Legislature(1993 - 1994)

03/15/1994 03:00 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    HOUSE LABOR AND COMMERCE                                   
                       STANDING COMMITTEE                                      
                         March 15, 1994                                        
                            3:00 p.m.                                          
  MEMBERS PRESENT                                                              
  Rep. Bill Hudson, Chairman                                                   
  Rep. Joe Green, Vice Chairman                                                
  Rep. Brian Porter                                                            
  Rep. Eldon Mulder                                                            
  Rep. Bill Williams                                                           
  Rep. Joe Sitton                                                              
  MEMBERS ABSENT                                                               
  Rep. Jerry Mackie                                                            
  COMMITTEE CALENDAR                                                           
  *HB 453:  "An Act amending the motor fuel tax to establish a                 
            different tax levy on residual fuel oil used in                    
            and on watercraft; and providing for an effective                  
            PASSED FROM COMMITTEE                                              
  *HB 290:  "An Act exempting certain sports officials from                    
            workers' compensation coverage."                                   
            PASSED FROM COMMITTEE                                              
  *HB 487:  "An Act relating to the sale, display, or                          
            distribution of material harmful to minors at                      
            places where minors are present or allowed to be                   
            present and where minors are able to view such                     
            material; and prohibiting the sale or display of                   
            certain audio recordings, phonograph records,                      
            magnetic tapes, compact discs, or videotapes,                      
            without warning labels and opaque wrappings."                      
            HEARD AND HELD IN COMMITTEE                                        
  (* First public hearing.)                                                    
  WITNESS REGISTER                                                             
  REP. GARY DAVIS                                                              
  Alaska State Legislature                                                     
  State Capitol                                                                
  Juneau, Alaska  99801-1182                                                   
  Position Statement:  Sponsor of HB 453                                       
  C.J. ZANE                                                                    
  Holland America Lines                                                        
  880 H Street, Suite 200-A                                                    
  Anchorage, Alaska  99501-3400                                                
  Position Statement:  Supported HB 453                                        
                       (Spoke via teleconference)                              
  BERNIE SMITH                                                                 
  P.O. Box 3369                                                                
  Kenai, Alaska  99611                                                         
  Position Statement:  Supported HB 453                                        
                       (Spoke via teleconference)                              
  JAMES BURNS                                                                  
  Petro Marine                                                                 
  3111 C Street                                                                
  Anchorage, Alaska  99503                                                     
  Position Statement:  Supported HB 453                                        
  CHRIS GATES, Director                                                        
  Division of Economic Development                                             
  Department of Commerce and Economic Development                              
  P.O. Box 110804                                                              
  Juneau, Alaska  99811-0804                                                   
  Position Statement:  Supported HB 453                                        
  ROBERT ERICKSON                                                              
  Teamsters Local 959                                                          
  306 Willoughby Ave.                                                          
  Juneau, Alaska  99801                                                        
  Position Statement:  Supported HB 453                                        
  KENT DAWSON, Lobbyist                                                        
  P.O. Box 20790                                                               
  Juneau, Alaska  99802                                                        
  Position Statement:  Supported HB 453                                        
  BEN ESCH                                                                     
  310 K, #709                                                                  
  Anchorage, Alaska  99501                                                     
  Position Statement:  Supported HB 290                                        
                       (Spoke via teleconference)                              
  BRUCE KREMENER                                                               
  3327 Moorewalk Rd.                                                           
  North Pole, Alaska  99705                                                    
  Position Statement:  Supported HB 290                                        
                       (Spoke via teleconference)                              
  DON SHANNON                                                                  
  232 Bentley Drive                                                            
  Fairbanks, Alaska  99701                                                     
  Position Statement:  Supported HB 290                                        
                       (Spoke via teleconference)                              
  BILL BRODERSON                                                               
  1612 Madison Dr.                                                             
  Fairbanks, Alaska  99709                                                     
  Position Statement:  Supported HB 290                                        
                       (Spoke via teleconference)                              
  MIKE BORGEFORD                                                               
  1801 Parks Highway                                                           
  Wasilla, Alaska  99654                                                       
  Position Statement:  Supported HB 290                                        
                       (Spoke via teleconference)                              
  BOB SIMS                                                                     
  P.O. Box 240024                                                              
  Douglas, Alaska  99824                                                       
  Position Statement:  Supported HB 290                                        
  JACK PHELPS, Staff                                                           
  Rep. Pete Kott                                                               
  Alaska State Legislature                                                     
  State Capitol                                                                
  Juneau, Alaska  99801-1182                                                   
  Position Statement:  Presented HB 487                                        
  REED STOOPS, Lobbyist                                                        
  Motion Picture Association                                                   
  240 Main Street #600                                                         
  Juneau, Alaska  99801                                                        
  Position Statement:  Opposed HB 487                                          
  PREVIOUS ACTION                                                              
  BILL:  HB 453                                                                
  SHORT TITLE: TAX ON RESIDUAL MARINE FUEL OIL                                 
  SPONSOR(S): REPRESENTATIVE(S) G.DAVIS                                        
  JRN-DATE    JRN-PG                     ACTION                                
  02/09/94      2316    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/09/94      2316    (H)   L&C, STATE AFFAIRS, FINANCE                      
  03/15/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  BILL:  HB 290                                                                
  SPONSOR(S): REPRESENTATIVE(S) MULDER                                         
  JRN-DATE    JRN-PG                     ACTION                                
  04/22/93      1430    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  04/22/93      1431    (H)   L&C, STATE AFFAIRS                               
  03/15/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  BILL:  HB 487                                                                
  BILL VERSION: SSHB 487                                                       
  SPONSOR(S): REPRESENTATIVE(S) KOTT                                           
  JRN-DATE    JRN-PG                     ACTION                                
  02/14/94      2379    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2379    (H)   LABOR & COMMERCE, JUDICIARY,                     
  02/24/94      2522    (H)   SPONSOR SUBSTITUTE                               
  02/24/94      2522    (H)   LABOR & COMMERCE, JUDICIARY,                     
  03/15/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  ACTION NARRATIVE                                                             
  TAPE 94-23, SIDE A                                                           
  Number 001                                                                   
  CHAIRMAN HUDSON convened the meeting at 3:10 p.m.                            
  HB 453 - TAX ON RESIDUAL MARINE FUEL OIL                                     
  Number 070                                                                   
  REP. GARY DAVIS, Prime Sponsor of HB 453, presented the                      
  following sponsor statement on HB 453:                                       
  House Bill 453 is simple, straight forward legislation.                      
  House Bill 453 will attempt to create an equal playing field                 
  between Alaska's residual fuel oil industry and their                        
  counterparts in the Lower 48 and Canada.                                     
  Residual fuel oil is the residue from crude oil after the                    
  light oils, gasoline, naphtha, kerosine, and mid-                            
  distillates, are extracted in the refining process.  The                     
  only applications for residual fuel oil in Alaska are                        
  asphalt, cruise ship fuel and reinjection into the pipeline.                 
  This product is subject to the state's motor fuel tax.  The                  
  tax rate for residual fuel oil is five cents per gallon.                     
  As a result of the current rate of taxation on this product,                 
  Alaska's residual fuel oil is automatically noncompetitive                   
  with the same product available elsewhere.  The cruise ship                  
  industry is the prime potential market for this fuel oil.                    
  However, even though many ships cruise Alaska waters during                  
  the summer, minimal quantities of this extremely tax                         
  sensitive fuel oil are purchased in Alaska.  Consequently,                   
  the state receives minimal revenue from the tax.                             
  House Bill 453 will reduce the tax rate levied on the sale                   
  of residual fuel oil, which will stimulate sales of residual                 
  fuel oil and benefit Alaska's economy.  This legislation                     
  will increase job opportunities in the trucking and fuel                     
  industries.  Simultaneously, state revenues will likely                      
  remain consistent and possibly increase.                                     
  Number 170                                                                   
  REP. GREEN asked if the market would grow if the tax is                      
  Number 180                                                                   
  REP. DAVIS replied that he expected the market to grow as                    
  the cruise lines want to do business in Alaska.                              
  Number 220                                                                   
  REP. PORTER asked if it would be an advantage to the state                   
  to get commitments from the cruise lines.                                    
  Number 232                                                                   
  REP. DAVIS replied that it would be to the advantage of the                  
  state to get commitments, but the cruise lines have been                     
  resistent to that.                                                           
  Number 238                                                                   
  REP. PORTER answered that the legislature could be resistent                 
  to lowering prices also.                                                     
  Number 240                                                                   
  REP. DAVIS stated that the statute does provide for a sunset                 
  Number 247                                                                   
  C.J. ZANE, Director of Government and Community Relations                    
  for Holland America Lines/West Tours, Inc., testified via                    
  teleconference in support of HB 453.  Mr. Zane stated that                   
  Holland America Lines supported the concept of the bill,                     
  which is to make Alaska products competitive on the world                    
  MR. ZANE stated that it is understandable that the committee                 
  would want some commitment from the cruise lines regarding                   
  amounts of fuel purchased, but that would be difficult                       
  because price is not the only consideration in deciding                      
  whether or not to purchase in Alaska.  Another consideration                 
  is the time the cruise line has for bunkering in the various                 
  ports.  An additional consideration is the availability of                   
  supply which can be affected by weather.                                     
  Number 330                                                                   
  BERNIE SMITH, Tesoro, testified via teleconference in                        
  support of HB 453.  Mr. Smith stated that last year Tesoro                   
  had over 6.5 million barrels of No. 6 fuel oil that had to                   
  be shipped out.  He said that currently only about 1-1/2                     
  percent of that is being sold to the cruise ship industry.                   
  MR. SMITH stated that HB 453 would produce a number of jobs                  
  and revenue for the Kenai Peninsula.                                         
  Number 355                                                                   
  REP. GREEN commented that Tesoro will be saving money since                  
  they won't have to ship out the large amounts of No. 6 oil                   
  if HB 453 passed, so the state and Tesoro should share the                   
  Number 367                                                                   
  MR. SMITH responded that Tesoro's residual is already a loss                 
  that they couldn't lower their price any more.  He added                     
  that they do not have the option of putting their fuel back                  
  into the pipeline.                                                           
  Number 377                                                                   
  CHAIRMAN HUDSON asked Mr. Smith if Tesoro paid any tax on                    
  residual fuel that was being shipped out.                                    
  Number 382                                                                   
  MR. SMITH responded no.                                                      
  Number 385                                                                   
  CHAIRMAN HUDSON asked how many jobs this decrease in tax                     
  would result in.                                                             
  Number 389                                                                   
  MR. SMITH answered twelve jobs.                                              
  Number 394                                                                   
  JAMES BURNS, Senior Vice President, Petro Marine, testified                  
  in support of HB 453.  Mr. Burns explained the process of                    
  making No. 6 oil and the costs involved.                                     
  MR. BURNS noted that no other states levy a tax on this oil.                 
  Number 499                                                                   
  CHRIS GATES, Director, Division of Economic Development,                     
  testified in support of HB 453.  Mr. Gates stated that when                  
  ships fuel up in either Sitka or Seward the local economy                    
  benefits as the ship stays in port longer and passengers                     
  spend more money.                                                            
  MR. GATES read two sentences from a letter from Gary Paxon,                  
  Administrator, Sitka:                                                        
  "HB 453 is a very important issue to the City and Borough of                 
  Sitka.  If it passed we have a commitment from Pacific                       
  Northern Oil to refuel cruise ships in Sitka.  This will                     
  create important jobs for our community and in the long term                 
  will give us significant opportunities as a change port."                    
  Number 521                                                                   
  REP. MULDER asked how long it takes to fuel up a ship.                       
  Number 525                                                                   
  MR. GATES responded that it depended on how empty the ship                   
  was.  It could take anywhere from four hours to eight hours.                 
  Number 528                                                                   
  ROBERT ERICKSON, Teamsters Union, testified in support of HB
  453.  He stated it is estimated that if this bill passes it                  
  could mean up to fourteen new trucking jobs.                                 
  Number 550                                                                   
  KENT DAWSON, Princess Tours, testified in support of HB 453.                 
  He stated that Princess Lines has stated in writing that at                  
  least 1/3 of its fuel will be bought in Seward if this bill                  
  is passed.                                                                   
  Number 569                                                                   
  REP. PORTER moved the "O" committee substitute.  No                          
  objections were heard; it was so ordered.                                    
  CHAIRMAN HUDSON asked the committee to look at an amendment                  
  to tighten the definition of residual fuel oil.                              
  Number 580                                                                   
  MR. BURNS offered Amendment 1:  page 2, line 3, after "oil"                  
  insert "otherwise known as No. 6 fuel oil" and on page 2,                    
  line 6 after "viscosity" insert "rated by kinematic units."                  
  TAPE 94-23, SIDE B                                                           
  Number 023                                                                   
  REP. MULDER moved adoption of Amendment 1.  No objections                    
  were heard; it was so ordered.                                               
  REP. PORTER moved to pass CSHB 453(L&C) as amended out of                    
  committee.  No objections were heard; it was so ordered.                     
  HB 290 - EXEMPT SPORTS OFFICIALS FROM WORKERS COMP                           
  Number 060                                                                   
  REP. MULDER presented HB 290 and offered the following                       
  sponsor statement:                                                           
  Recently, the Department of Labor, Division of Workers                       
  Compensation, has determined that amateur sports officials                   
  must be covered by worker's compensation policies under a                    
  ranking of extremely high risk.  This decision, according to                 
  sports officials' associations, will cause sports                            
  organizations which contract with referees, time keepers,                    
  and line judges, to pay anywhere between 17 and 54% of their                 
  compensation for officiating to cover worker's compensation                  
  HB 290 is designed to eliminate this problem by exempting                    
  amateur sports officials from worker's compensation coverage                 
  as we do other contractual groups.  Worker's compensation                    
  laws were designed to provide medical and income replacement                 
  for injured workers.  Whereas few, if any, amateur sports                    
  officials are injured while officiating, the current high                    
  insurance premiums do not accurately reflect the amount of                   
  risk they experience as officials.                                           
  HB 290 is supported by sporting associations, officials'                     
  groups and officials themselves throughout the state.                        
  Included in the packets are letters of support from these                    
  This is a serious problem facing amateur sports in Alaska                    
  and threatens their future existence.  HB 290 will eliminate                 
  this problem and allow the greatest number of people to play                 
  and officiate the games that they love to be involved in.                    
  Number 158                                                                   
  REP. SITTON asked if there was any position paper from the                   
  Department of Labor.                                                         
  Number 165                                                                   
  REP. MULDER responded no.                                                    
  Number 179                                                                   
  REP. SITTON stated he sees a disturbing tendency by the                      
  administration not to comment on legislation that affect the                 
  people of Alaska.                                                            
  Number 180                                                                   
  CHAIRMAN HUDSON noted that in the past the administration                    
  has provided some statement of support or nonsupport on                      
  Number 193                                                                   
  BEN ESCH testified via teleconference in support of HB 290.                  
  Mr. Esch stated this bill is the result of an audit that                     
  concluded that since the Anchorage softball association                      
  contracted the umpires and they didn't have insurance the                    
  association was to pay insurance.                                            
  MR. ESCH noted that the biggest problem he sees is the rates                 
  charged by insurance companies.                                              
  MR. ESCH noted that local referees, umpires and time keepers                 
  are being charged the same worker's compensation rates as                    
  are being charged to major league baseball refs, umpires and                 
  time keepers.                                                                
  Number 285                                                                   
  BRUCE KREMENER testified via teleconference in support of HB
  290.  He added that the 17% rate is too high and will end up                 
  shutting down amateur sports in Alaska.                                      
  Number 311                                                                   
  DON SHANNON testified via teleconference in support of HB
  290. He stated that he referees as a hobby not for the                       
  money, and the amount of insurance is too high for people                    
  like him to continue.                                                        
  Number 330                                                                   
  REP. SITTON asked Mr. Shannon if in his fifteen years of                     
  experience had he ever seen anyone be injured.                               
  Number 340                                                                   
  MR. SHANNON replied no.                                                      
  Number 360                                                                   
  BILL BRODERSON testified via teleconference in support of HB
  290.  He stated that any raise in insurance will effectively                 
  raise his rates to officiate.  This will necessarily be born                 
  out by the players.                                                          
  Number 360                                                                   
  MIKE BORGEFORD, Mat-Su Softball Association, testified via                   
  teleconference in support of HB 290.  Mr. Borgeford stated                   
  he is a player, sponsor, and has helped out with tournaments                 
  in Mat-Su.  He stated he supports the testimony of Mr. Esch                  
  and Mr. Kremener.                                                            
  MR. BORGEFORD noted that the scorekeepers receive $5.00 a                    
  game and if they worked every game possible during a season                  
  the total compensation per season would be $350.00.  The                     
  minimum workman's compensation insurance currently is $79.95                 
  for a scorekeeper, which is 22% of their wage.                               
  MR. BORGEFORD stated that the Mat-Su Softball Association's                  
  workers compensation bill last season was over $4,000.00.                    
  Since there are only 35 teams in the association, that                       
  results in over $100.00 per team.                                            
  MR. BORGEFORD concluded by saying that historically injuries                 
  have been few to referees and other officials.  Passage of                   
  HB 290 would be good for kids and adults to help keep them                   
  involved in sports.                                                          
  Number 390                                                                   
  BOB SIMS, President, Juneau Douglas Officials Association,                   
  testified in support of HB 290.  Mr. Sims dittoed the                        
  previous supportive testimony.                                               
  Number 429                                                                   
  REP. PORTER moved HB 290 with individual recommendations and                 
  a zero fiscal note.  No objections were heard; it was so                     
  HB 487 - SALE/DISPLAY OF MATERIAL HARMFUL TO MINOR                           
  Number 435                                                                   
  JACK PHELPS, Staff, Rep. Pete Kott, Prime Sponsor of HB 487,                 
  offered the following sponsor statement for the record:                      
  The introduction of House Bill 487 was prompted by the                       
  sponsor's concern over the growing number of violent crimes                  
  in Alaska.  Cases of reported rape, for example, nearly                      
  doubled between 1989 and 1991.  Furthermore, there is                        
  growing evidence that violent crimes, especially rape and                    
  murder, are more frequently committed by young people.                       
  The sponsor believes that a contributing factor in this                      
  rising violence among young people is the increased                          
  frequently of sex-related violence as a theme in rock and                    
  rap music.  This conclusion has been supported by the U.S.                   
  Attorney General's Commission of Pornography which found                     
  that exposure to sexually violent material resulted in acts                  
  of sexual aggressiveness and antisocial behavior.  It is                     
  self-evident that some material, whether in a visual or                      
  aural format, may not be suitable for distribution to                        
  children.  At a minimum, the seller should make some attempt                 
  to alert parents to the contents of such material and to                     
  shield innocent young people from unwanted contact with such                 
  House Bill 487, while recognizing the constitutional                         
  restraints imposed on the legislature's ability to curtail                   
  distribution of certain material, acts on the state's                        
  legitimate interest in providing some level of protection to                 
  children who may be harmed by unwanted exposure to the                       
  The bill would regulate the distribution, sale, and display                  
  of two different types of material.  First, it would require                 
  that printed matter, if it visually depicts material harmful                 
  to minors and is displayed in a place where minors are apt                   
  to view the material, must be covered by an opaque wrapper                   
  and individually sealed.  The definition of material harmful                 
  to minors in this section is drawn from the obscenity                        
  definition set forth by the U.S. Supreme Court.                              
  Second, the bill requires labeling on any audio recording or                 
  music video recording that contains lyrics harmful to                        
  minors.  The label is required to give a parental advisory                   
  that the recording contains lyrics that include or describe                  
  material harmful to minors.  The bill also applies the                       
  wrapping and sealing requirements of the first part of the                   
  bill to certain audio and video recordings.  For audio and                   
  video recordings the definition of material harmful to                       
  minors is expanded to include certain kinds of violence.                     
  Violation of the provisions of HB 487 would be a Class B                     
  misdemeanor on first offense, and a Class A misdemeanor on                   
  subsequent convictions.                                                      
  Number 490                                                                   
  REP. SITTON asked if the language on page 1, line 13,                        
  "harmful to minors in any place where minors are present"                    
  applied to material found in the minor's home.                               
  Number 495                                                                   
  MR. PHELPS answered that he thought that was a good question                 
  and thought that on the face of it it appears that it would                  
  be true.                                                                     
  Number 507                                                                   
  REP. SITTON questioned whether Michelangelo's "David" would                  
  be determined to fall under the language on page 2, line 14.                 
  Number 514                                                                   
  MR. PHELPS answered that material referenced under this                      
  section would have to satisfy all three descriptions to                      
  apply. He further stated that it was clear "David" would not                 
  fall under this section.                                                     
  Number 520                                                                   
  REP. SITTON asked if the language on page 2, line 11, was                    
  the language from a Supreme Court decision.                                  
  Number 525                                                                   
  MR. PHELPS answered that the previous statement was true and                 
  further stated that what's added to the Miller definition is                 
  the word "minors."  He added that you can argue that this is                 
  a looser standard as it now specifically references minors.                  
  Number 529                                                                   
  CHAIRMAN HUDSON asked if the sponsor had any opinion on the                  
  Department of Law's concerns.                                                
  Number 540                                                                   
  MR. PHELPS stated that the sponsor felt that if the items in                 
  question truly fit the Supreme Court's definition of                         
  obscenity he could not imagine why they would be provided to                 
  minors from an official entity.                                              
  Number 550                                                                   
  CHAIRMAN HUDSON suggested that the comments provided by the                  
  Department of Law should be fully considered.                                
  Number 557                                                                   
  REED STOOPS, Lobbyist, Motion Picture Association of America                 
  and the Recording Industry, testified in opposition to HB
  487.  Mr. Stoops stated he believes the bill to be                           
  unconstitutional, unworkable and unenforceable.                              
  MR. STOOPS stated he believes HB 487 to be unconstitutional                  
  because the definition regarding violent behavior is                         
  subjective and is protected by the first amendment.                          
  MR. STOOPS stated that he believes there is a violation of                   
  due process because under HB 487 action could be taken                       
  before something is deemed harmful to minors.                                
  MR. STOOPS added that HB 487 could be under inclusive and                    
  doesn't treat all things the same.                                           
  MR. STOOPS contended that HB 487 is unworkable as the                        
  industry would have to decide case by case on over 10,000                    
  recordings a year what is offensive and what is not; and                     
  furthermore what standards should/would be used.                             
  MR. STOOPS added that HB 487 was impracticable as it would                   
  require only the recordings to be sold in Alaska be wrapped                  
  and he questioned whose responsibility that would be.                        
  MR. STOOPS informed the committee that the recording                         
  industry already has a rating system done on a voluntary                     
  TAPE 94-24, SIDE A                                                           
  Number 001                                                                   
  MR. STOOPS suggested that if the legislature wanted to do                    
  something they should do a constitutional definition on what                 
  is harmful to minors.                                                        
  Number 073                                                                   
  CHAIRMAN HUDSON appointed a subcommittee of Rep. Sitton and                  
  himself on HB 487.                                                           
  Number 089                                                                   
  MR. PHELPS commented that the sponsor shared the concerns                    
  heard today, and he felt that the practical application of                   
  what obscenity means needs to be tightened up.                               
  MR. PHELPS added that the sponsor was supportive of the                      
  voluntary compliance of the industry to the degree it                        
  extends, but believes it should be uniformly applied.                        
  Number 115                                                                   
  CHAIRMAN HUDSON adjourned the meeting at 4:50 p.m.                           

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