Legislature(1997 - 1998)
04/25/1997 03:30 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 25, 1997
3:30 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery, Vice Chairman
Representative Bill Hudson
Representative Jerry Sanders
Representative Joe Ryan
Representative Tom Brice
Representative Gene Kubina
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 222
"An Act relating to abandoned, wrecked, or junk vehicles."
- WAIVED FROM COMMITTEE
CS FOR SENATE BILL NO. 89(L&C)
"An Act relating to regulation of barbers and hairdressers;
extending the termination date of the Board of Barbers and
Hairdressers; and providing for an effective date."
- MOVED CSSB 89(L&C) FROM COMMITTEE
CS FOR SENATE BILL NO. 91(STA) am
"An Act relating to the regulation of physical therapists, physical
therapy assistants, occupational therapists, and occupational
therapy assistants; extending the termination date of the State
Physical Therapy and Occupational Therapy Board; and providing for
an effective date."
- MOVED CSSB 91(STA) AM FROM COMMITTEE
HOUSE BILL NO. 178
"An Act relating to letters of credit under the Uniform Commercial
Code; and providing for an effective date."
- HEARD AND HELD
* HOUSE BILL NO. 209
"An Act regulating the use of pre-hire project labor agreements for
public construction projects by the state and political
subdivisions of the state."
- HEARD AND HELD
HOUSE BILL NO. 218
"An Act relating to regulation and examination of insurers and
insurance agents; relating to kinds of insurance; relating to
payment of insurance taxes and to required insurance reserves;
relating to insurance policies; relating to regulation of capital,
surplus, and investments by insurers; relating to hospital and
medical service corporations; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 222
SHORT TITLE: ABANDONED,WRECKED,OR JUNK VEHICLES
SPONSOR(S): REPRESENTATIVE(S) ROKEBERG, Kemplen
JRN-DATE JRN-PG ACTION
04/01/97 900 (H) READ THE FIRST TIME - REFERRAL(S)
04/01/97 900 (H) TRANSPORTATION, L&C
04/23/97 (H) TRA AT 1:00 PM CAPITOL 17
04/23/97 (H) MINUTE(TRA)
04/24/97 1317 (H) TRA RPT CS(TRA) 2DP 5NR
04/24/97 1318 (H) DP: HUDSON, WILLIAMS; NR: ELTON,
04/24/97 1318 (H) KOOKESH, SANDERS, COWDERY, MASEK
04/24/97 1318 (H) 2 ZERO FNS (DPS, ADM)
BILL: SB 89
SHORT TITLE: BARBERS AND HAIRDRESSERS
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
02/14/97 357 (S) READ THE FIRST TIME - REFERRAL(S)
02/14/97 357 (S) L&C, STA
03/20/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
03/20/97 (S) MINUTE(L&C)
03/25/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
03/25/97 (S) MINUTE(L&C)
03/26/97 872 (S) L&C RPT CS 4DP SAME TITLE
03/26/97 873 (S) DP: LEMAN, MILLER, HOFFMAN, KELLY
03/26/97 873 (S) ZERO FISCAL NOTE TO SB & CS (DCED)
04/10/97 (S) STA AT 3:30 PM BELTZ ROOM 211
04/10/97 (S) MINUTE(STA)
04/15/97 (S) STA AT 4:30 PM BELTZ ROOM 211
04/15/97 (S) MINUTE(STA)
04/16/97 1161 (S) STA RPT 3DP (L&C)CS
04/16/97 1161 (S) DP: GREEN, MACKIE, WARD
04/16/97 1161 (S) PREVIOUS ZERO FN (DCED)
04/21/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
04/21/97 (S) MINUTE(RLS)
04/21/97 1330 (S) RULES TO CALENDAR 4/21/97
04/21/97 1332 (S) READ THE SECOND TIME
04/21/97 1332 (S) L&C CS ADOPTED UNAN CONSENT
04/21/97 1332 (S) ADVANCED TO THIRD READING UNAN CONSENT
04/21/97 1332 (S) READ THE THIRD TIME CSSB 89(L&C)
04/21/97 1333 (S) PASSED Y18 N1 E1
04/21/97 1333 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/21/97 1369 (S) TRANSMITTED TO (H)
04/22/97 1232 (H) READ THE FIRST TIME - REFERRAL(S)
04/22/97 1232 (H) LABOR & COMMERCE
04/25/97 (H) L&C AT 3:15 PM CAPITOL 17
BILL: SB 91
SHORT TITLE: PHYSICAL THERAPY AND OCCUPATIONAL THERAPY
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
02/14/97 357 (S) READ THE FIRST TIME - REFERRAL(S)
02/14/97 358 (S) L&C, STA
03/18/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
03/18/97 (S) MINUTE(L&C)
03/19/97 780 (S) L&C RPT CS 4DP NEW TITLE
03/19/97 780 (S) DP: LEMAN, KELLY, MACKIE, MILLER
03/24/97 832 (S) CORRECTED L&C CS
03/19/97 780 (S) ZERO FISCAL NOTE TO SB & CS (DCED)
04/10/97 (S) STA AT 3:30 PM BELTZ ROOM 211
04/10/97 (S) MINUTE(STA)
04/15/97 (S) STA AT 4:30 PM BELTZ ROOM 211
04/15/97 (S) MINUTE(STA)
04/16/97 1162 (S) STA RPT CS 3DP NEW TITLE
04/16/97 1162 (S) DP: GREEN, MACKIE, WARD
04/16/97 1162 (S) PREVIOUS ZERO FN APPLIES (DCED)
04/21/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
04/21/97 (S) MINUTE(RLS)
04/21/97 1331 (S) RULES TO CALENDAR 4/21/97
04/21/97 1333 (S) READ THE SECOND TIME
04/21/97 1333 (S) STA CS ADOPTED UNAN CONSENT
04/21/97 1333 (S) ADVANCED TO THIRD READING UNAN CONSENT
04/21/97 1334 (S) READ THE THIRD TIME CSSB 91(STA)
04/21/97 1334 (S) FAILED PASSAGE Y10 N9 E1
04/21/97 1334 (S) PEARCE NOTICE OF RECONSIDERATION
04/22/97 1429 (S) RECON TAKEN UP - IN THIRD READING
04/22/97 1430 (S) RETURN TO SECOND FOR AM 1 UNAN CONSENT
04/22/97 1430 (S) AUTOMATICALLY IN THIRD READING
04/22/97 1430 (S) AM NO 1 ADOPTED UNANIMOUS CONSENT
04/22/97 1431 (S) PASSED ON RECONSIDERATION Y19 N- A1
04/22/97 1431 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/22/97 1433 (S) TRANSMITTED TO (H)
04/23/97 1284 (H) READ THE FIRST TIME - REFERRAL(S)
04/23/97 1284 (H) LABOR & COMMERCE
04/25/97 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 178
SHORT TITLE: UNIFORM COMMERCIAL CODE:LETTERS OF CREDIT
SPONSOR(S): LABOR & COMMERCE BY REQUEST
JRN-DATE JRN-PG ACTION
03/06/97 561 (H) READ THE FIRST TIME - REFERRAL(S)
03/06/97 561 (H) LABOR & COMMERCE
03/14/97 (H) L&C AT 3:15 PM CAPITOL 17
03/14/97 (H) MINUTE(L&C)
04/25/97 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 209
SHORT TITLE: PROJECT LABOR AGREEMENTS ON PUB CONSTR.
SPONSOR(S): REPRESENTATIVE(S) VEZEY
JRN-DATE JRN-PG ACTION
03/25/97 827 (H) READ THE FIRST TIME - REFERRAL(S)
03/25/97 827 (H) LABOR & COMMERCE
04/25/97 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
ART PETERSON, Uniform Law Commissioner
State of Alaska
350 North Franklin Street
Juneau, Alaska 99801
Telephone: (907) 586-4000
POSITION STATEMENT: Commented on HB 178.
L. S. "JERRY" KURTZ, JR., Uniform Law Commissioner
State of Alaska
1050 Beech Lane
Anchorage, Alaska 99501
Telephone: (907) 258-6051
POSITION STATEMENT: Commented on HB 178.
DOUGLAS LOTTRIDGE, Assistant Attorney General
Commercial Section
Civil Division
Department of Law
1031 West Fourth Avenue, Suite 200
Anchorage, Alaska 99501-1994
Telephone: (907) 269-5100
POSITION STATEMENT: Commented on HB 178.
WILLIS KIRKPATRICK, Director
Division of Banking, Securities and Corporations
Department of Commerce and Economic Development
P.O. Box 110807
Juneau, Alaska 99811-0907
Telephone: (907) 465-2521
POSITION STATEMENT: Commented on HB 178.
REPRESENTATIVE AL VEZEY
Alaska State Legislature
Capitol Building, Room 13
Juneau, Alaska 99801
Telephone: (907) 465-3719
POSITION STATEMENT: Sponsor of HB 209.
DONNA C. WILLARD, Attorney
124 East Seventh Avenue
Anchorage, Alaska 99501
Telephone: (907) 278-3641
POSITION STATEMENT: Testified on HB 209.
JOHN BITNEY
Alaska Housing Finance Corporation
326 Fourth Street, Suite 504
Juneau, Alaska 99801
Telephone: (907) 586-3587
POSITION STATEMENT: Testified in opposition to HB 209.
SAM KITO III, Special Assistant
Office of the Commissioner
Department of Transportation
and Public Facilities
3132 Channel Drive
Juneau, Alaska 998801-7898
Telephone: (907) 465-3904
POSITION STATEMENT: Testified on HB 209.
MICHAEL SAMSON, President
Samson Electric
P.O. Box 56888
North Pole, Alaska 99705
Telephone: (907) 451-0252
POSITION STATEMENT: Testified in support of HB 209.
JEFF ALLING, President
Alcan Builders, Incorporated
1326 Valley Drive
North Pole, Alaska 99705
Telephone: (907) 456-1382
POSITION STATEMENT: Testified in support of HB 209.
RUSS SCHWARTZ, President
Associated General Contractors
of Alaska; Senior Manager
Osborne Construction Company
4273 Birch Lane
Fairbanks, Alaska 99709
Telephone: (907) 456-7554
POSITION STATEMENT: Testified in support of HB 209.
JUDY MONTGOMERY, Employee
Associated General Contractors
of Alaska
4041 "B" Street
Anchorage, Alaska 99503
Telephone: (907) 561-5354
POSITION STATEMENT: Testified in support of HB 209.
JULIE DUQUETTE, Employee
Osborne Construction
458 Shannon Drive
Fairbanks, Alaska 99701
Telephone: (907) 451-0079
POSITION STATEMENT: Testified in support of HB 209.
HAROLD SKELTON
1714 Roosevelt
Fairbanks, Alaska 99709
Telephone: (907) 451-0079
POSITION STATEMENT: Testified in support of HB 209.
TONY FAZIO, Co-owner and Vice President
Slayden Plumbing and Heating
P.O. Box 55518
North Pole, Alaska 99705
Telephone: (907) 488-3359
POSITION STATEMENT: Testified in support of HB 209.
KEVIN DOUGHERTY
Alaska Laborers Union
2501 Commercial
Anchorage, Alaska 99501
Telephone: (907) 276-1640
POSITION STATEMENT: Testified on HB 209.
CHARLES ELWOOD
132 Charles Street
Fairbanks, Alaska 99701
Telephone: (907) 451-9155
POSITION STATEMENT: Testified in support of HB 209.
KARL HNILICKA
P.O. Box 7189
Fairbanks, Alaska 99707
Telephone: (907) 457-5205
POSITION STATEMENT: Testified on HB 209.
PAT REILLY, Owner
Rain Proof Roofing Company
2201 East 84th Court
Anchorage, Alaska 99507
Telephone: (907) 344-5545
POSITION STATEMENT: Testified in support of HB 209.
JOHN MacKINNON, Deputy Mayor
City and Borough of Juneau
1114 Glacier Avenue
Juneau, Alaska 99801
Telephone: (907) 321-2047
(907) 58603902
POSITION STATEMENT: Testified on HB 209.
JASON JACKOVICH, Carpenter
Osborne Construction
4273 Birch Lane
Fairbanks, Alaska 99709
Telephone: (907) 479-2441
POSITION STATEMENT: Testified in support of HB 209.
JOHN BROWN
814 Austin
Fairbanks, Alaska 99701
Telephone: (907) 452-8131
POSITION STATEMENT: Testified on HB 209.
FLOYD SHEESLEY, Project Engineer
Osborne Construction
P.O. Box 73370
fairbanks, Alaska 99707
Telephone: (907) 451-0079
POSITION STATEMENT: Testified in support of HB 209.
HOWARD WILSON
600 Auburn
Fairbanks, Alaska 99701
Telephone: (907) 451-0079
POSITION STATEMENT: Testified in support of HB 209.
GARY DONOFRIO, Project Engineer
Osborne Construction
1246 Richard Berry Drive
Fairbanks, Alaska 99709
Telephone: (907) 452-6277
POSITION STATEMENT: Testified in support of HB 209.
GARY NIESE
36 College Road, Suite 2-302
Fairbanks, Alaska 99701
Telephone: (907) 458-0503
POSITION STATEMENT: Testified against HB 209.
STEVE HOVENDEN
360 Terrace Drive
Fairbanks, Alaska 99712
Telephone: (907) 457-8624
POSITION STATEMENT: Testified against HB 209.
DON ETHERIDGE, Representative
Alaska State District
Council Laborers
710 West Ninth Street
Juneau, Alaska 99801
Telephone: (907) 586-3707
POSITION STATEMENT: Testified in HB 209.
ED FLANAGAN, Deputy Commissioner
Department of Labor
P.O. Box 21149
Juneau, Alaska 99802-1149
Telephone: (907) 465-2700
POSITION STATEMENT: Testified against HB 209.
ACTION NARRATIVE
TAPE 97-49, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee to order at 3:30 p.m. Members present at the
call to order were Representatives Rokeberg, Ryan, Sanders, Cowdery
and Hudson. Representative Brice arrived at 4:25 p.m. and
Representative Kubina arrived at 5:00 p.m.
HB 222 - ABANDONED,WRECKED,OR JUNK VEHICLES
Number 0108
CHAIRMAN ROKEBERG explained that on the House floor he passed out
bill packages relating to HB 222, "An Act relating to abandoned,
wrecked, or junk vehicles." He said in the information he gave the
committee he requested that the bill be waived from committee if
everybody would agree to that.
REPRESENTATIVE JOHN COWDERY made a motion to waive HB 222 out of
the committee. Hearing no objection, HB 222 was waived from the
House Labor and Commerce Committee.
CSSB 89 - BARBERS AND HAIRDRESSERS
Number 0178
CHAIRMAN NORMAN ROKEBERG announced the committee would hear CSSB
89(L&C), "An Act relating to regulation of barbers and
hairdressers; extending the termination date of the Board of
Barbers and Hairdressers; and providing for an effective date." He
stated that the committee had basically heard about this bill
before from the Board of Barbers and Hairdressers. He indicated
the committee has had a hearing on the House version of this
legislation and were waiting for the Senate version to come over.
The Senate version is consistent with the activities that happened
in House Labor and Commerce Committee. He asked if there were any
questions. Hearing none, he asked what the will was of the
committee.
REPRESENTATIVE BILL HUDSON moved and asked unanimous consent to
move CSSB 89(L&C), Version E, out of committee with individual
recommendations and with the accompanying zero fiscal note.
Hearing no objection, CSSB 89(L&C) moved out of the House Labor and
Commerce Committee.
CSSB 91(STA) AM - PHYSICAL THERAPY AND OCCUPATIONAL THERAPY
Number 0231
CHAIRMAN ROKEBERG announced the next order of business would be
CSSB 91(STA) am, "An Act relating to the regulation of physical
therapists, physical therapy assistants, occupational therapists,
and occupational therapy assistants; extending the termination date
of the State Physical Therapy and Occupational Therapy Board; and
providing for an effective date." He noted that the committee has
already reviewed this legislation.
REPRESENTATIVE HUDSON moved and asked unanimous consent to move
CSSB 91(STA) am, Version F, out of committee with individual
recommendations and the accompanying zero fiscal note. Hearing no
objection, CSSB 91(STA) am was moved out of the House Labor and
Commerce Committee.
CHAIRMAN ROKEBERG called for a brief at-ease at 3:35 p.m. He
called the meeting back to order at 3:40 p.m.
HB 178 - UNIFORM COMMERCIAL CODE:LETTERS OF CREDIT
Number 0311
CHAIRMAN ROKEBERG announced the committee would address HB 178
"An Act relating to letters of credit under the Uniform Commercial
Code; and providing for an effective date." He said Representative
Ryan was the chairman of an informal subcommittee on HB 178. He
asked Representative Ryan to make some recommendations to the
committee.
Number 0331
REPRESENTATIVE JOE RYAN said the first amendment would be on page
5, line 2, of Version A. Section 45.05.106(d) would be deleted
which reads, "Notwithstanding a modification or revocation of a
revocable credit, a person authorized to honor or negate, under the
terms of the original credit, is entitled to reimbursement for or
honor of a draft or demand for payment duly honored or negotiated
before receipt of notice of the modification or revocation, and the
issuer, in turn, is entitled to reimbursement from its customer."
REPRESENTATIVE RYAN said, "The way that is set up here, except with
the subsections of this, we've allowed a person to, in effect,
arbitrarily go ahead and decide that they don't want to pay the
letter of credit. What we want is these things if the documents
are presented the way they're supposed to, they have the proper
signatures, they have the stamps from the government authorities
that require they have -- you have a document that's subject to
payment. And this is the whole purpose in international trade of
being able to get your money because the time value of money being
what it is, someone holding you up can cause you to have the
biggest problem you've had and for going out of business."
Number 0490
REPRESENTATIVE RYAN said to insert 45.05.105(c) which reads,
"Unless otherwise agreed, after a revocable credit is established,
it may be modified or revoked by the issuer without notice to or
consent from the customer or beneficiary." Representative Ryan
said, "The person who would revokes the letter of credit if they
haven't met the criteria -- you've established this thing and the
banker is sending millions of dollars across for something and you
don't get the paperwork back the way it's supposed to be, you sure
don't want to pay because then you have to sue, internationally, to
try to get your money back." He indicated this would ensure that
these people are going to get paid in a timely manner when they're
supposed to.
Number 0556
REPRESENTATIVE COWDERY asked if this would still allow in the
letter of credit to the issuer to the letter of credit to stop
payment for legitimate reasons.
REPRESENTATIVE RYAN said after a revocable credit is established,
it may be modified or revoked by the issuer without notice to or
consent from the customer or beneficiary which would allow you to
make the stop payment. He explained you don't have to go to the
person and say, "Do you agree that I stop this letter?" This
basically allows a stop payment.
Number 0608
REPRESENTATIVE RYAN indicated the next amendment would be on page
5, line 14, following the word "Formal" insert "and other." He
explained this is about formal requirements and read, "A letter of
credit, confirmation, advice, transfer, amendment or cancellation
may be issued in any form that is record and is authenticated by a
signature or under the agreements and so forth." He informed the
committee that besides the original agreement, there may be other
agreements. There may be side agreements. He said we want the
latitude for the person making the letter of credit to put whatever
agreements that are necessary in that letter. This gives them the
flexibility rather than sticking with a formal agreement.
Representative Ryan said not all situations are dealt with on a
formal basis. He said following "requirements" insert "(a)."
Number 0700
REPRESENTATIVE RYAN informed the committee that the next amendment
is on page 5, line 15, following "authenticated" insert, "by the
signature of the issuer, the signature of the beneficiary, the
signatures of two bank officers of the issuer if the issuer is a
bank, and the signature of the issuer if the issuer is not a bank."
He explained it says the form is a record, it's authenticated and
we're trying to show them how this is authenticated by the person
who is issuing it, beneficiary of the issuer or two bank officers
acting on behalf of the issuer.
Number 0745
REPRESENTATIVE COWDERY questioned who other than a bank issues
letters of credit.
REPRESENTATIVE RYAN responded, "Trading houses who deal in
international trading, brokerage houses who deal with vast
commodities of (indisc.) and/or petroleum, gold, diamonds,
currencies, people who actually have the things themselves and have
the financial resources."
REPRESENTATIVE COWDERY questioned who issues the common letter of
credit.
REPRESENTATIVE RYAN said it's usually a bank, but there are other
people, especially those who deal in gold. They change currency
for gold.
Number 0810
REPRESENTATIVE RYAN indicated the next amendment is on page 5,
delete lines 17 through 19. He explained that what is being
deleted are the provisions by a signature or under the agreement.
He said this is covered in the previous part of the amendment.
REPRESENTATIVE RYAN said, "Now we're talking about talking about
the time limits when we insert this, `A letter of credit must
contain a provision that if an issuer does not honor a letter of
credit within the time established under AS 45.05.108(b), even if
a notice of discrepancy is given, an impartial third party shall
determine the amount of any interest and damages that are owed to
the beneficiary. The provision must also establish procedures for
carrying out the provision, including how the third party is
selected.'" He pointed out that this is similar to a dispute
resolution and a lot of contracts that are done under an
international basis, you have to find out a law that is common to
all the jurisdictions to resolve the dispute and it's usually added
in a contractual arrangement. He said, "If you do not redeem this
letter and you've received the funds and you don't honor it, you're
sitting with the money and the longer you can keep from honoring
that, the more money you're going to make on the float from the
money you're keeping. So this gives a person a basis to have an
impartial third party decide whether you're claim is justified or
not, you should be paid and then you get to find out that -- keep
the interest and/or the damages that were caused by this person not
honoring this letter of credit." He noted most of these things are
done by electronic transfer and the person has the money. They
just want to sit on it awhile and tell you why they don't want to
honor the letter and in the meantime, they're making a lot of money
by doing that. He said this would be a little more equitable for
people to get prompt payments so they can continue to conduct
business.
Number 0959
REPRESENTATIVE RYAN informed the committee the next amendment would
be to delete page 5, line 27, through page 6, line 2, which reads
"(b) After a letter of credit is issued, rights and obligations of
a beneficiary, applicant, confirmer, and issuer are not affected by
an amendment or cancellation to which the beneficiary, applicant,
confirmer, or issuer has not consented, except to the extent the
letter of credit provides that the letter of credit is revocable or
that the issuer may amend or cancel the letter of credit without
the consent." He informed the committee that is not a good
business practice. When you set up a letter of credit, it is
usually set up on terms that have previously been negotiated. He
again read the amendment and said it only leaves one thing saying
it provides that it is revokable. Representative Ryan said a lot
of the times there are a lot of amendments made to the disposition
afterwards because situations change. I could be a large commodity
purpose and all the commodities can't be delivered at one time such
as with large amounts of currencies. He said these things are paid
for in what is called a "tronch." You may have a $1 billion
currency transaction, most banks don't have a liquidity to come up
with $1 billion at one time, so they will do it in tronches of
perhaps $250 million. Representative Ryan said there are access
and confirmation codes. There are a number of things that have to
happen in a sequence. By doing this in tronches, it may take three
or four months to make everything work. He said, "Then you would
modify, you would make an agreement. And what they're saying here
is that you're rights and so forth are going to be -- once that's
issued you're rights are going to be -- unless a letter is
revokable, the issuer may amend or cancel a letter of credit
without consent. Well, if I've got all this money hanging out
there and it's half in process of being - the deal being completed,
I don't want anybody revoking that letter of credit. I want to be
able to have the ability to make what adjustments are necessary to
make this deal go through."
Number 1176
REPRESENTATIVE RYAN indicated the next change is on page 7, line 7
through 14, delete, "An issuer has a reasonable time after
presentation, but not beyond the end of the seventh business day of
the issuer after the day of the issuer's receipt of documents to
honor the presentation;". He gave the following example, "I would
personally love to be able to resign from this legislature and to
receive the amounts of money that are received in letters of credit
and hold on to them for seven days and invest that money for seven
days and I wouldn't have to do anything for the rest of my life
except sail around in my 100 foot sailboat - green water, white
beaches." He said holding someone's money for seven days without
paying them for it is outright theft. This would make sure that
the banks dealing with this are able to make their interest
payments to their depositors and, therefore, to keep all the rest
of the return they make on the money, because on the side business
of (indisc.) letters of credit, they're sitting there getting the
interest. Representative Ryan said domestically, the money has
been wire transferred and when you make the presentation of
documents, there is no reason for anybody to hold on to your money
for seven days. In international transactions, federal
requirements are three days and anything longer than three days,
you should be able to present the documents and receive the money
without the bank having a period of time above those three days to
hold you're money. He indicated wording should be inserted which
would read, "(b) Unless the letter of credit provides for a
different time, after receipt of documents, an issuer shall honor
the presentation, or give notice to the presenter of discrepancies
in the presentation, when demand is made for honor of the issuer is
located in the United States, or within three days after receipt of
the documents if the issuer is not located in the United States."
He said the subcommittee felt this was reasonable as you want to be
paid when you want to be paid.
Number 1315
REPRESENTATIVE RYAN explained the next amendment is on page 11,
line 10, following "transferable" insert "or assignable, which may
include assignment of proceeds under AS 45.05.114,". He referred
to any document that has a value and said you can assign it to
another individual for payment and move on about your business. He
said they wanted the flexibility of transferrable or assignable.
Representative Ryan read from 45.05.114, "Issuer's duty and
privilege to honor; right to reimbursement. (a) An issuer must
honor a draft or demand for payment which complies with the terms
of the relevant credit regardless of whether the goods or documents
conform to the underlying contract for sale or other contract
between the customer and the beneficiary. The issuer is not
excused from honor of the draft or demand by reason of an
additional general term that all documents must be satisfactory to
the issuer, but an issuer may require that specified documents must
be satisfactory to it." Representative Ryan explained another
common way to hang onto money and keep it from being paid is to
say, "Well, you're paperwork is not quite right, you're going to
have to go and do something else."
Number 1436
REPRESENTATIVE RYAN explained the next change is on page 11, line
14, after the word "if" insert "the transfer or assignment would
violate applicable law."
Number 1450
REPRESENTATIVE RYAN referred the committee members to page 11,
lines 15 through 20. He said, "Since we put this extra language in
there, we don't feel that this stuff is necessary. So it cleans up
that portion."
Number 1468
REPRESENTATIVE RYAN said on page 11, line 22, following "(a)"
delete "A", which is a subsection, and insert "If allowed by the
letter of credit under AS 45.05.112, a".
Number 1502
REPRESENTATIVE RYAN informed the committee the last change is on
page 12, line 3, following "issuer" insert "and the beneficiary".
He said this protects the issuer and the beneficiary.
Number 1538
CHAIRMAN ROKEBERG said it is not his intention to move the bill as
the committee members just received the proposed amendment and he
would like everybody to have an opportunity to understand it. He
said it is his intent to bring the bill back up the following
Wednesday.
Number 1637
ART PETERSON, Uniform Law Commissioner, State of Alaska, came
before the committee to testify. He noted he is also an attorney
in private practice. Mr. Peterson indicated Representative Ryan
didn't contact him, any of the other uniform law commissioners or
the director of the Division of Banking. He said HB 178 is a major
piece of legislation of significance around the country and it is
currently being enacted regularly throughout the country. Mr.
Peterson said, "For Alaska to go off in its own tangent when we are
not simply addressing unique about Alaska - something to address
our own situation - is probably not a good idea. I have kind of a
negative attitude toward a set of amendments like this."
MR. PETERSON continued, "I noticed that Representative Ryan was
checking the statute book to read to you some of the provisions
when there was a cross-reference to some other section. In fact,
the sections referred to are sections in this like that Section 114
that we were just looking at, for example, is repealed and
reenacted in the bill. So you don't want to read the text that's
in the book when you read the cross-reference that's in the bill,
to the other section that's in the bill. You want to read that
section for the current text. And that's subsection `(C)' versus
`(D)' that we started out with in this set of amendments - same
situation there. The cross-reference is in the bill, not in the
book. So with that warning, as you study this matter, you might
want to keep that in mind." Mr. Peterson said he would like to
defer to Mr. Kurtz or Mr. Kirkpatrick.
Number 1783
L. S. "JERRY" KURTZ, JR., Uniform Law Commissioner, State of
Alaska, testified via teleconference from Anchorage. He informed
the committee members he practices law maybe 10 percent of the
time, but he is otherwise retired. Mr. Kurtz said he hasn't seen
the amendments. He said he would second the comments of Mr.
Peterson. Mr. Kurtz said it sounds to him that a number of the
provisions are founded upon very good ideas that Representative
Ryan has in recognition of real problems. He said, "That drawing
of -- in the fashion they've drawn will simply make credit more
expensive and harder to get for anybody in Alaska seeking a letter
of credit. I think I've heard enough about the amendments to know
that if I were representing any bank, which I no longer do but did
for 25 years, that I would advise them to oppose the amendments.
And if they were involved in trying to issue a letter of credit
under them, I would be telling them to be a whole lot more cautious
and charge more for the letter of credit and be sure they had an
attorney looking at the terms of the situation very carefully since
Alaska no longer had the uniform act."
Number 1872
CHAIRMAN ROKEBERG asked Mr. Kurtz if the bill was brought before
the committee the following Wednesday, would that be adequate time
for him to review the amendments.
MR. KURTZ indicated he would have time to review the amendments by
that time. He noted that Mr. Peterson's suggestion to have direct
contact with whoever put the amendments together is a very good
suggestion.
Number 1913
CHAIRMAN ROKEBERG asked Mr. Kurtz if he could make any
recommendations of any banking institutions and a specific person
the committee could speak to that may have a vested interest in the
legislation.
MR. KURTZ suggested the committee speak to Wes Coyner who
represents banks. Also, the committee may want to speak to John
Beard, Attorney, who does most a lot of work for the First National
Bank of Anchorage.
Number 1984
DOUGLAS LOTTRIDGE, Assistant Attorney General, Commercial Section,
Civil Division, Department of Law, spoke to the committee via
teleconference from Anchorage. He said he is working with Mr.
Kurtz on the issue and has been in touch with Mr. Peterson. Mr.
Lottridge said in his review of the bill, there has been a
considerable amount of time spent by the drafters trying to balance
the interests of both the issuers and the beneficiaries under the
letters of credit. For instance, the time period of seven days was
balanced. In an earlier bill there was a time period of three
days, but there wasn't a specific requirement that the notice be
given by the issuer of what was wrong with it. Mr. Lottridge said,
"In the commentary of that particular section, the commentator
suggests whether it's a practical matter or not the banks are not
automatically or the issuers are not automatically allowed to hold
it for seven days. It says, `Whatever is a reasonable time or
seven days.' And something much less than seven may be reasonable.
I understand the practicalities." Mr. Lottridge said he would take
time to review the amendments.
CHAIRMAN ROKEBERG asked Mr. Lottridge to provide some written
comments relating to the Uniform Act and the commentary as to the
issue of the three-day period.
Number 2090
WILLIS KIRKPATRICK, Director, Division of Banking, Securities and
Corporations, Department of Commerce and Economic Development, came
before the committee. He indicated he doesn't have any definite
comments to make on letters of credit other than to say as far as
financial institution regulation, his division examines letters of
credit probably more indepth than the loans that banks have on
their books. He stated one of the reasons that letters of credit
are so important to the division is that in a lending obligation,
a borrower will draw down on a loan as whatever he's borrowing his
money for progresses. In a letter of credit, especially if they
exceed a year, a lot of things can happen within that year -
collateral can move, economies can change, borrowers can go broke.
Mr. Kirkpatrick said, "One bank I can talk about because it doesn't
exist, United Bank of Alaska that issued a letter of credit in the,
I believe it was in the reconstruction of World War II fighter
planes in Japan. And management changed at the bank and the new
management came to realize that they had made a mistake on that
issuance of a letter of credit, their collateral was out of the
country at that particular time. And the bank lost it, the bank
refused to honor the letter of credit. The court said, `Sorry
Charlie, you made the obligation. The obligation was on good
faith. You need to disburse on it,' and they did. And it was a
loss."
MR. KIRKPATRICK said based on contingencies that are not always at
the control of the financial institution, he would take a very
close look at those obligations. He indicated it's in the
department's regulations, so that there won't be a
misunderstanding, they will examine and charge those off as they
see fit as to whether they are substandard, doubtful or lost. As
regulators, they take a close look at those types of obligations.
They look at the instruments on a basis as far as an obligation
contract. In that light, they rely on the Uniform Commercial Code
for those types of readings as to what is an obligation on a
contract.
Number 2227
REPRESENTATIVE RYAN asked if it is not common practice when people
are setting up these kinds of transactions that they exercise due
diligence as far as with whom they're setting up the contracts in
that the person is capable of performing.
MR. KIRKPATRICK indicated that is a common practice and that is
what his division examines. He said they like to see letters of
credit backed by cash or better. It is always nice to have a
certificate of deposit for the same amount of money that is issued
in a letter of credit. Mr. Kirkpatrick said they run into problems
with the larger financial institutions. He said it could be very
complex and involved as you get down to the purpose that an
obligation has created. Generally, the businesses are well
established and as a normal course of business, it normally has a
history behind it. He noted he would forward some names to the
committee of people in Alaska who deals with letters of credit on
a more of a day to day basis.
Number 2364
CHAIRMAN ROKEBERG said the bill would be held over and discussed
again the following Wednesday.
HB 209 - PROJECT LABOR AGREEMENTS ON PUB CONSTR.
Number 2380
CHAIRMAN ROKEBERG announced the committee would address HB 209,
"An Act regulating the use of pre-hire project labor agreements for
public construction projects by the state and political
subdivisions of the state."
Number 2422
REPRESENTATIVE AL VEZEY, sponsor of HB 209, said he introduced the
bill because we are dealing with an area of the labor law that is
still evolving in the country and courts. It is a trend that
started in the 1980s with a case that became known as the Boston
Harbor case. There have been other cases since that time and there
are still matters that are being adjudicated in the courts.
Representative Vezey said, "In essence, what we saw over the decade
since World War II is that labor unions found themselves losing
market share. And like all economic institutions, they came to the
realization that if they couldn't win in the market place, that it
is much easier to compete if you get a legislative grant of limited
competition. This is what they succeeded in doing in the Boston
Harbor case involving a public work's project. Since this time,
this sort of subject of where political subdivisions mandate that
work be performed under a...."
TAPE 97-49, SIDE B
Number 0001
REPRESENTATIVE VEZEY continued, "...bill was put together to
address the supreme court's decision in the Boston Harbor case and
that is that a political entity may enter into a project labor
agreement (PLA). That is an agreement that requires a collective
bargaining agreement with a bargaining unit, such as typically
referred to as a labor union, if there was a legitimate public
purpose."
REPRESENTATIVE VEZEY said what he is attempting to do by
introducing the bill is to lay out what criteria has to be
evaluated to determine that it is in the public's best interest to
limit competition in this manner. He explained the bill is very
generic and wide open. There are some very simple requirements
that an elected or government body would have to show were being
met before they could say, "It is in the public's interest to
require that this be done under a project labor agreement." He
noted the requirements are laid out in the bill and he would be
happy to review them if the committee wishes.
Number 0105
DONNA C. WILLARD, Attorney, came before the committee to testify on
HB 209. She noted she has been involved in matters concerning
project labor agreements (PLAs) in Alaska for at least the last
four years. Ms. Willard indicated there are both good and bad
PLAs. She said one of the good ones was utilized for the building
of the Denver International Airport where union and nonunion
workers negotiated with the city and county of Denver and produced
an agreement where labor lived amicably. Nonunion workers were not
forced to join unions in order to hold jobs on that project and
nonunion contractors were not forced to sign labor agreements in
order to prosecute work on the project.
MS. WILLARD said the bad PLAs have been seen surfacing in Alaska
over the last five or six years. Basically, what they generally
provide is that in order for a nonunion contractor, if he becomes
the low bidder, to work on a public construction project in this
state he must sign a labor agreement, which is a PLA, with the
effective unions. He is generally not allowed to hire his own
wealth of employees other than a few top senior managers and he
must go to the union hiring halls in order to get his labor for
that project. Ms. Willard explained this not only disadvantages
the nonunion contractor who is unfamiliar with union labor rules
and other aspects of unionism, but also saddles him with an
ineffective unknown labor force for the particular project. She
said what it does is stifle competition.
Number 0212
MS. WILLARD pointed out a case which is currently before the
supreme court, which was won in the lower court, is entitled
Lampkin v. Fairbanks North Star Borough. In that case, the court
ruled that the PLA was unconstitutional as it violates the equal
protection clause of the Alaska Constitution and it constituted a
taking by requiring nonunion workers to join a union and pay into
pension funds from which they would never recoup any benefits. She
said such agreements that contain these provisions violate the
procurement codes of the state of Alaska and, in this case, the
Fairbanks North Star Borough. Ms. Willard explained the whole idea
of procurement codes is to ensure that maximum open competition be
allowed for public construction projects in order to promote public
interest, to get the best bid and lowest bid from the most
responsible bidder. When these types of provisions are
incorporated into specifications for construction contracts, you
generally drive away the nonunion contractor which lowers the level
of competition. She said the courts that have considered this from
the aspect of the procurement codes in respective states, have
generally found that, except in exceptional circumstances, such
agreements violate the procurement codes and only in exceptional
circumstances should they be allowed to override the procurement
code provisions concerning maximum competition.
MS. WILLARD said it seems to her that in a state, out of all of the
states in the union, we pride ourselves in the right and freedom of
the individual to the maximum extent possible. It is absolutely an
anathema to say, with respect to the expenditure of public funds,
that there is condition that if you want work on a public
construction contract, you must join a union even though you long
ago exercised your free choice and decided not to do so.
MS. WILLARD said all HB 209 does is level the playing field. It
make it fair from both sides. Everyone gets to bid and may the
best person win, whether it is a union or nonunion contractor,
whether they employ union workers or nonunion workers. It is a
uniform set of rules which is in the best interest and uphold the
highest standards that we have in Alaska.
Number 0360
REPRESENTATIVE COWDERY asked Ms. Willard to define "state and
political subdivisions."
MS. WILLARD said, "Literally it means the state, the boroughs, the
school districts, the public components in this state and it goes
no further."
Number 391
REPRESENTATIVE COWDERY asked if the legislation has a bearing on
the interties.
MS. WILLARD said it appears that somehow the municipality of
Anchorage has, without public notice or assembly input, just signed
a memorandum of understanding with the International Brotherhood of
Electrical Workers (IBEW) agreeing, in terms of its rule with
respect of the intertie, to have the IBEW as the exclusive union-
only contractor. She noted that both the Chugach Electric
Association and Matanuska Electric Association have revoked those
agreements because they have determined, through their own studies,
that if the intertie projects go union only, we are talking about
millions of dollars in added expense to get the north and south
interties built.
Number 0484
REPRESENTATIVE COWDERY asked Ms. Willard that if the municipality's
agreement were to be challenged, would it hold up through the
system.
MS. WILLARD said, "My understanding of the way that the boroughs
operate, and I did a fair amount of research in this because of the
situation I ran into in Fairbanks, that I don't see where the mayor
got the authority under the state statutes with respect to borough
powers to without assembly approval enter into such an agreement,
but I guess that's going to be litigated."
REPRESENTATIVE COWDERY asked if the bill would restrict anybody
involved in the construction business from bidding or procuring
jobs.
MS. WILLARD indicated it wouldn't restrict anybody. She said it
sets up a uniform set of standards that everyone will abide by on
public construction contracts in Alaska, be it union or nonunion.
Number 0539
JOHN BITNEY, Alaska Housing Finance Corporation (AHFC), came before
the committee to testify. He said AHFC is brought in under the
bill by the definition section where public corporations are
included in the definition of "state," on page 3, line 15.
MR. BITNEY referred to page 2, lines 2 through 23, and said there
are six provisions that requires them to do a findings and analysis
section before they do any kind of a project labor agreement. He
explained that in projects they do through financing, where they
have a private developer or are basically paying for the cost to do
an upgrade or construction with the use of AHFC money or housing
and urban development (HUD) money on a public housing project, one
of the things they've been doing is awarding points during the
procurement process for bidders who are coming in with PLAs to
provide some job training aspects. For example, AHFC is trying to
seek a federal grant to allow a contractor to partner up with the
Private Industry Council in Fairbanks to provide job training
opportunities for people who are going to be working on a public
housing project. He noted they are also doing the same thing in
Anchorage with two projects that are financed with a private
developer where AHFC has asked them, as part of their financing
agreement, to provide that a PLA to team up with the YMCA and the
carpenter's union to offer job training placement on a pre-
apprenticeship program. Mr. Bitney said AHFC would like to
continue to be able to provide these kinds of things with their
projects.
Number 0659
MR. BITNEY referred to the first provision on page 2, line 8, and
said AHFC would be required, before they could do a PLA, to show
that the agreement would result in greater employment
opportunities. He said they could easily do that for each of the
cases, however, in the second provision on line 12, they would be
required to show that this would result in significant identifiable
cost savings. He stated job training costs money and they believe
that with those two items in the bill, it would prohibit or
extremely limit AHFC's ability to do those kinds of programs.
Number 0690
MR. BITNEY referred to page 2, line 20, item 5, and said they could
only do a PLA if the size and complexity of the project is
significantly greater than public projects ordinarily constructed
by the state, which would be AHFC. He said the language appears to
be ambiguous. Mr. Bitney noted their projects regularly and
annually range in size from thousands of dollars to millions of
dollars. He state that AHFC is opposed to HB 209 as it is
currently written.
Number 0722
REPRESENTATIVE COWDERY said it would seem to him that the best
qualified contractor that gives the state the best benefit, in hard
dollars, should be the one that gets the bid, whether or not they
have a social program that AHFC's chosen contractor abides to or
doesn't abide to.
Number 0823
MR. BITNEY said it is his understanding that in terms of the
contractor for the projects, they don't necessarily have to be
union. He said there is a criteria in AHFC's award process where
they receive additional points if they have this job training
piece. Mr. Bitney noted it is not a requirement that it
necessarily be union, but in these cases that is what is happening.
REPRESENTATIVE COWDERY referred to the point process that AHFC uses
to evaluate the bids and said it seems to him that is not really a
level playing field.
Number 0881
REPRESENTATIVE VEZEY said he doesn't believe Mr. Bitney described
pre-hire agreement or a PLA. He said there is a training program
as part of AHFC's procurement.
MR. BITNEY responded, "I will immediately seek legal council if
that is indeed the case, but our understanding in reading the bill
and looking at it -- just my looking at it was I assumed, and I
will check that, that those kinds of things as far as our process
coming in and being submitted as part of the application that that
would fall under this definition, but I will double check that
immediately."
Number 0958
CHAIRMAN ROKEBERG said Mr. Bitney indicated that within the
financial terms of their lending agreements on particular projects
that they will design job training programs.
MR. BITNEY indicated that is correct.
CHAIRMAN ROKEBERG said, "I'm really rather disturbed to hear that
because it seems to me that there is an extraordinary problem for
potential abuse if you're going to be inserting any kind of a
refinancing requirement -- financing agreement that requires job
training. That could really be subject to quite a bit of
discussion and it leaves a lending institution an incredible amount
to dictate what has to be done as a condition of a loan. Could you
expand on that a little bit?"
MR. BITNEY explained that Brighten Park in Anchorage is a 80 unit
multifamily complex that is being constructed at Bragaw Street and
the Glen Highway. He told the committee members that a
representative of AHFC went to the community council meetings in
the area before the loan was approved. They received a lot of
public input. There was concern about adding more multifamily
units in the Mountain View area of Anchorage. Mr. Bitney said the
agreement to try and provide some job training as part of the
project was something that came up and it was taken to the board
for approval and was done so per an agreement with the developer.
CHAIRMAN ROKEBERG asked if that was the only project where this has
been done.
MR. BITNEY responded, "Mr. Chairman, in the situation where it's a
financing, that is correct."
Number 1091
SAM KITO III, Special Assistant, Office of the Commissioner,
Department of Transportation and Public Facilities (DOT/PF), came
before the committee to testify. He said DOT/PF currently is not
entered into nor have they worked with any PLAs. The department's
interest in HB 209 is to preserve the ability to, in the future,
work with PLAs if that becomes a viable option in project
contracting for the department.
MR. KITO pointed out that a concern DOT/PF has with the legislation
is on page 2. As Mr. Bitney commented, the department believes
those sections would be extremely subjective and potentially
restrictive. It would be difficult to adequately demonstrate
greater employment opportunities, significant identifiable cost
savings, greater safety, significant labor unrest and items such as
size and complexity of a project. He noted the size and complexity
is independent. Subsection (a) would make it extremely difficult
to ever enter into a project labor agreement.
Number 1224
MICHAEL SAMSON, President, Samson Electric, testified via
teleconference from Fairbanks in support of HB 209. He informed
the committee he has reviewed the bill, it is a well written bill
and is very fair. He said the PLAs he has run into up to this
point are completely one-sided. They are nothing more than
political paybacks for organized labor in this state for their
election contributions. They serve nothing more than to line the
pockets of the unions and they do not help the union workers. Mr.
Samson pointed out that his company is nonunion and employs between
20 to 80 electricians. He said they do not discriminate as they
hire union or nonunion. Mr. Samson explained the nonunion workers
that he employs have had the opportunity to join the union and
chose not to. They choose to deal with their wages as they see fit
and the pension money they receive from the Davis-Bacon Act is
theirs. If they work one week and leave, they get their money.
The only law that would restrict that is if you are a union worker.
Number 1372
JEFF ALLING, President, Alcan Builders, Incorporated, testified via
teleconference from Fairbanks in support of HB 209. He informed
the committee his business happens to be a member of the Associated
General Contractors and has been for many years. Mr. Alling
explained he supports the bill because he is against bad PLAs
altogether as they restrict our constitutional rights of equal
access and freedom of association. He said they have a right to do
business with whoever they choose to do business with. Mr. Alling
stated he is not against or opposed to unions. Unions have a
potential to provide a skilled workforce. His firm employed over
99 union employees last year. Mr. Alling said bad PLAs cater a
union only group restricting access of the nonunion skilled tax
payers. He said bad PLAs are (indisc.) to taxation without
representation. Mr. Samson informed the committee that he and his
business partner are not willing to give up their employees because
of restricted PLA legislation. House Bill 209 would restrict PLAs
and allow for a more competitive atmosphere resulting in cost
savings in tough budget times to the state of Alaska and local
governments. Mr. Alling said there is one thing missing out of
Representatative Vezey's bill as he believes PLAs should be
outlawed altogether.
Number 1521
RUSS SCHWARTZ, President, Associated General Contractors of Alaska;
Senior Manager, Osborne Construction Company, testified via
teleconference from Anchorage in support of HB 209. He informed
the committee his company currently employs over 700 Alaskans. He
read the following statement into the record:
"I've been actively engaged in the construction industry for over
35 years. It is my experience that project labor agreements on
taxpayer funded projects are bad public policy. However, if a
project labor agreement can be shown to be in the best interest of
Alaskans, through clear convincing evidence that would be required
by this bill, then I would not voice opposition.
"Unrestricted open bidding procedures is the best way to serve the
public. Project labor agreements, by definition, restrict those
who would otherwise be qualified from bidding, and force those with
existing collective bargaining agreements to enter into agreements
they did not participate in. Individuals who make their living in
a construction industry are forced, under restricted PLAs, to give
up their constitutional rights of equal protection, the right of
freedom from forced association, the due process guarantee and
their right of equal access. But if we are to have project labor
agreements, lets have them, as limited, under House Bill 209.
Thank you, Mr. Chairman."
Number 1627
CHAIRMAN ROKEBERG asked Mr. Schwartz if one of the benefits of PLAs
is that they can stipulate local hire.
MR. SCHWARTZ informed Chairman Rokeberg that as he understands
Alaska law, they can't require local hire, but PLAs can be written
to show certain restrictions as far as where you live and how long
you've been there. Under federal law, Alaska still has designated
certain areas as being under employment duress - high areas of
unemployment.
Number 1707
REPRESENTATIVE COWDERY asked, "How many crafts and what different
crafts off the top of your head -- could you name some of them that
you employ?"
MR. SCHWARTZ responded that they employ operators, carpenters,
laborers, teamsters, masons, pipefitters, electricians, et cetera.
If it has anything to do with construction, they probably employ
them.
Number 1760
JUDY MONTGOMERY, Employee, Associated General Contractors of
Alaska, testified via teleconference from Anchorage in support of
HB 209. She said her organization is a nonprofit trade
organization that represents over 600 contractors and associated
businesses in Alaska. She stated unrestricted uncompetitive
bidding procedures for public works projects are the most prudent
way of serving the public's interest in accordance with the state
procurement code. Ms. Montgomery said, "A public sector project
labor agreement is a government mandate for the job site contractor
and subcontractors employ only members of a union on the project.
And like most collective bargaining agreements, the PLA is usually
negotiated between the unions and the government procurement agency
and is forced upon the contractor."
MS. MONTGOMERY said government-opposed PLAs limit the competition
for public work, increase the cost of public infrastructure and
threaten individual rights and freedom. She stated public sector
project labor agreements increase the cost of construction,
including the private work that manufacturers and other American
businesses find necessary to maintain their competitive and world
economy. Ms. Montgomery requested the support of the committee.
Number 1875
JULIE DUQUETTE, Employee, Osborne Construction, testified via
teleconference from Fairbanks in support of HB 209. She stated she
has lived in Fairbanks since 1953, and has worked on various
construction projects with both union and nonunion contractors.
Ms. Duquette said she doesn't feel the state should require a
contractor, on a public construction project, to enter into a pre-
hire agreement with a labor organization. With a competitive
bidding process, all the contractors should be allowed the option
to sign a project labor agreement. The state of Alaska has set
wages under the Davis-Bacon Act to ensure fair wages are paid and
to make contributions on behalf of the employees for a benefits
fund. She sees no reason why a public or state project should
require a contractor to sign a project labor agreement. Ms.
Duquette said she would recommend a favorable vote on HB 209.
Number 1953
REPRESENTATIVE COWDERY asked Ms. Duquette to elaborate on the
Davis-Bacon Act requirements.
MS. DUQUETTE said, "The Davis-Bacon requirements are set on whether
it's a high Davis-Bacon project or a low, there is a set wage where
when you do competitive bidding, whether you're a union or a
nonunion contractor, you're wages is set and you set up a benefit
package that you pay into for your employee - similar to what the
union packages are."
Number 1993
HAROLD SKELTON testified on behalf of himself via teleconference
from Fairbanks. He noted he is a senior manager for Osborne
Construction. Mr. Skelton urged the committee to pass HB 209 as
all Alaskans should be allowed to work on public projects and not
just those who choose to be members of a union. Furthermore, he
supports the open and competitive bidding process. The past has
shown efforts have been made to limit the competitive bidding
process by placing PLAs in the bid documents. Mr. Skelton said HB
209 will protect all workers and contractors and stop the waste of
public and private funds and time arguing this issue in court. No
government agency should mandate that it's constituents belong to
a union to be able to be employed. He said he supports HB 209.
Number 2092
TONY FAZIO, Co-owner and Vice President, Slayden Plumbing and
Heating, testified via teleconference from Fairbanks in support of
HB 209. He said they have had a lot of problems with PLAs. By
passing HB 209, it will allow his company to focus more on the work
they need to do. He thanked the committee.
Number 2154
KEVIN DOUGHERTY, Alaska Laborers Union, testified via
teleconference from Anchorage. He said he believes the current law
is sufficient. He referred to the Healy coal project and said it
was a project that Governor Hickle and Joe Usibelli put together in
1993. That project was voted on unanimously by the Alaska
Industrial Development and Export Authority (AIDEA) Board to
support the project labor agreement because of what it accomplished
for the project. It accomplished harnessing Alaska labor support
for the project in terms of the private, federal and state funding,
local hire and the owner's ability to negotiate an effective cost
savings process as well as having standardized shift work, overtime
and terms of employment. Mr. Dougherty said he thinks that the
wise business practices of Governor Hickle and Mr. Usibelli can
probably speak for themselves in Alaska. He informed the committee
of several court cases where PLAs were upheld. Mr. Dougherty said
he thinks it is best to look at projects. If you go out there,
you'll find there are union and nonunion contractors on the
projects and there are union and nonunion members on those
projects. He thanked the committee for listening.
Number 2360
CHARLES ELWOOD testified on behalf of himself, via teleconference
from Fairbanks, in support of HB 209. He indicated he has worked
as a superintendent for Osborne Construction Company. He also used
to be a member of the Carpenters Union for 33 years and resigned a
few years ago. Mr. Elwood said what he sees with the project labor
agreements is the union "fat cats" are lining their pockets. He
referred to PLA agreements that are adopted and said 95 percent of
the people would never see any of the money or revenue. Once the
project labor agreement is over, the people will probably be
unemployed and their pension funds will probably go right into the
general fund of the labor union. He again stated he supports HB
209.
TAPE 97-50, SIDE A
Number 0002
REPRESENTATIVE JERRY SANDERS questioned who the union "fat cats"
are.
MR. ELWOOD indicated he is speaking particularly of the union
bosses. These people are hired and they work 52 weeks a year at
the highest scale the union can pay and he sees very little that
they do for their people.
Number 0066
KARL HNILICKA was next to testify via teleconference from
Fairbanks. He informed the committee he is lived in Alaska for
over 18 years. Mr. Hnilicka said although he doesn't believe HB
209 is perfect, it is a better bill than what is presently out
there. He said what he sees with PLAs is it eliminates a good
portion of the workforce that is available. In the state of
Alaska, where we do experience some high unemployment rates, this
is kind of detrimental to certain areas as people will be
eliminated from working on certain projects. He said anytime there
is a tax funded project and you enter into a PLA, it will eliminate
a lot of people that should be benefitting from that project if
they could work on it. Mr. Hnilicka referred to safety issues and
said he thinks it is prudent to all contractors that they have as
high of a safety factor that they can possibly have on any project.
He referred to unrest on projects and said the only time he has
ever seen unrest is if the unions don't get the project. He has
seen unions picketing projects more so than a nonunion project.
Mr. Hnilicka referred to benefits and said the nonunion workers
don't work long enough to receive their full benefits that they do
acquire during the project. He said he believes the workers should
receive all the benefits they acquire during a project.
Number 0256
PAT REILLY, Owner, Rain Proof Roofing Company, testified via
teleconference from Anchorage in support of HB 209. He informed
the committee that his company is locally owned, has been in
business since 1962, and they do work all over the state of Alaska.
He said he has been in Alaska all of his life. Mr. Reilly said the
PLAs he has run up against have excluded his business from
projects. Prior to the mid 1980s, his business did mostly light
commercial and residential work. Since then, they do public sector
and residential work in all phases. He said the only thing the
present PLAs have done is excluded his business from some projects.
Mr. Reilly said he supports the passage of HB 209 as it is
presently written.
Number 0367
JOHN MacKINNON, Deputy Mayor, City and Borough of Juneau, came
before the committee to testify. He explained the city has a PLA
on the River Bend Elementary School in Juneau. It was put into
place for one main reason and that was one of the positive benefits
of a PLA is a mechanism that maximizes local hire. Mr. MacKinnon
said the city has found in the past, locally, that on a sizable
public works project, one in the order of $2 million, it is
attractive and large enough to bring in contractors from out of
state. Often times, these contractors bring in a significant
number of their own workforce. Mr. MacKinnon said, "It's very
difficult, as a local elected official, to pass the `red face test'
where a project that is being paid for out of local tax dollars and
a significant amount of labor is out-of-state labor, it becomes
difficult for us." Because of those of situations and because of
some criticism along those lines, the city put one in place for the
River Bend Elementary School and it has worked very well. He said
if the legislation is passed, he would ask that the political
subdivisions be kept out of it. Whether PLAs are used or not, it
should be a municipal or local decision. He noted they don't plan
to use PLAs on every project.
Number 0527
REPRESENTATIVE COWDERY referred to the school project and said
local hire could mean that a local contractor, union or nonunion,
could participate. He said, "I don't see as this hindering
anybody." Representative Cowdery referred to local hire and asked
how the city's agreement with the school solved that kind of an
issue.
Number 0627
MR. MacKINNON explained the way the local project labor agreement
works is the hiring done for the job is done through the local
union halls. The hiring hall's rules are set up through a number
of tiers - "A" list, "B" list, "C" list, which is based on the
number of years or other criteria that the person has been a
member. He informed the committee he is also contractor and was
the one member on the assembly that brought up the PLA and pushed
for it. He said he saw it as a positive benefit. The project
labor agreement was tailored a little bit different than just a
blanket agreement as it was limited to first tier subcontractors.
In looking at the way a project is put up, there are a number of
tiers of subcontractors and the further down you get, the smaller
you are and often times the more difficult it is for a small
operation to be a union operation. For the larger subcontractors
in mechanical/electrical trades and some side work, you end up with
a lot more opportunities and availability of contractors to bid on
a project.
Number 0804
REPRESENTATIVE TOM BRICE said, "Trying to meet the requirements 1
through 6, is that a reasonable request of municipalities to go or
these -- I mean the six hoops, are they reasonable for you guys in
terms of just making sure that if you want to participate in a PLA,
are the six factors that you would point to to make the decision of
a PLA?"
MR. MacKINNON explained there would be six things they would look
at.
REPRESENTATIVE BRICE asked if they only look at six things.
MR. MacKINNON said they look at a wide range of factors such as the
timing of a project. The local projects are timed out to get the
most competitive advantage on projects. Mr. MacKinnon said he
would hate to have too many more hoops to jump through on projects
as there are already a number of problems that gives them hoops to
jump through. Some include wet lands and permitting problems.
Number 0877
CHAIRMAN ROKEBERG asked if the city stipulated in their bidding
process that in order to bid, a contractor had to be a union or
nonunion contractor.
MR. MacKINNON said the bid didn't make that stipulation. There was
a stipulation that the hiring on the project will be through the
local hiring halls.
CHAIRMAN ROKEBERG asked if a nonunion contractor can provide his
labor force through the hiring halls.
MR. MacKINNON said he believes that the way it worked out legally
in the PLA was if a contractor became signatory prior to the bid,
then the contractor was able to bring in a certain number of his
own forces to do the project such as superintendents. If the
agreement took place afterwards, it did limit them. Mr. MacKinnon
noted this was totally dependent on which labor organization you
were talking to, whether it be the IBEW, laborers or carpenters.
Number 0950
CHAIRMAN ROKEBERG asked if that isn't a de facto method of
disallowing a nonunion contractor. He asked if signatory means
signatory to a collective bargaining agreement.
MR. MacKINNON said, "...or a single job only." He informed the
committee that as a contractor, you can sign blanket agreements
that he believes are good for a year at a time. Contractors may
also opt to sign one job agreements, or one particular job - they
will sign up and be signatory.
CHAIRMAN ROKEBERG asked if they would be subject to the typical
prevailing contractual wages in that particular area if they're
going through the union hall.
MR. MacKINNON explained that as part of the Davis-Bacon
requirements for public projects.
Number 1008
JASON JACKOVICH, Carpenter, Osborne Construction, was next to
testify via teleconference from Fairbanks in support of HB 209. He
informed the committee that he feels an employee should be able to
work for a nonunion contractor as it is like freedom. Mr.
Jackovich said he has worked for unions and he never received any
sort of pension as he wasn't there long enough. He now chooses to
work for a nonunion organization. He has received the Davis-Bacon
pension and it really helps to know that you have money that you
can draw at any point. Mr. Jackovich said he believes that PLAs
restrict a lot of employees. If there aren't jobs in a town, you
could be forced to join a union.
Number 0191
JOHN BROWN testified from via teleconference from Fairbanks. He
said he a 20-year union member. Mr. Brown said, "In my opinion,
what were looking at here is Mr. Vezey trying to dictate to state
and municipal and their labor relations policies to the detriment
of the state and to municipalities, and to the benefit of himself,
a contractor and to his political contributors such as Osborne
Construction. Project labor agreements are proven to save money
for owners. They do this through insurance of quality work, stable
labor relations, (indisc.) completion of the work and they also
effectively provide local hire. (Indisc.) legal challenges
association with other types of local hire provisions. This is
another blatant attack by Mr. Vezey on union workers. I would say
to any legislator supporting this bill that unless you carved out
your own district as Mr. Vezey did, I would think twice before I
vote. He won the election by a very very narrow margin."
Number 1173
FLOYD SHEESLEY, Project Engineer, Osborne Construction, testified
in favor of HB 209 via teleconference from Fairbanks. He said, "In
reading it (HB 209), the understanding I get is if in fact it can
be proved that something is beneficial or something is beneficial
out of it and (indisc.). I think we've heard statements that
stated it is bad, we've heard statements that it's good. I think
if we've got an option here to support it and that the wording
(indisc.) give us a consideration for the PLA. Thank you."
Number 1224
HOWARD WILSON was next to testify via teleconference from
Fairbanks. He noted he is a project manager for Osborne
Construction, but would be testifying on behalf of himself. Mr.
Wilson stated that because of the wide varieties of PLAs, both good
and bad, and because of the inconsistencies in PLAs, he is in favor
of HB 209. He said he believes it will bring continuity to the
process by establishing fair and consistent guidelines that will
benefit the state, its construction workforce and the rest of the
people that live in Alaska.
Number 1230
GARY DONOFRIO, Project Engineer, Osborne Construction, testified
via teleconference from Fairbanks. He said he believes that no
organization, be it the state or other organizations, should have
any control over which qualified contractor gets a bid on a public
construction project. He stated he is in favor of HB 209, but
noted he has a problem with Section 36.90.300 (5). Mr. Donofrio
said he believes the legislation will help keep the free and open
market free and open.
Number 1314
GARY NIESE testified via teleconference from Fairbanks. He
informed the committee he is testifying on behalf of himself, but
noted he works out of the labor union. He has been in Alaska since
1973. Mr. Niese informed the committee he is raising a handicapped
child and has spent $1.5 million in medical bills, which have been
covered by organized labor. Less than 10 percent of the $1.5
million has been paid for by the federal government or the state.
Mr. Niese said, "My back is against the wall here and if I lose
much more I'm going to be bankrupt. I'll be back working for one
of these nonunion companies that have the insurance plans that have
all these preexisting causes and I'm going to be putting the burden
of my burden back on the people of this state. Now do you want
organized labor to pay for some of these major medical bills or do
you want to put it back on the community? I need your help and
I'll be in your front yard with my kid asking for it and that's
just the way it's going to be. My back is against the wall. I've
lost as much as I can lose here. Thank you."
CHAIRMAN ROKEBERG asked Mr. Niese which union he belongs to.
MR. NIESE responded, "Operating Engineers, Local 302." He added
that it has been very difficult raising a handicapped child and the
community has been very supportive, both union and nonunion. Mr.
Niese said the recent attack on the laborers unions impacts a lot
of longtime residents. He said he is against HB 209.
Number 1489
STEVE HOVENDEN testified via teleconference from Fairbanks. He
informed the committee he is a surveyor and truck driver by trade.
Mr. Hovenden said he has read HB 209 and said it outlaws PLAs. It
is a discriminatory set of standards and nobody can meet the
specifications in the bill. He said it is his personal opinion
that this is political payback to those people that Representative
Vezey perceives as his enemies. He state HB 209 is not in the best
interest of the state and it is an anti-union bill and is union
busting. The bill particularly discriminates against workers who
have organized. Mr. Hovenden said project labor agreements are the
only way to guarantee local resident hire. Mr. Hovenden said, "The
public money that comes into these PLAs are Davis-Bacon wages and
those wages are established by union negotiated contracts. When
PLAs and unions are outlawed, as House Bill 209 is the sure
(indisc.), there won't be Davis-Bacon jobs."
Number 1628
DON ETHERIDGE, Representative, Alaska State District Council
Laborers, came before the committee to testify. He said he wanted
to make the comment that as one of the "fat cat" union guys, he
didn't put one dime from the Juneau PLA project into his pocket.
He said, "We worked with city for almost three months putting that
project together and we worked out agreements with everybody that
was involved that if it did go to a nonunion contractor, that we
would work with them to put their folks on the jobs. We had a lot
of concessions that we made from the unions that would help this
project along and make it work out fine for them."
Number 1672
REPRESENTATIVE COWDERY asked Mr. Etheridge if he believes the bill
discriminates.
MR. ETHERIDGE stated he doesn't feel that HB 209 discriminates. He
said he believes that the different entities should be able to do
what they want to without having to go through all the hoops.
Number 1707
ED FLANAGAN, Deputy Commissioner, Department of Labor, came before
the committee to testify. He said the department is opposed to HB
209 in that it removes an option from political subdivisions and
state agencies. He said he doesn't believe there has been any PLAs
formally entered into by any state agencies. Mr. Flanagan said
there was the decision by AIDEA on the Healy project to allow a PLA
and then one was not successfully negotiated with the agency and
the building trade. He said, "The requirement for a finding of
resident hire in the PLA is almost a poison pill. It has come out
in the testimony on the Fairbanks and the Juneau PLAs that while
resident hire is a goal and a - best be described as a welcome side
effect because that can undermine the validity of the project labor
agreement in court. They have been upheld, as was said, and Boston
Harbor - Ms. Willard's comments notwithstanding, Boston Harbor --
the Massachusetts Water Resources Authority versus the ABC, the
Associate Building Contractors, did go all the way to the supreme
court and the issue was whether project labor agreements in the
public sector were legal. It found that they were."
MR. FLANAGAN continued, "Republican governors such as Patackie
(ph), not to get partisan, but Governor Patackie and Governor
Whitman have utilized or promoted project labor agreements on
certain projects in their states, where appropriate. It can
accomplish, as seems to be the case in Fairbanks and Juneau, some
valid public policy purposes. And while they differ from one to
the next -- I'm aware of accommodations that were made and many
nonunion workers have gone to work through the project labor
agreement on the Fairbanks project and I believe the Juneau project
as well. So basically, it certainly isn't appropriate for every
project, but it's maybe one more tool in the arsenal of the
political subdivisions and possibly at some point of the state
agencies that would effectively, we feel, be precluded by this
bill. And I also just want to correct one other thing. The
Superior Court Judge Bisline (ph), in the case of the Fairbanks
project labor agreement in case Ms. Willard gave the impression,
did uphold that the PLA was legal. He did find some things
problematic such as the use of the hiring hall - the exclusive use
of the hiring hall and the borough adjusted the terms of the PLA to
accommodate Judge Bisline's concerns. And I believe it is Ms.
Willard actually who is appealing and her plaintiffs is appealing
to the supreme court as the project is underway, under the project
labor agreement, with so far from what we hear of good results."
Number 1853
REPRESENTATIVE SANDERS asked Mr. Flanagan if he feels that there is
more local hire under a PLA agreement than there is without a PLA
agreement.
MR. FLANAGAN said he believes there is more local hire. He said
there is a very limited universe of PLAs in the public sector that
have been utilized. He said, "I was the resident hire enforcement
for the Alaska Power Authority on the Bradley Lake project which
had an `after the fact' project labor agreement. The low bidder
was a signatory contractor. There was a project labor agreement so
that all subcontractors came under it and we have over 90 percent
Alaska hire on a project that was massive and had a lot of
specialized skill work. And the local hire law had an affect too,
I got to say. I was associated with probably what was the first
public sector PLA, although we didn't even call it that at the
time, with Nome school district in 1990. At the time, I was
working for the laborers training school and the school board
president in Nome and laborers representative up there called up
and said, `We've got a asbestos contract coming up here and if the
union comes up and trains people, we'll make sure whoever gets the
job signs the union agreement and uses the local people to go to
work. This was before Boston Harbor and I said, `I don't know if
you can do that, guys.' And they said `Don't worry about it, this
is Nome. We'll take care of it, you get up here.' And we went up,
we trained probably 3 union members and 12 or 13 people that
weren't - have never been in the union. A nonunion contractor got
the job and signed a one job agreement, brought in three or four of
his own people and used local people exclusively for three seasons
on that project. And it led to other work, other contractors that
went up there, the local community was able to say, `We've got
local people here.' And a lot of those people have since gone on
to work in hazardous waste and work on the environmental cleanups
for IT. By now, well they are not vested yet, although I believe
unions are changing their vesting requirements to five years."
Number 1966
REPRESENTATIVE COWDERY explained he has worked both union and
nonunion and he has found that it was to his benefit to hire all
the local qualified people wherever he was as he wouldn't have camp
expenses. He said they probably hired 75 percent to 80 percent
locally. He didn't want to transport people from Anchorage if the
jobs could be done by local people.
MR. FLANAGAN said it certainly does seem counter-intuitive to not
hire locals, but unfortunately that does seem to be what happens.
It kind of defies logic, but it does seem to be a problem
throughout the state.
CHAIRMAN ROKEBERG said he has other questions, but would contact
Mr. Flanagan. He said HB 209 is extraordinarily interesting and
controversial. Chairman Rokeberg stated the bill deserves
additional review by the committee and, as a result, he said will
hold HB 209 over.
ADJOURNMENT
Number 2232
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Committee
meeting at 5:50 p.m.
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