Legislature(2025 - 2026)BUTROVICH 205
03/24/2025 01:30 PM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) Violent Crimes Compensation Board | |
| SB17 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 17 | TELECONFERENCED | |
SB 17-CRIME COUNTERFEIT/NONFUNCTIONING AIRBAG
1:40:44 PM
VICE-CHAIR KIEHL reconvened the meeting and announced the
consideration of SENATE BILL NO. 17 "An Act establishing the
crime of airbag fraud."
1:41:11 PM
CHAIR CLAMAN, speaking as sponsor, introduced SB 17, as
paraphrased below:
In Alaska today, there is no law to prohibit the
installation or reinstallation of airbags that do not
meet federal safety standards. While legitimate
manufacturers design airbags to protect us from
serious injuries, counterfeit or nonfunctioning
airbags are known to either improperly deploy or fail
to deploy at all, potentially resulting in serious
injuries.
The primary purpose of this legislation is to support
federal efforts to stop the importation of counterfeit
or nonfunctioning airbags through the Federal Unfair
Trade Practices Act. It will allow federal authorities
to seize these products at Alaska's border.
1:41:48 PM
CHAIR CLAMAN continued the introduction of SB 17:
Automotive manufacturers do not make new airbags that
you might find in a car straight from the factory.
Instead, automotive manufacturers source them from a
handful of "tier one suppliers," which include Joyson
Safety Systems, Robert Bosch, or Nihon. There are nine
of these suppliers internationally, and they are all
regulated by federal laws, such as the Federal Motor
Vehicle Safety Act.
In contrast, counterfeit and nonfunctioning airbags
are often manufactured at a fraction of the price
overseas and sent to the United States to be installed
in cars by unscrupulous mechanics to slash their
costs. Just last week, a man in North Carolina was
found guilty of importing over 2,500 counterfeit
airbags from the United Kingdom. These nonfunctioning
and counterfeit airbags are defined as "replacement"
airbags, and they are often filled with junk, such as
t-shirts, newspapers, or sawdust. They are extremely
dangerous in the event of a crash.
By establishing airbag fraud as a crime, SB 17
prohibits dangerous actors from knowingly selling,
installing, or manufacturing these dangerous and
improper devices. Passage of this legislation will
help keep counterfeit airbags out of Alaska.
1:43:03 PM
CHAIR CLAMAN continued the introduction of SB 17:
Over 30 states have passed similar legislation. The
Michigan Penal Code takes a severe approach to this
crime, punishing airbag fraud as a felony punishable
by four years of imprisonment or a fine of $10,000. In
comparison, SB 17 classifies the installation or sale
of a counterfeit or nonfunctioning airbag as a class A
misdemeanor and a class C felony if serious injury or
death occurs. Of the states that have passed laws, and
we have reviewed the majority of those, most of the
states punish the crime as a misdemeanor only. It was
interesting that Michigan, which is the heart of
automobile manufacturing in the country, makes it a
felony. This reflects the independent values of each
state. The key is to fight the importation more than
anything else.
1:44:03 PM
CHAIR CLAMAN continued the introduction of SB 17:
The bill contains exceptions to the crime under four
different circumstances. The first exception applies
to cars used solely for police work, as many police
vehicles must remove rear airbags to install the
standard barriers located between the driver and
passenger. The second exception applies to a person
who sells a vehicle without knowing that it contains a
counterfeit or nonfunctioning airbag. The third
exception applies to a person who transfers a vehicle
to an insurance company when that vehicle has been
declared a total loss. The fourth exception is for an
insurance company that disposes of a vehicle as
authorized by law or regulation. These exceptions for
transactions involving insurance companies apply to
totaled cars that may contain nonfunctioning airbags
and are typically sold or disposed of for junk or for
parts.
We want to emphasize that SB 17 does not create a duty
to inspect a used car's airbags before it is sold. The
time and effort to examine each airbag in a used
vehicle is unrealistic and extremely onerous.
Inspecting an airbag is a highly technical practice
that can often result in damage to the airbag. Such a
requirement would likely add significant labor costs
for used car dealers, increase costs for individual
private sellers trying to sell their vehicles, and
ultimately result in higher prices for consumers,
significantly changing the used car market.
The Coalition Against Insurance Fraud supports SB 17
and believes in protecting consumers and the idea that
consumers should be able to trust their airbags. The
Automotive Anti-Counterfeiting Council (A2C2) and a
broad coalition of auto manufacturers also support
SB 17.
1:45:50 PM
CHAIR CLAMAN announced that Mr. Craig Orlan of Honda Motor
Company has been working on this legislation in coordination
with A2C2 and the automobile manufacturing group. He stated that
Mr. Orlan specifically represents Honda, but his views align
with those of manufacturers generally. He said Mr. Orlan is
available to answer questions and provide testimony.
CHAIR CLAMAN said that, to date, he is not aware of any
fraudulent airbag installations in Alaska. He stated that no
evidence exists of fraudulent or nonfunctioning airbag
installations occurring in Alaska. He explained that the intent
of SB 17 is not to prosecute anyone for installation but to
prevent such activity from occurring. He emphasized that it has
not happened yet and that Alaska wants to keep it that way.
1:46:42 PM
VICE-CHAIR KIEHL invited the bill sponsor's staff, Ms. Dennis,
to present the sectional analysis.
1:46:51 PM
CARLY DENNIS, Staff, Senator Matt Claman, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for SB 17:
[Original punctuation provided.]
Senate Bill 17
Sectional Analysis Version A
Section 1
AS 28.35.248. Airbag fraud
Establishes and defines airbag fraud as knowingly
selling, offering for sale, installing, reinstalling,
or manufacturing a counterfeit or nonfunctioning
airbag or device that is intended to conceal a
counterfeit or nonfunctioning airbag, or intentionally
selling, leasing or trading a vehicle that the person
knows has a counterfeit or nonfunctioning airbag.
Establishes airbag fraud as a class A misdemeanor or a
class C felony if death or serious physical injury to
another person occurs as a result of the counterfeit
or nonfunctioning airbag.
Establishes that the liability of any party in a civil
action is not precluded. Provides that this
legislation does not create a duty to inspect a
vehicle for a counterfeit or nonfunctioning airbag
before its sale.
This section excludes a person installing,
reinstalling, or replacing an airbag on a vehicle used
solely for police work; an owner or employee of a
motor vehicle dealership or the owner of a vehicle who
does not have knowledge that the vehicle's airbag is
counterfeit or nonfunctioning; a person who transfers
a vehicle title to an insurance company to satisfy an
insurance claim; or an insurance company that sells or
otherwise disposes of a vehicle as authorized by law
or regulation.
1:48:18 PM
SENATOR TOBIN referred to page 2, line 6 of the bill. She
observed that SB 17 proposes to exempt a person from the crime
of airbag fraud if the vehicle is sold to an insurance company.
She asked why the bill does not have a comparable provision for
the donation of a vehicle to a nonprofit organization.
1:48:57 PM
CHAIR CLAMAN replied that it is his understanding that such
donations are unrelated to insurance transactions involving
totaled vehicles. He explained that under existing law and
regulation, an owner may transfer a totaled vehicle to an
insurance company as part of a claim settlement. In contrast, a
vehicle that is not running and has not been in an accident
perhaps one that has sat unused in a backyard for several years
and was never insuredfalls outside that process. He said those
vehicles do not need a specific exemption because donating one
is essentially the same as a private sale. The only difference
is that the vehicle is given rather than sold. He stated that
the focus is on whether the person transferring the vehicle is
aware of a non-functioning airbag. If the person knows of such a
defect and fails to disclose it, that would be an issue.
1:50:05 PM
SENATOR TOBIN clarified that her concern relates to the absence
of applicability language. She said that if SB 17 were enacted,
a person who currently owns a vehicle known to have a
nonfunctioning airbag, or a vehicle previously involved in an
accident that an insurance company might consider totaled, could
be prohibited from donating that vehicle once the law takes
effect. She explained that her concern centers around
individuals who currently own vehicles that fall under these
categories, who might be unable to donate them should SB 17 be
enacted.
1:50:39 PM
CHAIR CLAMAN replied that he would check that out with
Legislative Legal Services. He stated that the key is that this
legislation concerns criminal prosecution, and unless there is
proof of knowledge of the nonfunctioning airbag, no criminal
liability would exist.
1:51:19 PM
SENATOR TOBIN stated that she owns a vehicle that would fall
under this category. She said the airbag does not function and
she has considered donating the vehicle to a local veteran group
that operates off of Merrill Field. She said this legislation
has caused her to consider what actions might be permitted if
SB 17 were enacted.
1:51:40 PM
CHAIR CLAMAN replied that he is happy to talk more about that.
1:51:44 PM
VICE-CHAIR KIEHL requested that the aide for the bill sponsor
walk the committee through a discussion on how the bill's
definition of "nonfunctioning" applies to vehicles that are sold
or given away when the owner discloses that the airbag does not
work.
1:52:15 PM
MS. DENNIS replied that the definition section on page 2,
beginning on lines 25 and 28, specifies that "counterfeit" and
"nonfunctioning" airbags refer to replacement airbags. She
explained that an airbag that deployed in a crash but was never
removed from the vehicle, would not be considered counterfeit or
nonfunctioning under the bill.
1:52:50 PM
SENATOR MYERS asked how SB 17 applies to airbags that were
original equipment but no longer function. He described several
hypothetical scenarios: a vehicle involved in a crash where the
airbags were never replaced; airbags under recall that were not
changed out; and an owner who transfers title of an old vehicle
even though the owner knows the airbags do not work. He asked
how SB 17 would address those scenarios.
1:53:30 PM
MS. DENNIS replied that SB 17 does not apply to those scenarios
because the bill is specific to replacement airbags. She
emphasized that if the airbag is original equipment, regardless
of any issues, the owner would not be liable under this
legislation.
1:53:56 PM
SENATOR MYERS asked whether SB 17 could prevent the use of
replacement airbags that are functional but not approved by the
original manufacturer. He recalled that nine airbag
manufacturers exist. He presented a scenario in which a
competitor's airbag, a company other than the one under contract
with a given vehicle company, is installed in the vehicle. It
fits properly but is not officially approved by the original
automaker. He wondered what affect the proposed legislation
would have on this airbag scenario.
1:54:44 PM
CHAIR CLAMAN expressed his understanding that the question would
be whether the replacement airbag meets applicable federal
regulations, which depend on the specific details of the airbag
itself. He stated that, although he did not know the answer, his
general understanding is that federal regulations require any
replacement airbag, regardless of the manufacturer, to be
compatible with the vehicle in a manner consistent with federal
laws. He noted that, based on prior discussions, Honda uses
airbags from all nine manufacturers in different vehicles. He
said it is not the case that each automaker contracts
exclusively with a single airbag manufacturer. Instead, there is
a competitive market in which airbag manufacturers routinely
submit bids and proposals, while vehicle manufacturers seek the
best suppliers. He deferred the question to Mr. Orlan for
further clarification.
1:55:57 PM
SENATOR KIEHL directed the question to Mr. Orlan.
1:56:13 PM
CRAIG ORLAN, Director, State and Local Government Affairs,
American Honda Motor Company, Alexandria, Virginia, stated that
a robust market exists for airbags. He said nothing in SB 17
would prohibit a new manufacturer or a replacement airbag
company from producing airbags, provided the products meet
federal safety standards. He explained that, at present, there
is no legitimate aftermarket for airbags because they are
expensive, produced in relatively low volumes, and considered a
high-margin part. He emphasized that the proposed legislation
would not prevent a new company from entering the market and
offering an aftermarket airbag that complies with federal
requirements.
1:56:59 PM
SENATOR STEVENS inquired about the criminal elements of SB 17,
asking who would be subject to prosecution for an offense
involving the sale of a vehicle with a counterfeit or
nonfunctioning airbag. He questioned whether criminal liability
would fall on the vehicle owner who sold it, the mechanic who
installed the airbag, or the airbag manufacturer.
1:57:20 PM
CHAIR CLAMAN replied that a person who sells a vehicle with a
nonfunctioning airbag would not be liable if unaware of the
defect. He stated that liability would apply only if it could be
proven that the person had knowledge of the issue, emphasizing
that evidence of such knowledge would be required to establish
liability.
CHAIR CLAMAN explained that under SB 17, three primary parties
could be liable for an offense:
• The manufacturer, though, that circumstance is unlikely to
occur in Alaska.
• The seller or installer of the airbag.
• A person who sells a vehicle knowing it contains a
nonfunctioning airbag.
1:58:19 PM
MR. ORLAN stated that the purpose of this type of legislation is
to prevent counterfeit and nonfunctioning airbags from entering
vehicles in the first place. He explained that this will allow
federal, state, and local law enforcement agencies to coordinate
efforts to seize such products at the border. Under current law,
federal authorities may only seize counterfeit parts if they
violate federal trademark or hazardous materials laws, and only
a small percentage of counterfeit airbags meet those criteria.
He said this legislation would close that gap by enabling law
enforcement to intercept the products before they enter the
market.
MR. ORLAN said this legislation puts pressure on E-commerce
retailers to de-list website products that are in violation of
state law. It also allows enforcement efforts to target repair
shops suspected of installing counterfeit or nonfunctioning
airbags. He noted that similar state laws have already been used
successfully, citing a recent case in Florida where such
legislation was leveraged to obtain records from installers. As
a result, law enforcement identified approximately 200 consumers
who were unaware their vehicles contained these defective
airbags, and the airbags were replaced before causing any harm.
He emphasized that the core purpose of the legislation is to
prevent installation of these products and to ensure their
removal once discovered.
1:59:45 PM
SENATOR STEVENS referred to the incidents involving 200 cases of
airbag fraud in Florida, asking whether each of those incidents
would result in separate charges.
2:00:17 PM
CHAIR CLAMAN replied that if, in Alaska, an individual installed
200 nonfunctioning airbags, that installer could potentially
face 200 charges. He explained that if one of those vehicles
were involved in an accident in which the airbag failed to
deploy and a passenger sustained serious physical injury, the
installer could also face a felony charge. He stated that if
only one such accident occurred resulting in serious injury,
there would be one corresponding felony charge.
2:01:03 PM
VICE-CHAIR KIEHL asked whether the importation of a few hundred
counterfeit or nonfunctioning airbags would result in a single
charge or multiple charges. He restated his question, noting
that installing 200 airbags might result in 200 charges, but
asked how the law would treat the act of importing 200
counterfeit or nonfunctioning airbags.
CHAIR CLAMAN replied that he was uncertain, explaining that the
intent of the legislation is to give federal authorities the
ability to seize such products at the border. He said that
determination would fall more under federal jurisdiction, and he
did not know the precise answer.
CHAIR CLAMAN reasoned that, under Alaska law, if counterfeit or
nonfunctioning airbags made it past the border and into an
installer's shop but none had yet been installed, he was
uncertain but suggested that state authorities might treat that
as a single offense. On the other hand, if the airbags had not
yet been installed in any vehicles, it remains unclear whether
that would constitute a criminal act under the proposed
legislation.
2:02:22 PM
SENATOR TOBIN said she grew up with a Ford F-150 pickup truck in
rural Alaska and, as a child, accidentally deployed one of its
airbags. She asked whether, under the proposed legislation, it
would be legal to sell a vehicle whose airbag had deployed but
had never been replaced.
CHAIR CLAMAN replied that, assuming the deployed airbag was the
original airbag and not a replacement, the sale of that vehicle
would not be affected by SB 17.
2:03:22 PM
SENATOR TOBIN sought clarification, asking whether it would be
illegal under the proposed legislation to sell that Ford F-150
if it had a replacement airbag installed.
CHAIR CLAMAN replied yes.
2:03:30 PM
SENATOR TOBIN raised the issue of limited parts availability in
rural Alaska. She said that life in rural communities often
involves limited access to vehicles and that, in some cases,
airbags may have deployed or been replaced. She noted that rural
residents who perform vehicle repairs may not know where to
obtain a manufacturer-approved replacement airbag. She expressed
concern that the proposed legislation could result in severe
penalties for those living in rural areas.
2:04:11 PM
CHAIR CLAMAN said that raises an interesting question. He
expressed his belief that the Legislature passed a motor vehicle
Dealer law in 2018. He said the manufacturer is responsible for
the cost of a warranty replacement or airbag recall. He
explained that the manufacturer has an obligation to ensure the
work is completed in the rural location or to ship the vehicle
if necessary. He said if a person discloses knowledge of a
nonfunctioning airbag, that disclosure should not result in
criminal liability. He said he would look further into the
matter.
2:06:12 PM
VICE-CHAIR KIEHL referred to the word "reinstalls" on page 1,
line 6 of the bill. He asked about the distinction between
"reinstalls" and "installs," noting that his impression is that
any time something is put inwhether for the first time or
againit would be considered an installation. He asked what the
bill intends to address by including the term "reinstall."
2:06:42 PM
CHAIR CLAMAN replied that the intent is to remove any doubt that
both "installing" and "reinstalling" a nonfunctioning airbag
would constitute a criminal act. For example, suppose an airbag
were removed from a vehicle in a junkyard and no one knew that
the airbag was nonfunctioning. Later, the airbag was reinstalled
in another car. The reinstallation of that nonfunctioning airbag
might be thought of as different than the installation of a new
part that happened to be fraudulent. He expressed his belief
that the term is included out of an abundance of caution.
2:07:49 PM
VICE-CHAIR KIEHL referred to a paragraph in SB 17, which states
that the proposed legislation would not apply to an insurance
company that sells or otherwise disposes of a vehicle as
authorized by law or regulation. He observed that when an
insurance company disposes of a vehicle with a salvage title,
the buyer has reason to beware. Under those circumstances, the
presence of a nonfunctioning airbag is somewhat less concerning.
He asked whether there are situations in which an insurance
company may dispose of a vehicle without issuing a salvage
title.
CHAIR CLAMAN replied that a representative from State Farm could
better answer that question and will be available to testify at
the next hearing of the bill.
VICE-CHAIR KIEHL said he looks forward to that discussion.
2:08:53 PM
At ease.
2:09:25 PM
[VICE-CHAIR KIEHL returned the gavel to Chair Claman.]
2:09:26 PM
CHAIR CLAMAN reconvened the meeting and announced invited
testimony on SB 17.
2:09:45 PM
MR. ORLAN reintroduced himself, stating he is an employee of the
American Honda Motor Company. He expressed appreciation for the
opportunity to speak in support of SB 17 and commended the bill
sponsor for doing a great job. He said the legislation has
passed in 38 states with the support of automakers, dealers,
repair professionals, insurers, law enforcement, consumer groups
and other stakeholders. He emphasized that the intent of the
bill is not to prohibit the transfer of vehicles with deployed
airbags or vehicles that are under recall.
MR. ORLAN provided background on SB 17, explaining that the
legislation has been developed over the past 11 years. During
that time, approximately 30 to 40 arrests have occurred in
states that enacted similar laws. He said those cases involve a
small number of bad actors who knowingly and intentionally
installed counterfeit or nonfunctioning airbags in vehicles. He
reiterated that in one Florida case, an installer placed between
200 and 300 of these airbags in vehicles. He stated that the
primary purpose of the law is to give law enforcement the
leverage needed to obtain records from installers and ensure
that the defective airbags are removed from vehicles.
2:11:15 PM
CHAIR CLAMAN held SB 17 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Robert Urata Resume- Violent Crimes Compensation Board.pdf |
SJUD 3/24/2025 1:30:00 PM |
|
| SB 17 Version A.pdf |
SJUD 3/24/2025 1:30:00 PM |
SB 17 |
| SB 17 Sponsor Statement Version A 1.29.2025.pdf |
SJUD 3/24/2025 1:30:00 PM |
SB 17 |
| SB 17 Sectional Analysis Version A 1.29.2025.pdf |
SJUD 3/24/2025 1:30:00 PM |
SB 17 |
| SB 17 Supporting Document - Honda Memo.pdf |
SJUD 3/24/2025 1:30:00 PM |
SB 17 |