking company to license all of its drivers, but not allow the state to authorize a third party contract for administering the same exams. Number 578 CHAIRMAN RIEGER asked if this issue had been explored; can it only be done in house and not for anyone else? JUANITA HENSLEY said that the federal law is that explicit. The state can contract with a third party tester who can only administer the test for his/her employees. SENATOR TAYLOR asked if that is why all the CDL personnel must be employees of the department. JUANITA HENSLEY replied yes, unless when using a commissioned agent. CHAIRMAN RIEGER asked if a commissioned agent meant that the agent could not charge the customer an additional amount. JUANITA HENSLEY explained that a commissioned agent would receive 50 percent of everything. TAPE 96-6, SIDE B Ms. Hensley said that a contract agent would have to meet the same requirements, but the contract agent would not be paid for their services by the department. In response to Chairman Rieger, Ms. Hensley explained that the commissioned agents were grandfathered in long ago and that has not been expanded. SENATOR TAYLOR expressed interest in determining a way around that. He could not believe that Greyline could administer and issue CDLs to their employees for free while citizens in Ketchikan have to raise the money to travel to Juneau to get the same license. Number 578 JUANITA HENSLEY said that the department would write to the FHWA to determine if there is an additional waiver that would allow CDL contracting in certain areas in Alaska. SENATOR TAYLOR was not sure as to why it is necessary to specify the type of advertising for these people. CHAIRMAN RIEGER asked Representative Vezey and Joe Ryan to return to the table for more questions. Chairman Rieger noted that Legal Services had said that "individual" did mean a natural person; has that been discussed in other committees? REPRESENTATIVE VEZEY said that had been discussed and asked Mr. Ryan to explain. JOE RYAN explained that the bill wanted to allow non profits to do this to raise funds. Legislative drafting determined that "individual" would encompass corporations and people. Mr. Ryan clarified that the desire was to have a comprehensive term that allowed companies, non profits, and individuals. CHAIRMAN RIEGER asked if there would be any objection to changing "shall" to "may" on page 2, line 30. JOE RYAN pointed out that line 18 specifies that the department has the discretion to choose who would be licensed and who would not be licensed. REPRESENTATIVE VEZEY did not believe that to be a large issue. CHAIRMAN RIEGER inquired as to what was meant by the language on page 3, lines 17-18. REPRESENTATIVE VEZEY explained that there are DMV policies and federal requirements regarding the continuing education of licensers, examiners, and agents. The bill would allow the department to require that agents, registrars, and examiners maintain current professional training requirements. Representative Vezey noted that there had been much discussion about that paragraph; the department and he are satisfied with the language. Representative Vezey pointed out that a lot of discretion had been given to the department to establish a professional standard. Number 519 CHAIRMAN RIEGER reiterated his concern about providing information regarding a criminal matter. REPRESENTATIVE VEZEY stated that the purpose was that upon request an applicant would have to provide information to the department regarding criminal complaints. This information must be disclosed to the state although the information may not be valid for criminal or civil prosecution. Representative Vezey did not have a problem with relaxing the standards. SENATOR TAYLOR noted that some of the provisions for the screening for police officers and troopers required waivers for various constitutional rights. Requiring the criminal information of these people may violate the Fifth Amendment Rights, but there may be a policy reason to do so. CHAIRMAN RIEGER saw the problem being that the person would respond to a complaint which could merely be from someone who dislikes the examiner. REPRESENTATIVE VEZEY said that the bill places the state in a supervisory role. CHAIRMAN RIEGER asked if Representative Vezey had a specific blood alcohol level in mind. REPRESENTATIVE VEZEY said that the federal standard had been adopted for examiners. The BAC for a passenger vehicle for DWI is .10 and Representative Vezey believed that everyone would agree that to be too high for a professional examiner. Someone holding a commercial driver's licenses no matter the type of vehicle is considered intoxicated at .04 and with a BAC of .01 he/she become ineligible to operate a vehicle for 24 hours. HB 210 requires that these professionals should not partake in intoxicating substances for at least eight hours before work. Number 471 CHAIRMAN RIEGER asked if Representative Vezey would object by reference in the bill to the federal CDL standard. REPRESENTATIVE VEZEY said that the law would remain the same. CHAIRMAN RIEGER was not sure which standard would apply to a person administering a test in a private passenger car. REPRESENTATIVE VEZEY clarified that it would depend upon whether the person held a CDL. A commercial driver's license is not required in order to be an examiner in a private vehicle, or one that weighs less than 26,000 gross vehicle weight. Currently, a person holding a CDL is subject to the .04 standard of intoxication and at .01 the person would not be allowed to drive for 24 hours. Representative Vezey did not have a problem with adopting the CDL standard. The intent was to create a high standard. SENATOR GREEN felt that this discussion regarding how much alcohol a person could consume before administering a driver's test was ridiculous. Senator Green stressed that one should not be allowed to drink at all and administer a test. REPRESENTATIVE VEZEY assumed that people would not administer a test while intoxicated. This bill merely incorporates the federal standard for pilots; eight hours prior to flight time no alcohol may be consumed. SENATOR GREEN pointed out that the bill allows an examiner to drink during work hours up to a BAC of .04. REPRESENTATIVE VEZEY said no. SENATOR GREEN said that is what the discussion is about. CHAIRMAN RIEGER agreed. He posed the situation in which an examiner who was drinking heavily the night before and comes to work with a BAC of .06, or enough that someone being tested would notice. Number 440 JOE RYAN stated that the "8 hours before" and the "under the influence" language addresses what is being discussed. If a pilot drinks within eight hours before a flight or is still under the influence the next morning, he/she cannot fly or drive as is the case in HB 210. Mr. Ryan noted that one is under the influence when taking the first drink. CHAIRMAN RIEGER inquired as to how strongly the sponsor felt about having the contract in the bill. REPRESENTATIVE VEZEY said that there are no great examples of privatization in Alaska; this is a small first step. Representative Vezey hoped that the legislature would keep a close eye on this. If this does not perform within 12 or 24 months, then the program should be reviewed. Representative Vezey emphasized that historically, agencies take steps in order to ensure that privatization does not work which is why the contract is in statute. CHAIRMAN RIEGER asked if Representative Vezey held that view in light of the agency's testimony that a lot of this is already occurring. REPRESENTATIVE VEZEY said that this is an area in which other states are moving in this direction. In general, Representative Vezey's experience has been that state agencies are very good at structuring their efforts to ensure that privatized services do not work. CHAIRMAN RIEGER said that would be reviewed in the mark up of the bill. He believed that placing the contract in the bill may dramatically inhibit the success of the privatization. REPRESENTATIVE VEZEY believed that placing the contract in regulations would decrease the possibility of success. In Representative Vezey's opinion, this is an experiment. Number 407 SENATOR GREEN referred to page 18 , line 26 when asking what that amended portion meant. Does it mean that a bid process is not necessary? SENATOR TAYLOR said that it means that the procurement code would not be used. SENATOR GREEN asked if that was good or bad. REPRESENTATIVE VEZEY explained that the contract was not intended to be limited. He hoped that all qualified comers would be awarded a contract. STEVE FINDSEN seemed to be unclear on the training aspect. A corporation cannot be trained, each individual would have to be certified. Although the corporation may be a financial backer of the venture, each employee would need to be trained and certified. Mr. Findsen did not know how the bond would work. SENATOR TAYLOR felt that was a good point which should be clarified. He believed that the drafter had intended to focus on the fact that an individual would be certified by the department, but the person holding the agency relationship may have more than one individual within them. That does not seem to be in the bill and should be clarified. SENATOR TAYLOR pointed out that the Division of Motor Vehicles is one of the single biggest money makers. People are made to stand in line for hours or penalized for using the services. Senator Taylor believed this to be a false economy. Making licensing and registration easy should be the goal. Senator Taylor said that he had always been opposed to the reductions in that department. This will help reduce some of the department's work load. In Ketchikan, the office has been closed for two weeks because both employees are sick, so no one can registrar a car or obtain a license. There should be an alternative, especially in the smaller rural communities. CHAIRMAN RIEGER informed the committee that there is a bill by request relating to the procurement of the Alaska Railroad Corporation. A prospective purchaser will be before the committee next week. Chairman Rieger held HB 210 for possible amendments. There being no further business before the committee, the meeting was adjourned at 2:42 p.m.