Legislature(2025 - 2026)GRUENBERG 120
03/21/2025 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| HB74 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 74 | TELECONFERENCED | |
| += | HB 118 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 74-CRIME COUNTERFEIT/NONFUNCTIONING AIRBAG
1:17:43 PM
CHAIR GRAY announced that the final order of business would be
HOUSE BILL NO. 74, "An Act establishing the crime of airbag
fraud."
1:18:54 PM
CHAIR GRAY gave opening remarks, stating that the bill would
make the installation of a nonfunctioning or counterfeit airbag
a new crime. He shared his understanding that the bill is about
consumer protections; however, he expressed the following
concerns: firstly, there would be no legal way for a person to
sell a vehicle with nonfunctioning airbags, but the bill makes
an exception for insurance companies; secondly, the bill exempts
law enforcement vehicles; thirdly, the bill defines
"nonfunctioning" as a replacement airbag, which would
effectually exempt auto dealers and manufacturers from
prosecution, as they sell new vehicles with the original
airbags. He expressed further concern that a car with an airbag
that doesn't work would be considered a nonfunctioning airbag
even if it wasn't a replacement airbag.
1:21:17 PM
REPRESENTATIVE FRANK TOMASZEWSKI, Alaska State Legislature, as
prime sponsor, acknowledged the need to thoroughly vet the
legislation to avoid unintended consequences and said he looked
forward to having the expert testifiers address questions and
concerns.
CHAIR GRAY asked whether its currently a crime to sell a vehicle
with nonfunctioning airbags.
1:22:48 PM
CLAIRE RADFORD, Attorney, Legislative Legal Services,
Legislative Affairs Agency (LAA) said there's nothing specific
to airbags in Alaska statutes, and whether a crime could be
charged if a vehicle were sold with nonfunctioning airbags would
be fact specific.
CHAIR GRAY considered a scenario in which a person knowingly
sold a vehicle with nonfunctioning airbags and the buyer was
subsequently injured or killed in a crash. He asked whether the
seller could be charged with a crime.
MS. RADFORD said under current statute, the conduct described
may fall under manslaughter, criminally negligent homicide, or
assault, but it would still be fact specific depending on the
elements surrounding the injury or death.
CHAIR GRAY asked whether it's possible for a "private person" to
sell a vehicle with nonfunctioning airbags under the bill as its
currently written.
MS. RADFORD responded only if that person sold the airbag
without knowledge that it was nonfunctioning; otherwise it would
fall within the proposed crime.
1:24:55 PM
REPRESENTATIVE EISCHEID asked if a private party sold a car with
the airbag light on, whether that would that be considered
nonfunctioning.
MS. RADFORD deferred the question to the Department of Law
(DOL).
CHAIR GRAY noted that DOL would be here at a later date. He
asked Ms. Radford to define "nonfunctioning."
MS. RADFORD read the definition of "nonfunctioning" starting on
page 2, line 28 of the bill:
"nonfunctioning" means a replacement airbag that is
inoperable, damaged, or recalled, has previously been
deployed, will cause a vehicle's diagnostic system to
inaccurately indicate that the vehicle is equipped
with a properly functioning airbag, or results in an
electric fault detected by a vehicle's diagnostic
system after the installation procedure is complete;
1:27:28 PM
CHAIR GRAY asked if his airbag had deployed during an accident,
whether he would be able to sell his car if the bill were to
pass.
MS. RADFORD explained that if the seller had knowledge and
intentionally sold, leased, or traded that vehicle, the
individual could be charged under Section 28.35.248(a)(3) of the
bill. In response to a follow up question, she reiterated that
a private person would not be able to sell, lease, or trade
their vehicle if they knew the airbag had previous been
deployed, as it would be considered "nonfunctioning" under the
bill language.
1:28:46 PM
REPRESENTATIVE MINA considered an example in which a dealership
sold a car with a new but faulty airbag and the vehicle got into
an accident that seriously injured or killed someone. She asked
what existing laws would be violated in that scenario.
MS. RADFORD did not know the answer, as nothing applies to those
specific facts under current Alaska law.
1:29:58 PM
REPRESENTATIVE VANCE said she wanted to ensure that Alaska
statutes are consistent when making references to federal law.
1:31:50 PM
CHAIR GRAY said he would begin Mr. Orlan's testimony by swearing
him in. He asked, "Do you swear or affirm that the testimony
that you are providing today is the truth, the whole truth, and
nothing but the truth?"
CRAIG ORLAN, Director of Local and State Government Retailers,
American Honda Motor Company, answered yes.
CHAIR GRAY asked Mr. Orlan to speak to Honda's history with the
bill in other states and whether it was initiated before or
after the class action settlements held against Honda.
1:32:19 PM
MR. ORLAN explained that Honda has been working on this issue
with other companies in the industry for the past 11 or 12 years
and has enacted legislation in 38 states. Honda began working
on the issue right around the emergence of the Dakota airbag
recall, which led to the identification of countless
counterfeits across the country. He said Honda realized that
more needed to be done to stop these counterfeits from entering
the country.
CHAIR GRAY asked which other auto companies Honda worked with to
pass legislation in other states.
MR. ORLAN answered Alliance for Automotive Innovation, which
represents all the major auto makers outside of Tesla and other
electric vehicle (EV) manufacturers. He shared that the
Automotive Anti-Counterfeiting Council is also supportive of the
bill.
1:34:03 PM
CHAIR GRAY asked how many states passed similar legislation.
MR. ORLAN answered 37 plus Texas with a similar law.
CHAIR GRAY asked whether Mr. Orlan would oppose changing the
definition of "nonfunctioning" to include all airbags, not just
replacement airbags.
MR. ORLAN said he disagreed with Ms. Radford's legal analysis.
He said the bill was designed to be narrow in scope. With 38
states enacting the legislation, only about 30-40 people have
been prosecuted as a result. He explained that "nonfunctioning"
was selected because "counterfeit" is a specific legal term that
means someone is using a registered trademark without
authorization, which given how airbags are manufactured, would
be difficult for Homeland Security to identify and confiscate.
He clarified that a previously deployed airbag is not by
definition a nonfunctioning or replacement airbag; instead,
"previously deployed airbag" is intended to capture a deployed
airbag that has been restuffed into a used cover and sold to
consumers. He said he would be reluctant to remove "replacement
airbag" because the bill would then apply to any new airbag and
if there were to be a recall, automakers could be charged with a
felony under Alaska law.
1:37:38 PM
CHAIR GRAY asked whether the bill as written could be used to
charge Honda with a crime.
MR. ORLAN answered no; however, the answer would potentially be
yes if the "replacement airbag" language was removed.
CHAIR GRAY shared his understanding that in April 2024, $67
million airbags were recalled, and that the vast majority of
nonfunctioning airbags were in new vehicles with new airbags.
He expressed confusion as to why Honda is passing a bill that
would never impact Honda.
MR. ORLAN said the bill is designed to go after the individuals
who are intentionally building and installing faulty airbags
that were never intended to offer protection in a crash.
Federal law addresses how original equipment manufacturers (OEM)
should act, but there isn't a law that addresses the replacement
parts market, which is a loophole the bill intends to close.
1:40:16 PM
CHAIR GRAY explained that in Alaska, many communities are off
the road system with no access to a dealership. He asked how
notice of a recalled airbag should be handled in one of these
communities.
MR. ORLAN said throughout the Dakota recall, Honda traveled to
people's houses to make repairs where necessary and is committed
to replacing every recalled airbag that's out there. He
acknowledged Alaska's unique challenges and said Honda is
willing to do anything it can to make that process easier. He
encouraged individuals to reach out to their closest dealer to
find a solution.
1:42:36 PM
REPRESENTATIVE MINA considered a scenario in which a dealer sold
a new car with a faulty airbag and the car injured or killed
someone in an accident. She asked what laws would hold that
manufacturer or dealership accountable with regard to the
National Traffic and Motor Vehicle Safety Act.,
MR. ORLAN explained that the federal act sets performance
standards for airbags, not criminal code. The National Highway
Traffic Safety Administration would be able to impose civil or
criminal penalties on a manufacturer or parts supplier if these
standards were not met.
1:44:05 PM
REPRESENTATIVE EISCHEID asked if he brought a vehicle with a
nonfunctioning airbag to an independent auto repair shop,
whether that shop would be without legal jeopardy if they
properly installed a federally approved replacement airbag
regardless of brand.
MR. ORLAN explained that per franchise law, only auto
dealerships can provide original OEM airbags, and an independent
repair shop could obtain an OEM airbag from any authorized
dealership and install it. He said the goal is to prevent
airbags from being purchased from Alibaba or eBay, for example,
at a low cost and reselling them at full price to profit the
difference while compromising safety.
1:47:27 PM
CHAIR GRAY asked whether Mr. Orlan would be opposed to an
amendment that would allow people to disclose, in writing, that
their vehicle has recalled airbags that were never replaced to
allow them to sell the car in a remote location.
MR. ORLAN contended with the premise that the bill, as drafted,
would prohibit the transfer of a vehicle with an open recall.
He reiterated that the "replacement airbag" language is intended
to prevent someone with a pile of Dakota airbags from
reinstalling them in someone's vehicle in lieu of a new airbag.
The goal is firstly, to allow Homeland Security to seize these
products at the border, and secondly, to spread customer
awareness about airbag safety. He explained that with the word
"replacement" included in the definition of "nonfunctional," it
would not apply to recalled, defective, or deployed airbags. In
response to a follow up comment, he agreed that recalled airbags
should be disclosed in the sale of the vehicle; however, he said
it's an entirely separate issue.
1:51:15 PM
CHAIR GRAY asked how someone in a remote village could sell
their vehicle if the airbag had been deployed.
MR. ORLAN clarified that a previously deployed airbag is not a
replacement airbag as long as it's not reinstalled. He
emphasized that there is no prohibition against selling a
previously deployed airbag. The previously deployed airbag must
be reinstalled as a replacement airbag to fall under the bill.
1:52:49 PM
REPRESENTATIVE UNDERWOOD asked for verification that Mr. Orlan
had stated that people are stuffing t-shirts into airbags.
MR. ORLAN said yes, people are taking airbag covers and filling
them with various debris, which is the conduct the bill attempts
to target.
1:54:49 PM
REPRESENTATIVE VANCE sought to better understand the provision
that exempts law enforcement vehicles.
MR. ORLAN said there are certain law enforcement vehicles that
are modified to provide extra safety for the officers and it's
not the bill's intent to prohibit this.
REPRESENTATIVE VANCE asked whether firefighters or other first
responders should be included in the bill.
MR. ORLAN responded no, its specific to law enforcement, but it
could be addressed if a concern was raised.
1:57:52 PM
CHAIR GRAY asked how many vehicles Chaz Limited repairs in a
month and how often air bags are replaced.
RANDY MAILLOUX, Manager, Chaz Limited, answered 50-60 vehicle
repairs and 1-2 airbag replacements per month. In response to a
series of follow up questions, he confirmed that the airbags are
purchased from dealerships, and said he's not aware of auto
shops buying anything other than an OEM product.
2:00:15 PM
REPRESENTATIVE EISCHEID asked whether Mr. Mailloux could
envision a scenario in which a bad actor would install a faulty
airbag to cut costs.
MR. MAILLOUX stated that no reputable shop would risk doing
that.
CHAIR GRAY asked whether it's true that airbag repair can be
dangerous and that airbags cannot be replaced in every village
in Alaska.
MR. MAILLOUX agreed that the work is dangerous if the correct
steps are not taken to ensure that the airbags do not deploy
while working on them.
CHAIR GRAY asked whether insurance totals a vehicle if an airbag
is deployed.
2:04:17 PM
JENNIFER MUSE, Counsel, Claim Litigation Division, State Farm,
explained that when a vehicle is declared a total loss, the
insured typically signs title over to the insurer who sells the
vehicle to a salvage company. In Alaska, there is a regulation
that references this process, which is the carveout that the
insurance industry has requested with regard to this
legislation.
CHAIR GRAY asked, if insurance companies need a carveout to sell
a vehicle with nonfunctioning airbags, why a "regular person"
wouldn't also need an exemption to sell a car with
nonfunctioning airbags.
MS. MUSE deferred the question to the Division of Motor Vehicles
(DMV), as there is an Alaska regulation that specifically
addresses these transactions in the insurance industry.
CHAIR GRAY asked if the airbag light is on, whether the
insurance company considers that to be an indication of a
nonfunctioning airbag.
MS. MUSE said that doesn't necessarily mean that the vehicle
would be declared a total loss. She explained that the carveout
is trying to protect both the consumer and the insurance company
during these transactions if a vehicle has a nonfunctioning
airbag.
CHAIR GRAY reiterated his belief that in remote Alaska, a person
should be able to sell their vehicle with a nonfunctioning
airbag to recoup some of its value without being held liable.
MS. MUSE said a person in rural Alaska who is transitioning
their vehicle to an insurance company would be protected
pursuant to 2 AAC 92.170, which only applies to vehicles that
are declared a total loss or constructed total loss.
CHAIR GRAY sought to confirm that if the vehicle is still
drivable, this carveout would not apply.
MS. MUSE responded correct; in which case the vehicle would be
repaired by a repair shop.
CHAIR GRAY reiterated that there are places in Alaska where the
repairs cannot be performed. He concluded that there's no
mechanism for the individual in this scenario to sell their
vehicle with a nonfunctioning airbag.
MS. MUSE declined to answer, as her focus is on the insurance
transaction.
2:11:12 PM
REPRESENTATIVE MINA asked whether a person may drive a car in
Alaska without airbags.
DAVID GOFF, Staff, Representative Frank Tomaszewski, Alaska
State Legislature, on behalf of Representative Tomaszewski,
prime sponsor, answered yes.
REPRESENTATIVE MINA shared her understanding that if the bill
were to pass, the car could be sold to someone, as long as the
airbag had not be replaced.
CHAIR GRAY reread the definition of "nonfunctioning" and
restated his understanding that "nonfunctioning" means
previously deployed. He asked whether that is correct.
MR. GOFF shared his understanding that nationally, cars may be
driven with deployed airbags without issue.
CHAIR GRAY sought to confirm that if the deployed airbag is
removed from the vehicle, the car may be driven and sold.
MR. GOFF responded in the affirmative.
2:14:31 PM
REPRESENTATIVE VANCE suggested that DOL would provide further
clarity. She shared two stories, and shared her understanding
that DMV is notified of a reconstructed car. She said the bill
is attempting to go after bad actors who try to fool people with
faulty products.
MR. GOFF pointed out that the vast majority of dealerships use
Carfax, which contains this information as well.
2:17:49 PM
The committee took a brief at-ease at 2:17 p.m.
2:18:23 PM
CHAIR GRAY invited Ms. Radford to answer questions.
2:18:53 PM
The committee took a brief at-ease at 2:18 p.m.
2:19:52 PM
CHAIR GRAY asked whether under the proposed legislation, a car
could be sold if the airbags had been deployed and removed from
the vehicle.
MS. RADFORD shared her understanding that the vehicle in this
scenario could not be sold based on the definition of
"nonfunctioning."
2:21:49 PM
REPRESENTATIVE MINA asked which part of the "nonfunctioning"
definition captures a deployed airbag that has been removed from
the vehicle.
MS. RADFORD said a previo8usly deployed airbag is captured under
the "nonfunctioning" definition; however, if the airbag is
previously deployed and no longer in the vehicle, she said there
could be an argument that it is no longer covered by the bill
language.
2:22:41 PM
REPRESENTATIVE EISCHEID emphasized the word "replacement" in the
definition of "nonfunctioning." He shared his understanding
that a car with a nonfunctioning airbag could be sold by a
private seller as long as the deployed airbag had not been
reinstalled.
MS. RADFORD contended that by her reading, the replacement
airbag would not apply to "previously been deployed" in the
definition of "nonfunctioning."
CHAIR GRAY asked whether current law requires functional airbags
in a vehicle.
MS. RADFORD offered to follow up with the requested information.
2:24:37 PM
CHAIR GRAY announced that HB 74 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 74 Memo.pdf |
HJUD 3/21/2025 1:00:00 PM |
HB 74 |
| HB 74 Amendment 1.pdf |
HJUD 3/21/2025 1:00:00 PM |
HB 74 |
| HB 74 Amendment 2.pdf |
HJUD 3/21/2025 1:00:00 PM |
HB 74 |
| HB 74 Amendment 3.pdf |
HJUD 3/21/2025 1:00:00 PM |
HB 74 |