Legislature(2021 - 2022)BELTZ 105 (TSBldg)
04/15/2021 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| HB36 | |
| SB103 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 36 | TELECONFERENCED | |
| += | SB 103 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
April 15, 2021
1:38 p.m.
MEMBERS PRESENT
Senator Robert Myers, Chair
Senator Mike Shower, Vice Chair
Senator Peter Micciche
Senator Jesse Kiehl
MEMBERS ABSENT
Senator Click Bishop
COMMITTEE CALENDAR
HOUSE BILL NO. 36
"An Act relating to an application for a license to operate as
a dealer in motor vehicles; and requiring a dealer in motor
vehicles to maintain liability and property insurance."
- MOVED SCS HB 36(TRA) OUT OF COMMITTEE
SENATE BILL NO. 103
"An Act repealing the Alaska Marine Transportation Advisory
Board; establishing the Alaska Marine Highway System Operation
and Planning Board; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 36
SHORT TITLE: MOTOR VEHICLE DEALERS: APPLIC.; INSURANCE
SPONSOR(s): REPRESENTATIVE(s) CLAMAN
02/18/21 (H) PREFILE RELEASED 1/8/21
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) L&C, FIN
03/03/21 (H) FIN REFERRAL REMOVED
03/03/21 (H) L&C AT 5:45 PM BARNES 124
03/03/21 (H) Heard & Held
03/03/21 (H) MINUTE(L&C)
03/12/21 (H) L&C AT 3:15 PM BARNES 124
03/12/21 (H) Moved HB 36 Out of Committee
03/12/21 (H) MINUTE(L&C)
03/15/21 (H) L&C RPT 6DP
03/15/21 (H) DP: SNYDER, NELSON, MCCARTY, SCHRAGE,
KAUFMAN, SPOHNHOLZ
03/25/21 (H) BEFORE HOUSE IN THIRD READING
03/25/21 (H) TRANSMITTED TO (S)
03/25/21 (H) VERSION: HB 36
03/26/21 (S) READ THE FIRST TIME - REFERRALS
03/26/21 (S) TRA, L&C
04/09/21 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/09/21 (S) -- MEETING CANCELED --
04/13/21 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
04/13/21 (S) Heard & Held
04/13/21 (S) MINUTE(TRA)
04/15/21 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 103
SHORT TITLE: AMHS OPERATION & PLANNING BOARD
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/10/21 (S) READ THE FIRST TIME - REFERRALS
03/10/21 (S) TRA
03/25/21 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
03/25/21 (S) Heard & Held
03/25/21 (S) MINUTE(TRA)
03/30/21 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
03/30/21 (S) Heard & Held
03/30/21 (S) MINUTE(TRA)
04/08/21 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
04/08/21 (S) Heard & Held
04/08/21 (S) MINUTE(TRA)
04/15/21 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
REPRESENTATIVE MATT CLAMAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 36.
LORI WING-HEIER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
POSITION STATEMENT: Answered questions on liability insurance
requirements in HB 36.
MARTEN MARTENSEN, Owner
Continental Automobile Group
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on
HB 36.
ANDY MILLS, Special Assistant to the Commissioner
Department of Transportation and Public Facilities (DOTPF)
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 103 on behalf of
the administration.
ROB CARPENTER, Deputy Commissioner
Department of Transportation and Public Facilities (DOTPF)
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 103 on behalf of
the administration.
ACTION NARRATIVE
1:38:22 PM
CHAIR ROBERT MYERS called the Senate Transportation Standing
Committee meeting to order at 1:38 p.m. Present at the call to
order were Senators Shower, Kiehl, and Chair Myers. Senator
Micciche arrived as the meeting was in progress.
HB 36-MOTOR VEHICLE DEALERS: APPLIC.; INSURANCE
1:39:05 PM
CHAIR MYERS announced the consideration of HOUSE BILL NO. 36
"An Act relating to an application for a license to operate as
a dealer in motor vehicles; and requiring a dealer in motor
vehicles to maintain liability and property insurance."
1:39:38 PM
CHAIR MYERS moved to adopt Amendment 1, work order 32-
LS0271\A.2:
32-LS0271\A.2
Fisher
4/14/21
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR MYERS
TO: HB 36
Page 2, line 29, through page 3, line 2:
Delete all material and insert:
"Sec. 08.66.085. Insurance requirements. A
dealer in motor vehicles shall maintain liability
insurance for bodily injury and property damage on
an auto dealer's form."
SENATOR SHOWER objected for discussion purposes.
1:39:55 PM
CHAIR MYERS explained that Amendment 1 was language requested
by the sponsor and the Director of the Division of Insurance,
Lori Wing-Heier. He asked the sponsor to explain HB 36.
1:40:09 PM
REPRESENTATIVE MATT CLAMAN, Alaska State Legislature, Juneau,
Alaska, as sponsor of HB 36, explained that Amendment 1 was
language recommended by Lori Wing-Heier, Division of Insurance
director as appropriate insurance for auto dealers. She also
advised that minimum levels of insurance were not necessary
because the insurance brokers would determine the right amount
of insurance the specific dealer needed based on the volume of
sales they had within the market. The key goal was to ensure
dealers had insurance but not to mandate any specific level of
insurance, he said.
1:41:34 PM
LORI WING-HEIER, Director, Division of Insurance, Department
of Commerce, Community and Economic Development (DCCED, stated
that she met with the sponsor to discuss the insurance
requirement in HB 36. Amendment 1 will provide the insurance
requirement for automobile dealers that the sponsor intended,
she said.
1:41:56 PM
SENATOR KIEHL asked about price points for policies because
the committee was interested in any increased costs for
dealers.
MS. WING-HEIER responded that the division researched premiums
for the policies. She stated that premiums for auto dealers
are rated on the number of fulltime employees. The annual rate
per employee cost would be approximately $600 in Anchorage,
$350 in Fairbanks and $300 for all other areas of the state.
In addition, there would be loss cost multipliers (LCMs) to
add and other factors, such as whether the employer had
previous claims. She stated that the sponsor wanted liability
insurance at $100,000 per accident with a $200,000 policy
limit and a separate limit for property damage. She noted that
she could not find an insurer that would write less than $1
million. She offered her belief that the rates would probably
double the current dealer insurance rates. In addition, some
insurance companies have a minimum insurance premium. It would
be possible to have one fulltime employee and still pay
$2,500.
1:43:55 PM
CHAIR MYERS asked if that is per month.
MS. WING-HEIER answered the rates were for annual policy
amounts. Premiums would be based on what the company
underwrites. For example, the insurance premium for a dealer
with four employees at $600 each would total $2,400. In this
instance, the rates were based on fulltime employees.
1:44:35 PM
SENATOR SHOWER offered his view that the rates did not seem
onerous. She asked what kind of impacts or barriers she
foresaw for small businesses. He wondered if she had done any
analysis.
MS. WING-HEIER answered that she had not done so. She offered
her belief that established businesses would receive better
rates than a new dealer because the insurance company could
review their claims.
SENATOR SHOWER expressed concern that the capital outlay could
be burdensome and create a barrier for a person who is just
starting a business.
1:46:10 PM
SENATOR MICCICHE joined the meeting.
1:46:24 PM
REPRESENTATIVE CLAMAN outlined that the economic cost to
become an auto dealer falls into two categories: the bond cost
and the insurance cost. Currently, the cost of obtaining a
bond of $50,000 is $500 to $1,000, depending on
creditworthiness. An estimated increased cost of going from a
$50,000 to $100,000 bond was $1,000 to $2,500. He clarified
that he did not ask about the charge. He explained that
typically the bond is sold by the same broker, so the minimum
coverage might be less because the dealer would be buying the
bond and insurance from the same broker. He estimated the
total cost would range from $2,500 to $4,000 for someone
initially starting a dealership. He said it strikes him as
reasonable consumer protection considering that people would
be spending from $15,000 to $30,000 for a used car.
1:48:14 PM
CHAIR MYERS asked whether the costs would be too high for
entry-level auto dealers.
1:48:48 PM
MARTEN MARTENSEN, Owner, Continental Automobile Group,
Anchorage, Alaska, related a scenario in which a wheel fell
off while a driver was test driving a vehicle advertised on
craigslist. MS. WING-HEIER answered the rates were for annual
policy amounts. Premiums would be based on what the company
underwrites. For example, the insurance premium for a dealer
with four employees at $600 each would total $2,400. In this
instance, the rates were based on fulltime employees. He
related his understanding that every legitimate dealer has
liability insurance and garage policies to protect themselves
in the event of an accident. When Continental Auto takes a
vehicle in trade, the dealer performs any reconditioning
needed. If something goes wrong, the dealer needs that
insurance coverage as protection. At a minimum, state law
requires all vehicle owners to have liability insurance. He
offered his belief that requiring liability insurance would
not pose a barrier for anyone entering the car business;
that's just something dealers must provide.
1:50:17 PM
CHAIR MYERS related his understanding that HB 36 would
effectively put what is already happening into statute.
MR. MARTENSEN answered that legitimate auto dealers carry
liability insurance.
1:50:45 PM
SENATOR KIEHL pointed to a reputable dealer with a different
business model. This dealer is not exclusively a car dealer
but operates a boutique business on a very small scale geared
toward a higher quality product. He stated that Amendment 1
would impose an increased obligation and cost for this dealer.
He asked members to contemplate this. He said he would not
object to Amendment 1, but he hoped to work with the Division
of Insurance and the sponsor to explore lower-cost options to
provide the minimum coverage. He stated that this remains a
concern as the bill moves forward.
1:51:45 PM
REPRESENTATIVE CLAMAN pointed out that Mr. Martensen brought
up a good point. He highlighted the situation of an uninsured
driver test driving a vehicle. He stated there should be
protection for someone hit by an uninsured driver. That car
should be insured just as his car is insured. If a driver test
drives a car from the boutique dealer Senator Kiehl mentioned
and the wheel falls off, it is due to a problem with the
vehicle. If the driver is severely injured in that instance,
the notion that the boutique dealer could operate without
insurance would be troubling to the average consumer. The
average consumer would expect a dealer to stand behind the
defective vehicle, which is why liability insurance should be
required.
1:53:10 PM
SENATOR KIEHL agreed that uninsured motorists are problematic.
He offered to continue to work on the issue going forward due
to his concerns. He acknowledged that the potential insurance
costs would more than double, so he would continue to
contemplate it.
1:53:45 PM
SENATOR MICCICHE offered his belief that the proposed
insurance required by Amendment 1 appeared to be basic
insurance coverage. He stated that he has insurance on every
vehicle he owns. He said he wanted to be certain he understood
Amendment 1. He asked what the difference was between the very
basic level of insurance and Amendment 1.
1:54:47 PM
CHAIR MYERS explained that Amendment 1 was recommended by the
division. Currently, the bill takes the language aimed at an
individual and applies it to a business. Amendment 1 would
change the liability insurance requirements to better apply to
businesses. The insurance company set the minimum
requirements, not by statute.
1:55:24 PM
SENATOR MICCICHE asked why the language "death" was being
removed from AS 08.66.085. It previously read, "for injury,
including death for any one person?." He asked whether the
assumption was that the insurance for an auto dealer would
include that level of protection.
REPRESENTATIVE CLAMAN deferred to Ms. Wing-Heier.
MS. WING-HEIER responded that the insurance policies currently
have a single limit of $1 million, whereas personal auto
coverage is $50,000 per person, $100,000 per accident and
$25,000 for property damage. Amendment 1 would require the $1
million limit, which includes bodily injury, including death.
1:56:48 PM
SENATOR MICCICHE asked what the cost increase will be to auto
dealers.
MS. WING-HEIER replied that it was impossible to find an
insurance company to write a policy for less than $ 1 million.
She suggested that the minimum premiums would likely run about
$2,500, whether the dealer has one employee or four employees.
She said insurance companies or brokers could not afford to
write policies for less. She indicated that the base rate
could be $600 for an auto dealer with one employee in
Anchorage.
SENATOR MICCICHE asked whether these fees were for annual
premiums.
MS. WING-HEIER answered yes.
1:58:07 PM
SENATOR SHOWER removed his objection.
There being no further objection, Amendment 1 was adopted.
1:58:37 PM
SENATOR MICCICHE commented that he heard from several auto
dealers in his region. He offered that HB 36 was not a
burdensome bill. For example, if one of his daughters were to
test drive a vehicle, he would want the dealer to be
reputable, one who could be located if something went wrong,
and one who has insurance coverage for test drives. He said he
was worried about the cost of entry for smaller dealers.
However, it seemed as though most held this level of insurance
anyway. He offered his view that the provisions in HB 36 were
not burdensome and seemed fair.
CHAIR MYERS asked the will of the committee.
1:59:57 PM
SENATOR SHOWER moved to report HB 36, work order 32-LS0271/ as
amended, from committee with individual recommendations and
attached fiscal note(s).
CHAIR MYERS found no objection and SCS HB 36(TRA) was reported
from the Senate Transportation Standing Committee. He stated
that Legislative Legal is directed to make any changes to the
language, including technical, conforming, or bill title
changes to accomplish the intent of any conceptual changes to
the bill.
2:00:31 PM
At ease
SB 103-AMHS OPERATION & PLANNING BOARD
2:02:40 PM
CHAIR MYERS reconvened the meeting and announced the
consideration of SENATE BILL NO. 103 "An Act repealing the
Alaska Marine Transportation Advisory Board; establishing the
Alaska Marine Highway System Operation and Planning Board; and
providing for an effective date."
2:03:22 PM
SENATOR KIEHL moved to take up Amendment 11, 32-GS1649\A.4,
which was previously tabled.
32-GS1649\A.4
Fisher
4/2/21
AMENDMENT 11
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 103
Page 4, following line 25:
Insert a new subsection to read:
"(e) Not later than August 1 of each year, the
board shall submit proposed operating and capital
budgets for the Alaska marine highway system for the
next fiscal year to the governor and to the senate
secretary and chief clerk of the house of
representatives and notify the legislature that the
proposed budgets are available."
Reletter the following subsection accordingly.
Page 5, line 21:
Delete "AS 19.65.280"
Insert "AS 19.65.280(d)"
CHAIR MYERS removed his objection [from the April 8, 2021,
hearing when the measure was tabled].
2:03:44 PM
SENATOR KIEHL moved to adopt Conceptual Amendment 1 to
Amendment 11, to change the date from August 1 to October 1.
CHAIR MYERS objected for discussion purposes.
2:04:06 PM
SENATOR KIEHL stated that the committee had previously
discussed the date. He offered his view that the department
indicated October 1 would be a more workable date.
CHAIR MYERS asked Mr. Mills to respond.
2:04:29 PM
ANDY MILLS, Special Assistant to the Commissioner, Department
of Transportation and Public Facilities (DOTPF), Juneau,
Alaska, stated that the rationale the department used was to
provide two months from the start of a new fiscal year for
preparation and resources to be supplied to the board. It
would allow two and one-half months until the governor's
proposed budget was released. The department considered it to
be "meeting in the middle."
CHAIR MYERS removed his objection. There being no further
objection, Conceptual Amendment 1 to Amendment 11 was adopted.
CHAIR MYERS stated that Amendment 11, as amended, was before
the committee.
2:05:32 PM
SENATOR MICCICHE stated that currently, the duties and powers
do not include budgeting. He asked if it was an appropriate
role of the board to provide proposed budgeting for AMHS or if
it would be an obstacle for the board's primary mission. He
asked for clarification on the intent.
SENATOR KIEHL offered his view that it would be an excellent
complement to the Operating and Planning Board (OPB) because
budgets are policy documents. He stated there is no better way
to understand how something works than to review spending
fully. For the board to obtain the most detailed and thorough
understanding of the Alaska Marine Highway System and how it
accomplishes its mission, OPB must understand its budget and
spending. The governor will retain all constitutional powers
to propose the final budget.
2:07:13 PM
CHAIR MYERS removed his objection.
2:07:25 PM
SENATOR MICCICHE objected. He asked the Department of
Transportation and Public Facilities (DOTPF) how AMHS's
budgeting would mesh with OPB's role.
2:07:57 PM
ROB CARPENTER, Deputy Commissioner, Department of
Transportation and Public Facilities (DOTPF), Juneau, Alaska,
responded that the language in the final bill will determine
the board's responsibilities. As far as process, the agency
will be working on the proposed budget. He said he fully
expects the board to discuss the budget. DOTPF does not have a
position as to whether it should be a board requirement. He
thought it would be remiss for the board not to hold
discussions on financial aspects of AMHS. He said it would all
come down to the governor's budget proposal. He was unsure
whether the department would consider this as a need, but the
board would consider AMHS's budget either way.
2:09:16 PM
SENATOR SHOWER stated that this would give the board
sufficient power to move AMHS to a sustainable model. He
wondered if any efforts were duplicated and if this was the
right direction, but if some of these changes are not made, it
means doing things the same way. He stated that he was leaning
in favor of Amendment 11, but he understood the concern.
2:11:17 PM
SENATOR MICCICHE expressed concern about setting up an
expectation for a board that's not a corporate board. The
committee has discussed the next step. He said he would like
to see an Alaska Railroad Corporation model used in the
future. He said he hoped OPB might achieve this. It may depend
on who is elected as the next governor. Since this budget
would hold some weight, he would prefer the language suggested
or recommended instead of proposed. He pointed out that OPB is
not an elected board and it may set up an unsustainable
expectation. He acknowledged that members each have a vision
of what OPB will do and that vision may vary among members.
2:13:17 PM
SENATOR SHOWER asked whether "proposed" means it is just a
proposal; that the governor will ultimately decide on the
budget.
SENATOR KIEHL answered yes. He related his understanding that
this board would suggest the budget. He recalled that
constitutional language for the Board of Education gives it
the power to set or approve the budget that is binding. He
said he used "proposed" to clarify that since OPB is an
advisory board, it will propose the budget, but the governor
and the Office of Management and Budget (OMB) will send a
proposed budget to the legislature.
2:14:55 PM
SENATOR MICCICHE removed his objection. There being no further
objection, Amendment 11, as amended, was adopted.
2:15:30 PM
SENATOR SHOWER moved to take up Amendment 9, 32-GS1649\A.9,
which was previously tabled.
32-GS1649\A.9
Fisher
4/2/21
AMENDMENT 9
OFFERED IN THE SENATE BY SENATOR SHOWER
TO: SB 103
Page 1, line 2, following "Board;"
Insert "relating to the powers and duties of
the Alaska Marine Highway System Operation and
Planning Board and the commissioner of
transportation and public facilities;"
Page 3, lines 20 - 25:
Delete all material and insert:
"Sec. 19.65.280. Powers, duties, and functions.
(a) The commissioner of transportation and public
facilities in conjunction with the board shall,
without regard to political affiliation, solicit,
interview, and recruit the head of the division of
marine transportation, who shall report to and
function at the direction of the board."
CHAIR MYERS stated that Amendment 9 was before the committee.
2:15:50 PM
SENATOR SHOWER read Amendment 9. He stated that there is
precedent on boards. He said he requested an opinion from the
Department of Law on how the Board of Fisheries operates but
he had not heard back. He pointed out the Department of
Education says "The board shall appoint the commissioner of
education and early development subject to the approval of the
governor. The commissioner serves at the pleasure of the board
and may not be appointed for a fixed term." He said if the
committee would like to give the board more power, it could be
left to the board's discretion. Another approach could be to
add language "and the commissioner" to indicate that the
director works for the board, but also reports to the
commissioner. He asked the committee to consider which
direction to go.
2:19:10 PM
SENATOR KIEHL expressed concern that Amendment 9 raises a
constitutional issue. He said he requested Legislative Legal
Services to draft something similar to Amendment 9.
Ultimately, the attorneys convinced him it could not be done
because the Boards of Fisheries and Game and the Department of
Education and Early Development are under Art. III, Sec. 26 of
the Alaska Constitution, which indicates the board heads the
department and is confirmed by the legislature.
SENATOR SHOWER responded that was why he asked for alternate
methods. He suggested a half step would be to add "and the
commissioner" which may prevent a constitutional challenge. He
indicated that this language might help bridge the concern and
it may be worth going through with a challenge.
2:21:30 PM
SENATOR MICCICHE stated that this board is an interim board
that will get the legislature to the next step. He expressed
concern that this board has the structural authority to
operate AMHS. He said he would like to get there. He offered
his view that this tries to drag a subject-matter board to
suggest fundamental changes to how AMHS operates, its vessels,
and routes and convert it into a relatively new one. He
offered support for an independent AMHS structure. He said he
viewed SB 103 as the halfway point. Further, he agreed that
the legislature had not gotten anywhere. He offered his belief
that OPB can provide the expertise to identify recommended
changes. Then a final solution could be made to operate the
board independently. However, he did not believe Amendment 9
was the right direction to take at this time.
2:23:45 PM
SENATOR SHOWER offered his belief that it was problematic to
have AMHS under the commissioner and that the board lacked
sufficient authority. He expressed concern that this board
will not affect change because it will still be up to the
commissioner to make the final decisions. He offered his
belief that it was time to get something done since the state
does not have two, three, or five years to change the
direction of AMHS.
SENATOR SHOWER withdrew Amendment 9.
2:25:19 PM
SENATOR MICCICHE said he was not concerned about the
constitutional issues. He stated that the committee changed SB
103 by adding legislative appointees to OPB, which will move
the process forward. He offered his belief that this expert
board with its authority can propose AMHS's budget, which will
help the ferry system rely less and less on the state over
time. This board will demand better results, he said.
CHAIR MYERS held SB 103 in committee.
2:27:42 PM
There being no further business to come before the committee,
Chair Myers adjourned the Senate Transportation Standing
Committee meeting at 2:27 p.m.
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