Legislature(2005 - 2006)CAPITOL 120

04/13/2005 01:00 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved CSHB 183(JUD) Out of Committee
Moved CSHB 260(JUD) Out of Committee
<Bill Hearing Postponed to 4/18>
Bills Previously Heard/Scheduled
Moved CSSSHB 53(JUD) Out of Committee
HB 260 - TOBACCO: BONDS; TAX; POSSESSION BY MINORS                                                                            
1:31:51 PM                                                                                                                    
CHAIR McGUIRE announced that the  next order of business would be                                                               
HOUSE BILL NO.  260, "An Act relating to  purchase and possession                                                               
of cigarettes or  tobacco products by a person under  19 years of                                                               
age,  to licenses  for persons  engaged  in activities  involving                                                               
tobacco products,  to taxes on  cigarettes and  tobacco products,                                                               
and to  the amount of  the bond required  to stay execution  of a                                                               
judgment in  civil litigation involving a  signatory, a successor                                                               
of a  signatory, or an  affiliate of  a signatory to  the tobacco                                                               
product Master  Settlement Agreement  during an  appeal; amending                                                               
Rules 204,  205, and  603, Alaska  Rules of  Appellate Procedure;                                                               
and providing for an effective date."                                                                                           
REPRESENTATIVE KEVIN  MEYER, Alaska  State Legislature,  as chair                                                               
of the  House Finance Committee,  sponsor, presented HB 260.   He                                                               
said  that  HB 260  addresses  the  issues of  tobacco  taxation,                                                               
possession  and  purchase  of tobacco  products  by  minors,  and                                                               
limits on  the supersedeas  bond that  signatories of  the Master                                                               
Settlement  Agreement (MSA)  must post  to stay  an execution  of                                                               
judgment in civil  tobacco-related litigation.  He  said his main                                                               
goal in  carrying the bill is  to further the efforts  being made                                                               
to prevent  children from starting  to smoke in the  first place.                                                               
Studies indicate  that if a  person doesn't start  smoking before                                                               
the age  of 19,  there is  a 90 percent  chance that  he/she will                                                               
never start smoking.   The bill increases the  tax on "smokeless"                                                               
tobacco products from 75 percent  to 100 percent of the wholesale                                                               
cost,  and  accelerates  the  currently  instituted  increase  on                                                               
REPRESENTATIVE MEYER  relayed that under HB  260, individuals who                                                               
import tobacco  products for their own  personal consumption will                                                               
be required to purchase a  buyer's license from the Department of                                                               
Revenue (DOR)  for a fee of  $25; such licensure will  enable the                                                               
DOR to collect the required taxes  from the buyer.  The bill also                                                               
proposes to set  the supersedeas bond limit at $100  million.  He                                                               
offered his  understanding that this  bond limit will  not change                                                               
any other aspect  of the law, will not change  the rules by which                                                               
a trial  is conducted,  will not affect  who ultimately  wins the                                                               
lawsuit, and  will not affect  the rights of plaintiffs  to fully                                                               
recover damages.  Placing a limit  on such bonds will ensure that                                                               
the state will continue to  receive its MSA payments, he posited,                                                               
and predicted  that because Alaska is  such a small state,  it is                                                               
doubtful  that the  proposed  bond limit  would  ever be  reached                                                               
REPRESENTATIVE  MEYER  said  it  is important  to  keep  the  MSA                                                               
payments coming  into the state,  because that money  goes toward                                                               
the  state's education/cessation  programs.   Currently 26  other                                                               
states have established supersedeas bond  limits, and it would be                                                               
appropriate for Alaska to do the same, he concluded.                                                                            
1:37:30 PM                                                                                                                    
MICHAEL PATTERSON,  President, Lucky  Raven, Inc., said  he would                                                               
like to  see improvements made  to the enforcement  provisions of                                                               
the bill.   Currently, for a first offense, a  business will lose                                                               
its license.   So for some businesses, such as  his, that type of                                                               
penalty  would in  essence shut  the business  down, whereas  for                                                               
other businesses,  such as  those that are  not primarily  in the                                                               
business of selling  tobacco, that type of  penalty wouldn't have                                                               
that great  an impact.   He suggested that  substantial financial                                                               
penalties  - both  on the  individual that  performs the  illegal                                                               
sale, and on the business itself  - would be a greater deterrent;                                                               
for example,  a financial penalty  of $5000 for a  first offense,                                                               
and $10,000  for a  second offense.   "I  believe ...  making the                                                               
clerk also liable for the offense  ... will help clear up part of                                                               
the difficulties," he remarked.                                                                                                 
MR. PATTERSON  said he would  also like to  see more done  in the                                                               
way of education regarding tobacco  sales; for example, currently                                                               
the  alcohol  industry  is benefiting  from  the  "techniques  in                                                               
alcohol  management" (TAM)  program,  and he  would  like to  see                                                               
similar educational efforts  made in the tobacco  industry.  Also                                                               
of concern to him is the  enforcement of the tax on other tobacco                                                               
products.   Currently  there isn't  any state-to-state  reporting                                                               
and it is  very difficult to track Internet sales  of cigars, for                                                               
example, and  so trying  to collect  the tax  on such  sales will                                                               
also be  very difficult,  he concluded,  and predicted  that this                                                               
gap  in  enforcement will  leave  the  door  wide open  for  most                                                               
consumers  to look  out of  state when  purchasing their  tobacco                                                               
products,  and  could  actually   discourage  people  from  doing                                                               
business in Alaska.                                                                                                             
CHAIR  McGUIRE next  ascertained that  a representative  from the                                                               
Department  of   Health  and  Social  Services   (DHSS),  Tobacco                                                               
Prevention and Control Unit, was available to answer questions.                                                                 
1:41:14 PM                                                                                                                    
DALE FOX,  Executive Director, Alaska Cabaret  Hotel Restaurant &                                                               
Retailer's Association  (Alaska CHARR),  relayed that  because of                                                               
the bill's recent introduction, CHARR  has not yet formally taken                                                               
the issue up.  Notwithstanding this, he offered:                                                                                
     It's a  mixed bag.   We think there's some  really good                                                                    
     provisions in  this bill, and some  that probably would                                                                    
     not be supported by our  group.  First let's talk about                                                                    
     the positives.   Obviously,  as the  folks who  run the                                                                    
     TAM program  in the  alcohol industry, we  believe that                                                                    
     strengthening the  efforts to  make sure  that everyone                                                                    
     ... who is  trying to get tobacco [is  carded] and that                                                                    
     there's adequate education  for the frontline employees                                                                    
     is critically important.  The  "We Card" program, which                                                                    
     is  in the  state now  and  [is] something  we hope  to                                                                    
     expand,  we  think   is  a  good  step   in  the  right                                                                    
     direction.  And  so, yes, we should  do everything that                                                                    
     we can to prevent youth  from getting access to tobacco                                                                    
     prior to reaching the age [of 19].                                                                                         
     The  second provision  we  think is  a  very good  pro-                                                                    
     business  stance  is  the bond  cap.  ...  The  tobacco                                                                    
     companies [have]  ... shown good faith  with the Master                                                                    
     Settlement  Agreement, they're  making their  payments,                                                                    
     and we  think that anything  that has the  potential of                                                                    
     putting somebody  out of  business is  bad legislation,                                                                    
     and so a bond cap  provision that allows people to move                                                                    
     forward  through   the  courts  equitably  is   a  very                                                                    
     positive effort.                                                                                                           
     In  terms  of  the  taxes, accelerating  the  taxes  on                                                                    
     tobacco  and  on  smokeless  tobacco,  in  general  the                                                                    
     Alaska CHARR  group has come  out against  singling out                                                                    
     specific  products  in   the  marketplace  for  special                                                                    
     taxes, and I  would suspect that they would  do that on                                                                    
     this as  well. ...  Those are  general comments  that I                                                                    
     think are reflective  or our industry.   Thank you very                                                                    
1:44:05 PM                                                                                                                    
PETE ROBERTS opined that the bond limitation being proposed in                                                                  
the bill is a good idea, but that the rest of the bill should be                                                                
tossed.  He elaborated:                                                                                                         
     We just  raised our  taxes on tobacco  products; [they]                                                                    
     were to be  phased in.  We haven't  even gotten through                                                                    
     that  period and  here somebody  wants to  do good  and                                                                    
     raise them some more.  I  think that the idea of trying                                                                    
     to keep  teens from  smoking is  a good  idea.   On the                                                                    
     other hand, I think that  most of the tobacco is bought                                                                    
     by  adults,  and  this  is  punitive  and  it's  social                                                                    
     engineering.   And I  think it's  bad state  policy and                                                                    
     not very consistent with the  republican ideals, so I'm                                                                    
     against it.  Thanks.                                                                                                       
1:45:21 PM                                                                                                                    
JAMES N. GARDNER, Attorney at  Law, Gardner & Gardner, P.C., said                                                               
he would  be speaking  on behalf  of Philip  Morris USA  (PA USA)                                                               
regarding the  bond provisions in  HB 260.  He  characterized the                                                               
MSA  as  being  very  important to  Alaska  because  it  delivers                                                               
millions of dollars  in revenues to the  state annually; however,                                                               
the continued  receipt of these  funds is threatened by  the huge                                                               
judgments that  have been awarded  against the  tobacco companies                                                               
that are  funding the  settlement.   Although defendants  in such                                                               
cases almost  always have  the right to  appeal, and  although in                                                               
many  instances such  appeals have  been successful  - either  in                                                               
reducing the judgment  or in overturning the  judgment entirely -                                                               
in order to stay the  execution of judgment on appeal, defendants                                                               
must post a supersedeas bond.                                                                                                   
MR. GARDNER  said that in the  states that do not  already have a                                                               
limit  on that  type  of bond,  the amount  of  the bond  usually                                                               
equals the amount  of the judgment itself, and if  a company that                                                               
is a  defendant in such  a case cannot afford  to post a  bond in                                                               
the amount  set by the court,  the company may be  forced to file                                                               
for bankruptcy  in order  to stop the  plaintiff from  taking the                                                               
companies assets during the appeal process.   That kind of a stay                                                               
could  disrupt payments  by the  company  to Alaska  and all  the                                                               
other states that  receive MSA payments.  He used  a Florida case                                                               
as an  example wherein  if there hadn't  been a  supersedeas bond                                                               
limit, the  company - the  defendant - would have  gone bankrupt,                                                               
adding that  33 states thus  far have recognized  the possibility                                                               
of  risk  from  large  supersedeas  bond  requirements  and  that                                                               
another 5  states do not require  supersedeas bonds at all.   He,                                                               
too, offered his  belief that passage of HB 260  would not affect                                                               
either the  substantive rights of  the litigants or  the ultimate                                                               
right  of  recovery  if  the  plaintiff  prevails  following  the                                                               
1:48:57 PM                                                                                                                    
MR. GARDNER, in response to questions,  said that he is not aware                                                               
of any  cases in Alaska in  which a required bond  has threatened                                                               
to put  a company out  of business;  opined that either  paying a                                                               
huge  judgment outright  or  putting  up the  same  amount for  a                                                               
supersedeas   bond  would   be  impossible,   from  a   financial                                                               
standpoint, and  therefore the  company would  be forced  to file                                                               
bankruptcy, which would  in turn impede the flow of  MSA funds to                                                               
the states; and offered his  belief that although the trial court                                                               
in  Alaska does  have some  degree of  discretion regarding  what                                                               
amount an  appeal bond should be  set at, as a  practical matter,                                                               
that  kind  of discretion  simply  can't  cope with  the  massive                                                               
reduction  that would  be necessary  to avoid  disruption of  MSA                                                               
payments should a "mega verdict" ever be awarded in Alaska.                                                                     
REPRESENTATIVE  GARA  asked  Mr.  Gardner  whether  he  would  be                                                               
amenable to  a provision that would  make it a class  C felony to                                                               
dissipate assets in order to avoid a judgment.                                                                                  
MR.  GARDNER said  he wouldn't  agree to  such a  provision.   He                                                               
noted,  though,  that  Section  12, subsection  (b),  of  HB  260                                                               
contains  language which  says that  if an  appellee proves  by a                                                               
preponderance of  the evidence that  an appellant  is dissipating                                                               
assets to  avoid the payment of  a judgment, a court  may require                                                               
the appellant to post  a bond in an amount up  to the full amount                                                               
of  the  judgment.    He  opined  that  such  language  addresses                                                               
Representative Gara's concern.                                                                                                  
REPRESENTATIVE GARA  pointed out, however, that  that language is                                                               
merely saying  that if  a company dissipates  assets in  order to                                                               
avoid payment of the judgment,  the company then really does have                                                               
to  post the  bond,  the bond  that's  automatically required  up                                                               
front in all  other cases.  His suggestion, he  reiterated, is to                                                               
make it a  crime, a class C felony, to  dissipate assets in order                                                               
to  avoid  paying  a  judgment;   he  characterized  this  as  an                                                               
appropriate penalty  particularly if  the proposed bond  limit is                                                               
MR.  GARDNER   reiterated  his  belief   that  the   language  in                                                               
subsection  (b)   of  Section   12,  specifically   the  language                                                               
requiring that a  preponderance of the evidence  be shown, offers                                                               
full protection to an appellee.                                                                                                 
1:54:01 PM                                                                                                                    
JOHANNA  BALES,   Excise  Audit  Manager,  Central   office,  Tax                                                               
Division, Department  of Revenue  (DOR), after relaying  that she                                                               
is  also  the  program  manager of  the  division's  Tobacco  Tax                                                               
Program,  noted  that retailers  support  the  proposed taxes  on                                                               
"other  tobacco products"  that are  being purchased  through the                                                               
mail by individuals  for personal consumption.  With  regard to a                                                               
comment  made  by Mr.  Patterson,  she  explained that  currently                                                               
there  are state-to-state  reporting requirements  in place,  but                                                               
acknowledged that  currently no tax  is levied when  products are                                                               
imported  by individuals  for personal  consumption; so  although                                                               
the  division   is  able  to  identify   some  such  individuals,                                                               
enforcement of Internet purchases is somewhat problematic.                                                                      
MS. BALES offered  her belief that if this  provision is adopted,                                                               
most people will comply with the  law, and that its adoption will                                                               
help protect  instate retailers;  this is  particularly important                                                               
for  the DOR  and instate  retailers  given that  an increase  in                                                               
taxes might entice  people to buy their  tobacco products through                                                               
the Internet.  She concluded by  saying that both the DOR and the                                                               
governor's office supports HB 260.                                                                                              
1:56:56 PM                                                                                                                    
DAVID PARISH, Lobbyist for the  American Heart Association (AHA),                                                               
mentioned that the AHA is an  active member of the Alaska Tobacco                                                               
Control  Alliance (ATCA),  which is  a coalition  working closely                                                               
with the national  Campaign For Tobacco-Free Kids.   He said that                                                               
the AHA  is still looking at  the individual sections of  HB 260,                                                               
especially  the "criteria  of what  is the  maximum public-health                                                               
benefit  particularly relative  to  reducing tobacco  consumption                                                               
among Alaska's  youth," and that  although the AHA  currently has                                                               
no official position  on HB 260, in general  the organizations he                                                               
represents do not support the  provision pertaining to a limit on                                                               
supersedeas bonds,  but they do support  the provisions regarding                                                               
the taxation  of other tobacco  products and the  acceleration of                                                               
the current cigarette tax.                                                                                                      
2:00:02 PM                                                                                                                    
REPRESENTATIVE  KOTT   surmised  that  everyone  there   has  the                                                               
children's  best  interest at  heart  and  wants to  ensure  that                                                               
tobacco does not fall into their  hands.  He asked whether enough                                                               
time has elapsed to allow an  evaluation of whether either of the                                                               
most  recent  cigarette tax  increases  have  decreased usage  by                                                               
those who are underage.                                                                                                         
MR.  PARISH said  that most  of the  data that  the AHA  has only                                                               
reflects what  has occurred since  1997, adding that he  would be                                                               
willing to  research the issue  further and get  that information                                                               
to the committee.   In response to another  question, he provided                                                               
the committee with a copy  of the Campaign For Tobacco-Free Kids'                                                               
position statement.                                                                                                             
CHAIR  McGUIRE, after  ascertaining that  no one  else wished  to                                                               
testify, closed public testimony on HB 260.                                                                                     
2:03:03 PM                                                                                                                    
REPRESENTATIVE  GARA  made a  motion  to  adopt Amendment  1,  to                                                               
delete Section 12  of the bill, the section that  proposes to set                                                               
a  limit  of $100  million  on  supersedeas bonds  pertaining  to                                                               
tobacco litigation.                                                                                                             
REPRESENTATIVE ANDERSON objected.                                                                                               
REPRESENTATIVE  GARA  predicted  that  the  moment  that  tobacco                                                               
companies  get a  special bond  amount, [ExxonMobil  Corporation]                                                               
will want  a special  bond amount.   He opined  that there  is no                                                               
need to  remove the  bond amount,  particularly given  that there                                                               
has never been  a case in Alaska where "the  bond amount has been                                                               
abused by  a court" and given  that the court has  the discretion                                                               
to lower the  bond amount if the amount  originally set threatens                                                               
to  put  a  company  out  of business  or  force  it  to  declare                                                               
bankruptcy.   He concluded his  argument in favor of  Amendment 1                                                               
by  stating that  he did  not think  the proposed  bond limit  is                                                               
REPRESENTATIVE  ANDERSON disagreed,  and  urged  members to  keep                                                               
Section 12 in the bill.                                                                                                         
REPRESENTATIVE KOTT  noted other  sections of  the bill  would be                                                               
affected by the adoption of Amendment 1.                                                                                        
2:06:55 PM                                                                                                                    
REPRESENTATIVE  GARA  withdrew Amendment  1  for  the purpose  of                                                               
restating it.                                                                                                                   
REPRESENTATIVE GARA  made a motion to  adopt Conceptual Amendment                                                               
1, "to delete all provisions that  change any of the bond laws or                                                               
bond  rules, either  in statutes  or  in court  rules; so  delete                                                               
Section 12 and then all related sections."                                                                                      
CHAIR McGUIRE added, "And including in the title."                                                                              
REPRESENTATIVE GARA said, "Yep."                                                                                                
2:07:25 PM                                                                                                                    
A roll  call vote  was taken.   Representatives  Kott, Dahlstrom,                                                               
and   Gara   voted   in  favor   of   Conceptual   Amendment   1.                                                               
Representatives McGuire,  Anderson, Coghill, and  Gruenberg voted                                                               
against it.   Therefore, Conceptual Amendment 1 failed  by a vote                                                               
of 3-4.                                                                                                                         
2:07:58 PM                                                                                                                    
REPRESENTATIVE GARA,  referring to page  4 [lines 16-18],  made a                                                               
motion to  adopt Conceptual  Amendment 2,  to make  it a  class C                                                               
felony to  intentionally dissipate assets  to avoid payment  of a                                                               
REPRESENTATIVE ANDERSON objected.                                                                                               
REPRESENTATIVE  GARA offered  his belief  that any  attempt by  a                                                               
tobacco  company  to  dissipate  assets to  avoid  payment  of  a                                                               
judgment should  be considered  fraud and  such a  company should                                                               
therefore be  charged with  a class C  felony, especially  if the                                                               
proposed bond limit is adopted.                                                                                                 
REPRESENTATIVE  GRUENBERG suggested  that Conceptual  Amendment 2                                                               
merely needs to  add language specifying that  violation of "this                                                               
subsection" is also a class C felony.                                                                                           
REPRESENTATIVE GARA  noted that the amendment  is conceptual, and                                                               
said that  as long as the  drafters specify that the  conduct has                                                               
to be  intentional, he will  be satisfied with  whatever language                                                               
the drafters choose.                                                                                                            
2:10:33 PM                                                                                                                    
A  roll   call  vote  was  taken.     Representatives  Dahlstrom,                                                               
Gruenberg, and  Gara voted  in favor  of Conceptual  Amendment 2.                                                               
Representatives  McGuire,  Anderson,   Coghill,  and  Kott  voted                                                               
against it.   Therefore, Conceptual Amendment 2 failed  by a vote                                                               
of 3-4.                                                                                                                         
REPRESENTATIVE GRUENBERG asked members to  look at an e-mail sent                                                               
by Mike Elerding  - President, Northern Sales  Company of Alaska,                                                               
Inc.  -  specifically  at the  language  referring  to  statutory                                                               
language signed into law in 2003:                                                                                               
     Section 43.50.510 of [Senate  Bill 168] stipulated that                                                                    
     "for purposes  of this section,  a stamp  is considered                                                                    
     affixed only if more than  80 [percent] of the stamp is                                                                    
     attached   to   the   individual   package"   ...   "in                                                                    
     accordance" with regulations  adopted by the Department                                                                    
     of Revenue.  Subsequent to  the passage of this measure                                                                    
     it has been demonstrated that  the current state of tax                                                                    
     stamping technology has not been  able to produce an 80                                                                    
     [percent]  affixment standard.    Based  on our  actual                                                                    
     experience  the  best   estimate  for  the  performance                                                                    
     standard of  affixing a tobacco  stamp on each  pack of                                                                    
     cigarettes  is somewhere  in  the  55 [percent]  range.                                                                    
     Only  through the  collaborative efforts  of the  state                                                                    
     Department of  Revenue and industry have  we avoided an                                                                    
     unmitigated disaster  regarding the enforcement  of the                                                                    
     80   [percent]   performance  requirement.      Section                                                                    
     43.50.510 needs  to be amended to  reduce the affixment                                                                    
     standard from 80 [percent] down to 55 [percent].                                                                           
MIKE  ELERDING,  President,  Northern Sales  Company  of  Alaska,                                                               
Inc.,  confirmed that  his letter  referenced statutory  language                                                               
currently in effect.                                                                                                            
CHRISTOPHER C. POAG,  Assistant Attorney General, Commercial/Fair                                                               
Business  Section, Civil  Division  (Juneau),  Department of  Law                                                               
(DOL),   relayed  that   the  regulations   referred  to   in  AS                                                               
43.50.510(d) have not yet been adopted.                                                                                         
REPRESENTATIVE GRUENBERG  said he  would be  willing to  offer an                                                               
amendment to  reduce the affixment standard  currently stipulated                                                               
in AS 43.50.510(d) down to 55 percent.                                                                                          
MS.  BALES  said  that  Mr.  Elerding  is  correct  in  that  the                                                               
cigarette  tax stamping  machines  are incapable  of affixing  80                                                               
percent of the  stamp 100 percent of the time.   Because of this,                                                               
the DOR has  drafted an amendment that would  lower the affixment                                                               
standard to 55  percent while also requiring that  either four of                                                               
the letters of  the state name or three of  the serial numbers be                                                               
legible.    She offered  her  belief  that this  amendment  would                                                               
address the  problems encountered  by the "stampers"  and protect                                                               
state  revenues.   She  mentioned that  this  amendment has  been                                                               
given to sponsor.                                                                                                               
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  the  DOR's                                                               
suggested  amendment  as  Conceptual   Amendment  3,  which  read                                                               
[original punctuation provided]:                                                                                                
     * Section ?.  AS 43.50.510(d) is amended to read:                                                                      
          (d) For purposes of this section, a stamp is                                                                          
     considered affixed  only if more  than 55  [80] percent                                                                
     of the stamp  is attached to the  individual package in                                                                    
     accordance  with (c)  of this  section and  regulations                                                                    
     adopted by the department, and                                                                                         
           (1) four of the letters of the state name                                                                        
     printed on the stamp are legible; or                                                                                   
           (2) three of the serial numbers printed on                                                                       
     the stamp are legible.                                                                                                 
REPRESENTATIVE MEYER  said that  although he'd intended  to offer                                                               
that  amendment  in the  House  Finance  Committee, it  would  be                                                               
acceptable to  him to  adopt it in  the House  Judiciary Standing                                                               
Committee instead.                                                                                                              
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Conceptual Amendment  3.  There being  none, Conceptual Amendment                                                               
3 was adopted.                                                                                                                  
2:17:51 PM                                                                                                                    
REPRESENTATIVE GRUENBERG asked whether  the issue of training and                                                               
licensing, perhaps via a program  similar to the TAM program, has                                                               
been addressed.                                                                                                                 
REPRESENTATIVE MEYER  indicated a preference for  addressing that                                                               
issue via a separate bill.                                                                                                      
REPRESENTATIVE  KOTT   made  a   motion  to   adopt  [Conceptual]                                                               
Amendment  4,  to  delete  Section  2;  to  delete  the  proposed                                                               
language change  in Section  3, page  2, line  17; and  to delete                                                               
Section 14.   He offered  his belief that adoption  of Conceptual                                                               
Amendment  4 "essentially  takes us  back  to the  bill that  was                                                               
passed by the  house last year," and  went on to say:   "It seems                                                               
to  me, to  have  this  particular issue  before  us is  somewhat                                                               
disingenuous, since  a group of members  came to me and  asked me                                                               
to work  out a compromise  with industry; the compromise  that we                                                               
worked  out was  in fact  the  one that  passed the  House."   He                                                               
offered  his belief  that adopting  the language  that Conceptual                                                               
Amendment 4 proposes to delete would be premature.                                                                              
CHAIR   McGUIRE,  in   response  to   a  question,   offered  her                                                               
understanding  that  Conceptual  Amendment  4  would  delete  the                                                               
language that deals with acceleration of the tax rate.                                                                          
2:20:46 PM                                                                                                                    
REPRESENTATIVE MEYER  said that the  bill seeks a  balance, since                                                               
in  order to  garner  enough  votes to  pass  a supersedeas  bond                                                               
limit, the other provisions were necessary.                                                                                     
REPRESENTATIVE  KOTT,  in response  to  a  question, offered  his                                                               
belief that  Conceptual Amendment 4  also addresses the  issue of                                                               
smokeless tobacco.                                                                                                              
REPRESENTATIVE  GARA  said  he agrees  with  Representative  Kott                                                               
regarding the  compromise reached  last year.   He  asked whether                                                               
members  would be  amenable to  amending Conceptual  Amendment 4,                                                               
"to add the  bond part," thereby also deleting  the proposed bond                                                               
2:24:04 PM                                                                                                                    
REPRESENTATIVE  ANDERSON  indicated  that he  supports  the  bond                                                               
REPRESENTATIVE MEYER opined that  the provisions being deleted by                                                               
Conceptual Amendment 4 ought to remain in the bill.                                                                             
REPRESENTATIVE GARA objected to [Conceptual] Amendment 4.                                                                       
CHAIR   McGUIRE  said   she  understands   Representative  Kott's                                                               
position, but mentioned  that she'd already made  a commitment to                                                               
try to keep all of the provisions in the bill.                                                                                  
2:26:14 PM                                                                                                                    
A roll call  vote was taken.   Representatives Anderson, Coghill,                                                               
Kott, and  Dahlstrom voted  in favor  of Conceptual  Amendment 4.                                                               
Representatives McGuire,  Gruenberg, and  Gara voted  against it.                                                               
Therefore, Conceptual Amendment 4 was adopted by a vote of 4-3.                                                                 
CHAIR  McGUIRE made  a motion  to adopt  Amendment 5,  which read                                                               
[original punctuation provided]:                                                                                                
     Page 2, line 2:                                                                                                            
          Following "facility":                                                                                                 
               Insert ","                                                                                                   
          Following "assisting":                                                                                            
              Insert "an agent or employee of the                                                                           
         Department of Health and Social Services under                                                                     
     AS 44.29.092 or"                                                                                                       
     Page 2, line 3:                                                                                                            
          Delete "this section"                                                                                             
          Insert "AS 11.76.100, 11.76.106, or 11.76.107"                                                                    
SUZANNE CUNNINGHAM,  Staff to  Representative Kevin  Meyer, House                                                               
Finance  Committee,   Alaska  State  Legislature,   relayed  that                                                               
Amendment   5,   which   she   characterized   as   a   technical                                                               
clarification amendment,  was brought to the  sponsor's attention                                                               
by  the DOL.    Amendment 5  addresses the  issue  of minors  who                                                               
participate  with   law  enforcement  or  the   DHSS  in  "sting"                                                               
REPRESENTATIVE GRUENBERG objected for  the purpose of discussion.                                                               
He  asked why  Amendment 5  proposes to  delete the  words, "this                                                               
section" from AS 11.76.105.                                                                                                     
MR. POAG explained  that "this section" refers  to the possession                                                               
statute, and  the DOL is not  trying to enforce that  statute via                                                               
sting  operations;  it  makes  more  sense  to  simply  list  the                                                               
provisions  of   law  that  are  being   enforced  through  sting                                                               
operations, those provisions pertaining to youth access.                                                                        
REPRESENTATIVE  GRUENBERG  suggested  that perhaps  the  specific                                                               
sections  listed  in  Amendment  5  should  simply  be  added  to                                                               
proposed  AS 11.76.105  rather than  using them  in place  of the                                                               
words, "this section".                                                                                                          
MR.  POAG suggested  that  the Department  of  Health and  Social                                                               
Services could better  address that issue, but added  that he did                                                               
not  think  that  the possession  provision  of  current  statute                                                               
needed  the  exemption  pertaining  to those  involved  in  sting                                                               
REPRESENTATIVE GRUENBERG made  a motion to amend  Amendment 5, to                                                               
strike  the  words, "Delete  'this  section'".   There  being  no                                                           
objection, Amendment 5 was amended.                                                                                             
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment  5, as  amended.   There  being none,  Amendment 5,  as                                                               
amended, was adopted.                                                                                                           
2:31:36 PM                                                                                                                    
REPRESENTATIVE ANDERSON moved  to report HB 260,  as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying fiscal notes.                                                                                                      
REPRESENTATIVE GARA objected.                                                                                                   
2:31:48 PM                                                                                                                    
A roll call  vote was taken.   Representatives McGuire, Anderson,                                                               
Coghill,  Kott,  Dahlstrom,  and  Gruenberg  voted  in  favor  of                                                               
reporting  HB 260,  as amended,  from committee.   Representative                                                               
Gara voted  against it.   Therefore,  CSHB 260(JUD)  was reported                                                               
from the House Judiciary Standing Committee by a vote of 6-1.                                                                   

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