CS FOR SENATE BILL NO. 84(JUD) "An Act relating to the testing and packaging of cigarettes to be sold, offered for sale, or possessed in this state; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. 9:25:59 AM Senator Olson, the bill's sponsor, cited cigarettes as being the leading cause of home fatalities in Alaska and the nation. One- quarter of cigarette home fire fatalities do not even smoke. This legislation is an attempt to address this issue by specifying that "only self-extinguishing cigarettes" could be sold in the State. Senator Olson stated that when he was a practicing physician, he had treated a child for injuries received in a cigarette-related home fire. That incident has been a major factor in his decision to sponsor this bill. 9:27:10 AM DENISE LICCIOLI, Staff to Senator Olson, expressed that in addition to allowing only self-extinguishing cigarettes to be sold in the State, this bill would establish testing and certification requirements to support that mandate. Ms. Liccioli communicated that while it is impossible to create a "safe" cigarette, allowing only self-extinguishing or "fire safe" cigarettes to be sold would have an impact. These "reduced ignition propensity cigarettes …. are designed to be less likely than a conventional cigarette to ignite soft furnishings such as a couch or mattress". Ms. Liccioli stated that in order to allow these cigarettes to be easily identified, the bill also included specifics as to how self-extinguishing cigarette packages should be marked. Ms. Liccioli reiterated that cigarettes are "the leading cause of home fire fatalities in Alaska" and the nation. "The most common material first ignited in home fires is mattresses and bedding, upholstered furniture, and floor coverings." Fires are often started by a dropped or forgotten cigarette, as evidenced in an April 21, 2007 article in the Juneau Empire newspaper [copy on file] that credited the cause of an April fourth apartment building fire in Juneau as being a discarded cigarette that ignited in a couch. Ms. Liccioli stressed that one-quarter of smoking-related fatalities are non-smokers and more than one-third of that one- quarter are children. Studies also indicate that the risk of dying in a smoking-related residential fire increases with age. "38 percent of fatal smoking material fire victims are age 65 or older." Ms. Liccioli stated that "the most common technology utilized by cigarette manufacturers for reduced cigarette ignition propensity [RCIP] … is to make a paper thicker in places to slow down a burning cigarette". She directed attention to a Coalition for Fire-Safe Cigarettes handout [copy on file] which included an image of the RCIP "speed bumps". Ms. Liccioli explained the speed bump technology. When an unattended cigarette burns down to the thicker paper speed bump area, the burning will self-extinguish. In order to qualify as a self-extinguishing cigarette, a cigarette must meet "established fire safety performance standards". Ms. Liccioli advised that similar legislation has been enacted in New York, Massachusetts, Vermont, New Hampshire, California, and Illinois. Utah, Kentucky and Oregon have recently passed such legislation. Canada has enacted a nationwide fire-safe cigarette mandate. Ms. Liccioli pointed out that the legislation is supported by the Alaska Fire Chiefs Association, the Alaska Firefighters Association, the Department of Public Safety Division of Fire Prevention, AARP, and numerous other organizations. "There is no known opposition to this legislation." Ms. Liccioli concluded that this legislation would save lives, reduce injuries, and save property. It would, in essence, have zero fiscal impact as the revenue generated by the fees established by the bill would exceed the expense the legislation would incur on the Department of Revenue. That Department is charged with tracking the cigarettes that are permitted to be sold in the State. She urged the Committee to support the bill. 9:32:05 AM Co-Chair Hoffman asked whether this legislation would increase the cost of a pack of cigarettes. Ms. Liccioli assured that adoption of the bill would not increase costs to consumers. Co-Chair Hoffman asked whether it would increase costs to cigarette manufacturers. Ms. Liccioli understood that manufacturers would absorb any increase in cost if there were any. During discussion on this bill in a separate committee hearing, the industry had testified that the "difference in cost to them was negligible". 9:32:52 AM Senator Thomas asked for further information about the compliance markings that would be required on each pack of cigarettes. Ms. Liccioli specified that, in order to maintain consistency, the bill would establish marking standards. The bill's language would allow the State's fire marshal to determine specific marking requirements. The bill does direct that markings established in other states should be considered. Senator Thomas asked why the bill included language that specified that not more than 25 percent of the cigarettes tested in a test may exhibit full-length burns. 9:34:12 AM Ms. Liccioli expressed that this requirement was based on the "Certificate of Analysis" "Cigarette Ignition Strength Standard" report compiled by the National Institute of Standards & Technology (copy on file). That analysis "establishes the standards for what's acceptable". 9:34:47 AM Senator Elton questioned the $41,600 fiscal impact reflected in the Department of Revenue's fiscal note #3, dated March 19, 2007, as that Department currently has a division that maintains a listing of cigarettes. He thought the bill would have "the greatest impact" on the Department of Public Safety, specifically the fire marshal's office, and to a lesser degree, the Department of Law. He noted, however, that the Department of Public Safety had submitted a zero fiscal note. Senator Elton asked for further information about the Department of Revenue's determination that this legislation would require an additional one-half time position. Ms. Liccioli assured Senator Elton that the Department of Revenue's fiscal note had been discussed. The Department currently maintains a directory of cigarettes in compliance with existing State tax laws. That directory is "broad" in the sense that it would include cigarettes that would not meet the fire- safe standards identified in this bill. Ms. Liccioli continued. This legislation would require the Department to maintain two different lists: one specific to each fire-safe brand name and brand style cigarette certified fire- safe by the State; the other specific to which cigarettes in compliance with State tax laws. Distributors and retailers could only sell cigarettes listed in both directories. Ms. Liccioli advised that expanding the directory in this manner would initially require an additional fulltime position. Eventually that position would be reduced to halftime. 9:37:23 AM Senator Elton thought that establishing and maintaining a list would "be simpler and less resource intensive" than being professed; therefore, he asked that the Department speak to their fiscal note. 9:37:53 AM Senator Dyson also asked whether New York and other states that have enacted fire-safe cigarette legislation have experienced a reduction in cigarette related fires. Ms. Liccioli responded that no in-depth studies have been conducted in this regard; however, preliminary reports in New York indicate there has been a reduction in cigarette-related fires. 9:38:34 AM JOHANNA BALES, Excise Audit Manager, Tax Division/Anchorage Office, Department of Revenue, testified via teleconference from Anchorage to respond to the fiscal note question. She affirmed that a comprehensive directory of cigarettes "approved for sale in the State" is currently maintained by the Department. The entirety of "those cigarettes must be stamped and in compliance "with the nationwide Master Settlement Agreement (MSA)". Ms. Bales advised that this legislation would change the manner in which the Department conducts its cigarette enforcement and investigation practices. Furthermore, the Department "would be the primary agency" tasked with ensuring that only fire-save cigarettes were sold in the State. Ms. Bales communicated that the current directory includes approximately 200 brands of MSA compliant cigarettes. The Department would be required to compile an additional list specific to fire-safe cigarettes. "Because of the way this" legislation's language is written, that list would contain approximately 1,000 different brands of cigarettes. Ms. Bales specified that the Department would then be required to compile a third list which would depict those cigarettes in compliance with both the MSA and the fire-save regulations. In addition, the Department would be required to conduct an educational campaign for the approximate 2,000 cigarette product retailers and distributors in the State. Ms. Bales surmised that "additional duties" would also be assigned to the Department. 9:41:10 AM Co-Chair Stedman asked whether the enforcement process would become less burdensome as more and more states adopted fire-save cigarette legislation. JERRY BURNETT, Legislative Liaison, Department of Revenue, acknowledged that over time that could be the case. However, the immediate affect would be that additional work would be levied on the Department. Thus, it is "reasonable" to request the additional staffing reflected in the Department's $41,600 fiscal note. 9:42:19 AM Senator Elton understood that the testing would be conducted by other entities and the test results would be provided to the State Fire Marshall in the Division of Fire Prevention, Department of Public Safety. A list would then be provided to the Department of Revenue. It appears that the responsibility of the Department of Revenue would be "a data entry issue". To that point, he questioned why this would warrant contractual expenses and an additional staffing position the initial year and a half- time position thereafter. Mr. Burnett asked Ms. Bales to discuss the Department's responsibilities in this regard. 9:43:21 AM Ms. Bales clarified that the Department would be the sole entity responsible for compiling the list. She noted that each cigarette manufacturer is required to provide their cigarette marking signatures to both the State Fire Marshal and the Department of Revenue. Ms. Bales asserted that the Department is responsible for compiling and maintaining the directory, and, were this legislation enacted the Department would be required to maintain three lists. Ms. Bales noted that the Department is also the primary enforcement agency. They seize and destroy cigarettes that are non-compliant and they must ensure that the entity from whom the cigarettes were seized has a hearing. All these activities incur expenses to the Department. Ms. Bales pointed out that the Department did not receive any additional funding when the MSA was implemented. Nor, was its funding increased when it was subsequently directed to develop the directory of approved MSA cigarettes. These efforts place fiscal demands on the Department year-round as the directory is updated constantly. Similar efforts would be applied to the two additional lists this legislation would require. Ms. Bales stressed that existing Department responsibilities, including its auditing activities, are impacted whenever the Department is asked to absorb additional functions. She reiterated the expectation that additional duties would be placed on the Department by this legislation. Ms. Bales divulged that the $83,000 the State annually receives from cigarette certification fees typically matches Department costs; however, this legislation would incur additional expenses. 9:45:33 AM WARREN CUMMINGS, President, Alaska Fire Chief's Association and Fire Chief, City of Fairbanks, testified via teleconference from Fairbanks in support of the bill. "Cigarettes are the leading cause of home fire fatalities in the United States, killing 700 to 900 people" annually, including both smokers and non-smokers. Approximately four people die this way each year in Alaska. Numerous people are also injured from cigarette related structure fires. Mr. Cummings noted that one-quarter of the people injured or killed in structure fires are not the person who had been smoking the cigarette. 34 percent of that number is children of the smoker; 25 percent are their neighbor or friend; 14 percent are their spouse and partner; and 13 percent are their parent. Mr. Cummings shared that research conducted in the 1980s concluded that fire-safe cigarettes would eliminate three out of four cigarette related fire deaths. Had cigarette manufacturers begun producing fire safe cigarettes at that time, an estimated 15,000 lives would have been saved to date. 27 lives would have been saved in Alaska over the past ten years. Mr. Cummings shared that research conducted in New York indicates there has been "no decline in cigarette sales" since fire safe cigarettes were introduced. However, a one-third reduction in cigarette fire fatalities was experienced during the first six month period in 2004 when the law went into effect. Mr. Cummings urged the Committee to advance this legislation. 9:48:14 AM JIM CARROLL, Representative, AARP and Juneau Retired Teachers Association spoke in support of the bill. As a former firefighter, he has experienced firsthand the aftermath of cigarette related fires. 9:49:50 AM DAVID HULL, Vice Chair, Alaska Council on Emergency Medical Services, spoke in support of the bill. This issue impacts all the services associated with the Council. It is a life-safety issue. Mr. Hull avowed that rather than being an attempt "to regulate the industry or to restrict smoking"; this legislation "is an effort to curb needless fires from starting from a carelessly discarded cigarette". During his 32 years in the medical services industry, he responded to numerous cigarette related fires, including a recent apartment building fire in the City and Borough of Juneau that placed numerous people in harm's way. The origin of that fire was a discarded cigarette that caught a couch and ultimately the entire building on fire. Mr. Hull urged the Committee to pass this legislation. Its goal is to save lives and property. 9:52:17 AM Senator Thomas, observing that the safe cigarette language that would be required on each pack of cigarettes was extensive, voiced concern that it might overshadow other required warnings. He also understood that in recent years cigarette manufacturers have reduced the number of additives included in cigarettes. This has reduced the tendency for cigarettes to continue to burn. He was surprised this had not been addressed in the testimony. 9:53:20 AM Senator Elton, who had signed on as a bill sponsor, thanked Senator Olson for initiating the effort. While he considered this "an important bill" and supported its being reported from Committee, there were fiscal note issues that should be further addressed, specifically that the Department of Revenue's fiscal note did not address enforcement efforts. He also continued to question the Department's request for additional staffing to maintain the directory. 9:54:24 AM Senator Dyson shared his continuing wariness "about government intrusions and forcing industries to do things that they ought to be doing on their own". Nonetheless, he exampled a government intrusion he had supported which dealt with prostate cancer screening. He had asked the insurance industry why government had to intervene and force them to cover this since it was "such a wise thing for them to do for their clients". The response "behind closed doors" was that "we would if our competition would do it … we don't want to have to run our rates up a little and be at a competitive disadvantage". Senator Dyson concluded that government interference in that matter was acceptable; it was beneficial to both individuals and the industry as it placed them "on the same level playing field". He considered this legislation in the same light. Cigarette manufacturers would have done this on their own had everyone done it. Now that numerous states were taking similar action, he surmised that cigarette manufacturers would eventually switch to solely producing fire-safe cigarettes rather than maintaining two production lines. 9:56:18 AM Co-Chair Hoffman moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, CSSB 84(JUD) was REPORTED from Committee with two previous fiscal notes: $41,600 fiscal note #3 from the Department of Revenue and zero fiscal note #4 from the Department of Public Safety. AT EASE 9:56:57 AM / 10:01:38 AM