Legislature(1999 - 2000)
03/15/1999 03:15 PM House L&C
| Audio | Topic |
|---|
* 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
March 15, 1999
3:15 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative Jerry Sanders
Representative Lisa Murkowski
Representative John Harris
Representative Tom Brice
Representative Sharon Cissna
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 123
"An Act exempting individuals who provide ski patrol services on a
voluntary basis from the requirement for payment of minimum wage
and overtime compensation; and providing for an effective date."
- MOVED CSHB 123(L&C) OUT OF COMMITTEE
* HOUSE BILL NO. 128
"An Act relating to lease-purchases of personal property."
- MOVED HB 128 OUT OF COMMITTEE
* HOUSE BILL NO. 110
"An Act relating to the sale, offer to sell, and labeling of fluid
milk, meat, and meat products."
- HEARD AND HELD
* HOUSE BILL NO. 17
"An Act relating to the calculation of employee contributions and
credited service in the public employees' retirement system for
noncertificated employees of school districts, regional educational
attendance areas, the Alaska Vocational Technical Center, and the
state boarding schools; and providing for an effective date."
- MOVED HB 17 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 123
SHORT TITLE: EXEMPT VOL. SKI PATROL FROM MINIMUM WAGE
SPONSOR(S): LABOR & COMMERCE BY REQUEST
Jrn-Date Jrn-Page Action
3/03/99 342 (H) READ THE FIRST TIME - REFERRAL(S)
3/03/99 342 (H) L&C
3/10/99 (H) L&C AT 3:15 PM CAPITOL 17
3/10/99 (H) HEARD AND HELD
3/12/99 (H) L&C AT 3:15 PM CAPITOL 17
3/15/99 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 128
SHORT TITLE: LEASE-PURCHASE OF PERSONAL PROPERTY
SPONSOR(S): REPRESENTATIVES(S) MURKOWSKI
Jrn-Date Jrn-Page Action
3/05/99 368 (H) READ THE FIRST TIME - REFERRAL(S)
3/05/99 368 (H) L&C
3/15/99 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 110
SHORT TITLE: SALE/LABELING OF MEAT/MILK PRODUCTS
SPONSOR(S): REPRESENTATIVES(S) HARRIS, Dyson
Jrn-Date Jrn-Page Action
2/24/99 300 (H) READ THE FIRST TIME - REFERRAL(S)
2/24/99 300 (H) L&C, JUD
3/10/99 418 (H) COSPONSOR(S): DYSON
3/15/99 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 17
SHORT TITLE: PERS CREDIT FOR NONCERTIFICATED EMPLOYEES
SPONSOR(S): REPRESENTATIVES(S) BRICE, Phillips, Smalley, Cissna,
Croft
Jrn-Date Jrn-Page Action
1/19/99 22 (H) PREFILE RELEASED 1/8/99
1/19/99 22 (H) READ THE FIRST TIME - REFERRAL(S)
1/19/99 22 (H) LABOR & COMMERCE, HES
2/12/99 210 (H) COSPONSOR(S): PHILLIPS
2/24/99 308 (H) COSPONSOR(S): SMALLEY
3/03/99 350 (H) COSPONSOR(S): CISSNA
3/05/99 378 (H) COSPONSOR(S): CROFT
3/12/99 (H) L&C AT 3:15 PM CAPITOL 17
3/12/99 (H) L&C MEETING CANCELLED
3/15/99 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
DWIGHT PERKINS, Deputy Commissioner
Department of Labor
P.O. Box 21149
Juneau, Alaska 99802-1149
Telephone: (907) 465-2700
POSITION STATEMENT: Explained Version H committee substitute for
HB 123.
BRADLEY W. DENISON, Senior Vice President
and General Counsel
Rent-a-Center, Incorporated
5700 Tennyson Parkway
Plano, Texas 75024
Telephone: (907) 972-801-1111
POSITION STATEMENT: Testified on HB 128.
JOHN W. WAGNER, President
Far North Venture, Limited
d.b.a. Premier Rental Purchase
418 Third Street, Number 9
Fairbanks, Alaska 99701
Telephone: (907) 456-2023
POSITION STATEMENT: Testified in support of HB 128 as owner of
rental stores in Anchorage and Fairbanks.
PETE FELLMAN, Researcher
for Representative John Harris
Alaska State Legislature
Capitol Building, Room 110
Juneau, Alaska 99801
Telephone: (907) 465-4859
POSITION STATEMENT: Explained HB 110.
JANICE ADAIR, Director
Division of Environmental Health
Department of Environmental Conservation
555 Cordova Street
Anchorage, Alaska 99501
Telephone: (907) 269-7644
POSITION STATEMENT: Testified on HB 110.
BERT GORE, DVM, State Veterinarian
Animal Industries
Division of Environmental Health
Department of Environmental Conservation
500 South Alaska Street, Suite A
Palmer, Alaska 99645-6399
Telephone: (907) 745-3236
POSITION STATEMENT: Testified on HB 110.
BELINDA CLIFTON, Environmental Health Officer II
Animal Industries
Division of Environmental Health
Department of Environmental Conservation
500 South Alaska Street, Suite A
Palmer, Alaska 99645-6399
Telephone: (907) 745-3236
POSITION STATEMENT: Testified on HB 110.
JULIE KOEHLER
P.O. Box 21106
Juneau, Alaska 99802-1106
Telephone: (907) 586-6070
POSITION STATEMENT: Testified in support of HB 110.
DONALD LINTELMAN
Northern Lights Dairy
HC 60 Box 3300
Delta Junction, Alaska 99737
Telephone: (907) 895-4824
POSITION STATEMENT: Testified in support of HB 110.
MARGARET CARR
3505 Woodland Park Drive
Anchorage, Alaska 99517
Telephone: (907) 243-4234
POSITION STATEMENT: Testified in support of HB 110.
MICHELLE WILSON
Alaska Conservation Voice
809 West 20th Avenue
Anchorage, Alaska 99503
Telephone: (907) 279-0777
POSITION STATEMENT: Testified in support of HB 110 on behalf of
the Alaska Conservation Voice and herself as a new mother.
BOB SHAVELSON
P.O. Box 1498
Homer, Alaska 99603
Telephone: (907) 235-4068
POSITION STATEMENT: Testified in support of HB 110.
RICK HELMS, Southeast Political Alternate
Board of Directors
Alaska Public Employees Association/
Alaska Federation of Teachers
P.O. Box 32912
Juneau, Alaska 99803
Telephone: (907) 789-5951
POSITION STATEMENT: Testified in support of HB 17.
JOHN CYR, President
NEA-Alaska
114 Second Street
Juneau, Alaska 99801
Telephone: (907) 586-3090
POSITION STATEMENT: Testified in support of HB 17.
GUY BELL, Director
Division of Retirement and Benefits
Department of Administration
P.O. Box 110203
Juneau, Alaska 99811-0203
Telephone: (907) 465-4471
POSITION STATEMENT: Provided information on HB 17, brought forward
alternate wording.
BARBARA HUFF TUCKNESS, Director
Governmental and Legislative Affairs
General Teamsters Local 959 State of Alaska
520 East 34th Avenue
Anchorage, Alaska 99503
Telephone: (907) 565-8122
POSITION STATEMENT: Testified in support of HB 17.
ACTION NARRATIVE
TAPE 99-23, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:15 p.m. Members present
at the call to order were Representatives Rokeberg, Halcro, Harris
and Brice. Representatives Sanders, Cissna and Murkowski arrived
at 3:19 p.m., 3:21 p.m. and 3:25 p.m. respectively.
Number 0030
CHAIRMAN ROKEBERG called a brief at-ease at 3:16 p.m. The
committee came back to order at 3:19 p.m.
HB 123 - EXEMPT VOL. SKI PATROL FROM MINIMUM WAGE
Number 0053
CHAIRMAN ROKEBERG announced the committee's first order of business
is HB 123, "An Act exempting individuals who provide ski patrol
services on a voluntary basis from the requirement for payment of
minimum wage and overtime compensation; and providing for an
effective date." He noted the existence of a new committee
substitute (CS), Version H, labeled 1-LS0577\H, Cramer, 3/11/99.
The chairman stated this version comes to the committee courtesy of
the Department of Labor and he invited Mr. Perkins forward.
Number 0101
DWIGHT PERKINS, Deputy Commissioner, Department of Labor, came
forward. He noted the committee's previous discussion of HB 123
[March 10, 1999] and mentioned his further discussion with Mr. Carr
of the Department of Labor's Wage and Hour section in Anchorage.
Mr. Perkins indicated the department is in favor of exempting
volunteer ski patrollers from potential liability regarding wage
and overtime hour laws, in light of the great service they perform
and the desire expressed for this exemption by the ski patrollers
and the committee. The department thinks an appropriate fit is in
subsection (16) [AS 23.10.055(16)] concerning emergency medical
services, rather than as an additional subsection (17). The
department would encourage the committee to accept this and move
forward. Section 2 of Version H reads:
* Sec. 2. AS 23.10.055(16) is amended to read:
(16) an individual who
(A) provides emergency medical services only on
a voluntary basis;
(B) [OR AN INDIVIDUAL WHO] serves with a
full-time fire department only on a voluntary basis; or
(C) provides ski patrol services on a voluntary
basis.
MR. PERKINS commented, in addition, the department has broadened
the entire issue regarding nonprofits in the language before the
committee [Section 1, subsection (6)]. He indicated he believes
Version H both accomplishes the department's goals regarding the
problem of nonprofits and assists with the ski patrol issue.
Number 0211
CHAIRMAN ROKEBERG confirmed the language in subsection (6) is
unchanged from the previous version [Version G], and the ski
patrollers have been added as a new portion rather than as a new
subsection. Chairman Rokeberg mentioned he felt particularly proud
having this bill in hand after events the previous Friday at
Alyeska Ski Resort [avalanche, March 12, 1999]. The chairman asked
if there were further questions or comments, noting he would
entertain a motion.
REPRESENTATIVE HARRIS confirmed from Mr. Perkins that the
Department of Labor is in full support of the legislation.
Number 0287
CHAIRMAN ROKEBERG confirmed Mr. Ross in Anchorage has seen Version
H of HB 123 and finds it acceptable [Chris Ross, Alaska Division
Director, National Ski Patrol]. Chairman Rokeberg confirmed Mr.
Carr in Anchorage [Department of Labor] did not feel the need to
testify. Confirming there was no other testimony, the chairman
closed the public hearing on HB 123.
Number 0359
REPRESENTATIVE HALCRO made a motion to move the proposed CS for HB
123 out of committee with the attached zero fiscal note and
individual recommendations. There being objections, CSHB 123(L&C)
moved out of the House Labor and Commerce Standing Committee.
Number 0382
CHAIRMAN ROKEBERG called a brief at-ease at 3:24 p.m. The
committee came back to order at 3:25 p.m.
HB 128 - LEASE-PURCHASE OF PERSONAL PROPERTY
Number 0395
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 128, "An Act relating to lease-purchases of personal
property." He invited the bill sponsor, Representative Murkowski,
to introduce the legislation.
Number 0415
REPRESENTATIVE MURKOWSKI said the committee members might wonder
why this subject is being addressed. The rent-to-own or
lease-purchase business is relatively new to the state and there
are not that many businesses here. However, it is a strongly
growing business nationwide; there are approximately 8,000 stores
across the country. Representative Murkowski surmised that it is
just a matter of time before more such businesses are seen in
Alaska. Currently there is no uniformity for those consumers
interested in renting personal property through a rent-to-own store
in terms of disclosures. Representative Murkowski explained the
rent-to-own business mainly consists of consumer products like
stereo equipment or washers and dryers. It is typically a
less-than-four-month rental allowing the consumer some flexibility
in terms of obtaining something immediately without a significant
initial cost. House Bill 128 specifically requires up-front
disclosure from the lease-purchase business so that the consumer
knows in advance what the required payments would be, the number of
payments, and when ownership would be achieved. The legislation
before the committee is patterned after model legislation from
other states; 44 states have adopted legislation. Representative
Murkowski indicated an industry member was present to answer
specific industry-related questions. She additionally noted this
legislation would be a new chapter in the Alaska Statutes; these
purchases do not fall within the Alaska Retail Installment Sales
Act [AS 45.10] or within the leases section of the statutes. There
really are not any statutory guidelines if a person needs to bring
an action against someone in the rent-to-own business.
Number 0647
CHAIRMAN ROKEBERG asked why this doesn't fit into the Alaska Retail
Installment Sales Act.
REPRESENTATIVE MURKOWSKI replied that a lease-purchase is basically
a four-month or less rental agreement allowing the person the
option to purchase at the end of the agreement. With retail
installment, someone is basically purchasing on credit; with
lease-purchase, it is a rental until the person makes the decision
that he or she wants to purchase at the end.
Number 0720
BRADLEY W. DENISON, Senior Vice President and General Counsel,
Rent-a-Center, Incorporated, came forward to testify. He said
Rent-a-Center is the largest rent-to-own company in the United
States; it has approximately 2,100 stores with stores in all 50
states. Mr. Denison described that leases of one week or one month
are most common, although the definition of rent-to-own in this
legislation and most other states' is a lease of four months or
less. A customer at a rent-to-own store fills out a very short
application that mainly asks for name, address, employer and
several personal references. If approved, the person pays one
week's rent which would be, for example, between $5 and $10 for a
20-inch television. The company delivers the item to the customer.
He noted Rent-a-Center does not charge for delivery. At the end of
the first week the customer can either continue to rent or return
the item. If returned, Rent-a-Center picks up the item without
charge. If the person continues to rent, Rent-a-Center provides
all service for the merchandise during the terms of the rental
including "loaner" merchandise if necessary. At the end of a
predetermined rental period the customer automatically becomes the
owner of the goods. This period might be 70 or 78 weeks. Mr.
Denison noted Rent-a-Center has a very diverse customer base
ranging from executives on temporary assignment to working people
unsure of the future. In some cases Rent-a-Center provides a
service to people without credit or access to credit, allowing them
to obtain a major appliance.
Number 0870
MR. DENISON indicated Rent-a-Center's customers always have other
alternatives like saving or buying used, but may have had bad
experiences with purchasing used items. Thirty-one percent of
their customers have household incomes of $36,000-plus on a
nationwide average. Mr. Denison commented their "bread and butter"
customer is generally a blue collar worker who wants something
extra like a big screen television in his or her life. In Alaska,
Rent-a-Center's transactions are considered leases, not retail
installment sales because Rent-a-Center's customers are never
obligated to pay past that first period. The Alaska Retail
Installment Sales Act and most other states' Acts have a basically
two-pronged approach to determining whether a lease is a sale: 1)
a customer signs an agreement obligating him or her to pay the
value of the goods; 2) the customer can get the goods at the end
for no or nominal consideration. Even though it's structured as
lease, it would be considered a sale. Because Rent-a-Center's
customers never obligate themselves to pay more than one week or
one month, these are not considered retail installment sales under
Alaska law. Mr. Denison noted, as Representative Murkowski had
said, that HB 128 provides a number of consumer protections. The
disclosure provision is probably the most important; it would
ensure that all rental dealers are providing customers with the
information needed to make informed decisions. The legislation
also provides for advertising disclosures so that companies have to
disclose certain information about the transaction in any
advertising.
Number 0997
MR. DENISON indicated, additionally, certain prohibitions are
placed on rental dealers. They would be prohibited from taking
confessions of judgement, negotiable instruments that could be
cashed later, wage assignments, or Alaska Permanent Fund Dividend
assignments. Dealers would also be prohibited from breaching the
peace or obtaining an agreement to enter the customer's home. Mr.
Denison indicated most of Rent-a-Center's customers don't use their
services to buy merchandise. He stated a typical lease averages
four months and that only 25 percent of their leases go full term.
On average, his business's inventory goes out 2.5 times. Mr.
Denison agreed they do charge more than retail. They do so because
their expenses are higher: delivery costs, service costs, the cost
of allowing someone to take merchandise for six months and return
it no questions asked. He indicated Rent-a-Center thinks Alaskan
consumers, in order to make this practice consumer-friendly, need
legislation detailing what information and services dealers are
required to provide. He stated Rent-a-Center thinks HB 128 does
this, and does it adequately.
Number 1085
REPRESENTATIVE HALCRO referred to Section 45.35.030(b)(3) of HB 128
["(3) the reasonable costs of picking up and redelivering the
property if the lessor has picked up the property from the
consumer; and"]. He asked what Mr. Denison's company charged to
pick something up.
MR. DENISON stated his company did not charge. He commented there
is a measure of practicality that enters into any transaction. If
a customer doesn't want the item or can't afford the next payment,
Rent-a-Center wants to pick up the merchandise and be done with it
so that the customer would be comfortable entering into a future
transaction.
Number 1135
CHAIRMAN ROKEBERG asked about the level of delinquency.
MR. DENISON replied it is very, very small. He noted it is done by
store and he does not have those exact numbers. Below 10 percent
of their accounts are delinquent. In response to the chairman's
comment about the stereotyped "thug" image of Mr. Denison's
industry, Mr. Denison said he supposes that may have been true of
some dealers at some point in the industry's history but he thinks
the vast majority of rental dealers have realized the right way to
do business, and the way to keep a business going perpetually and
profitably, is to absolutely take care of one's customers. Mr.
Denison stated he is very proud of his company's customer record:
his company and most of the other companies belonging to their
national association representing almost 4,000 stores voluntarily
follow the Fair Debt Collection Practices Act [15 U.S.C. Sec. 1692]
even though that doesn't apply to their industry. He commented
some bad media regarding a few cases exists, but noted that ignores
thousands and thousands of transactions with very satisfied
customers.
Number 1248
REPRESENTATIVE HARRIS asked how long the rent-to-own business has
been operating in Alaska.
MR. DENISON apologized that he didn't know. He explained
Rent-a-Center has been recently acquired by a company owning a
store in Alaska.
REPRESENTATIVE HARRIS indicated he had referred to the
lease-purchase philosophy, not a specific business, commenting he
has certainly dealt with lease-purchase in the equipment business.
Representative Harris confirmed from Mr. Denison that this
legislation would give some legal parameters to this type of
business as far as state law goes, to deal with repossessions or
just business practices. He further confirmed that Rent-a-Center
is simply looking for some uniformity nationwide.
Number 1308
REPRESENTATIVE MURKOWSKI added that the lease-purchase companies in
Alaska have been receptive to what is being proposed here: that
there be some uniformity within the disclosures. It not only
provides protection for the consumer, but also for those in the
industry.
CHAIRMAN ROKEBERG confirmed that Mr. Denison, as general counsel,
had looked at the contract used by his company's firm in Alaska.
The chairman asked how this legislation would modify that current
contract.
MR. DENISON indicated he had not done a line by line analysis, but
said he didn't believe the legislation would substantially modify
that agreement, except that it would allow them to provide
automatic ownership of the merchandise at the end. In response to
the chairman's comment about the grace period, Mr. Denison said he
had omitted the reinstatement provision from his testimony. He
explained the legislation provides a reinstatement provision: a
customer can terminate the agreement, giving up the goods, but has
the option to resume within certain time frames. The company would
have to disclose these parameters in its rental agreement, as well
as the early purchase option formula.
Number 1423
CHAIRMAN ROKEBERG asked if he was correct in thinking there is no
statutory grace period required in the state of Alaska.
MR. DENISON agreed; he believes there is no law specifically
regulating rental-purchase.
CHAIRMAN ROKEBERG asked Mr. Denison to explain the grace periods of
two and five days.
MR. DENISON replied that if a customer calls the rental store
requesting the merchandise be picked up within that time period,
then the customer has the right to reinstate his or her agreement
for 21 or 45 days without losing his or her place. The 21 or 45
days is determined by how long the customer has rented the goods.
If someone has rented for six months and calls within the five day
period on a monthly agreement, Rent-a-Center will pick up the
merchandise and the customer can pick up on a newer rental
agreement, receiving six month's worth of credit, so to speak.
CHAIRMAN ROKEBERG confirmed this bill provides a grace period that
is not currently in law, although it could be company policy.
Number 1487
MR. DENISON agreed. All the company is asking is that the customer
inform the company and allow it to pick up the merchandise, and the
company will let the customer pick up where he or she left off.
Economically, it is a good deal for the customer.
CHAIRMAN ROKEBERG asked how Mr. Denison would characterize this
legislation: Is this a consumer protection bill or a pro-business
bill? The chairman questioned why Mr. Denison's company is
supporting the legislation.
MR. DENISON responded he believes it is a very pro-consumer bill.
The reason Rent-a-Center is promoting this legislation is because
it and members of the Association of Progressive Rental
Organizations believe taking care of the customers is the way for
a business to last and prosper. They believe having uniformity in
the information available to the customer between different rental
businesses, so the customer can compare, is the right way to do
business and will ultimately benefit the industry.
CHAIRMAN ROKEBERG noted the committee would next hear testimony
from John Wagner.
Number 1573
JOHN W. WAGNER, President, Far North Venture, Limited, d.b.a.
Premier Rental Purchase, testified via teleconference off-net from
Anchorage in support of HB 128. Mr. Wagner stated he has had
rental stores in Anchorage and Fairbanks since October 1985.
CHAIRMAN ROKEBERG questioned how this would affect Mr. Wagner's
operation.
MR. WAGNER replied the only thing he noticed different from his
business's current practices is the holding the items for 45 days
- his business holds it longer. He indicated he echoed Mr.
Denison's comments about retaining the customers, stating, "The
last thing I want to do is go to someone's house and pick up the
merchandise and not let them have it back. ... We definitely work
with people, especially with Alaska being a transient state -
seasonal workers, paychecks sporadic, ... people that work in the
fishing industry, the construction industry ... We hold stuff for
people until they get back on their feet, you know, that sort of
thing." Mr. Wagner commented he still has customers today that he
had the first month he opened, noting his business has a pretty
loyal following.
Number 1639
REPRESENTATIVE SANDERS asked if there is a current problem in
Alaska bringing forward this legislation or if this is just a
preemptive strike.
MR. WAGNER responded he knew of nothing derogatory regarding this
legislation, at least in his operation. He commented Rent-a-Center
is a large and very good operation, noting its stockholders have
been around the business for a long time. Mr. Wagner indicated he
thinks it is just good business practices; something he would like
to see, but did not have the resources to put together himself.
REPRESENTATIVE MURKOWSKI addressed Representative Sanders' concern,
stating there is not a current problem within the industry from
what they understand; it is more of a preemptive strike recognizing
the likelihood that the numbers of these business will be
increasing in Alaska as they already have in the Lower 48. She
noted the up-front full disclosure requirement is the primary
reason for the legislation's introduction.
Number 1703
CHAIRMAN ROKEBERG asked Mr. Wagner if the large military population
in both Anchorage and Fairbanks is a significant part of his
clientele.
MR. WAGNER replied it had been when he opened up in Fairbanks. He
described, however, that the military base now allows "in-home
layaway," so his store there no longer has the military presence it
used to. Mr. Wagner noted he thinks this is one of the only
military bases in the country with this practice. He clarified for
the chairman that "in-home layaway" allows military personnel to
purchase goods from the "PX" or base store, take the goods home,
and payments are automatically taken out of the military member's
check. In response to the chairman's comments, he noted his
business's name is Premier Rental Purchase and that the committee
has received a letter from him and a copy of his rental agreement.
CHAIRMAN ROKEBERG confirmed Mr. Wagner would not have to modify his
rental agreement as a result of this legislation. The chairman
questioned how Mr. Wagner currently handled the grace period with
his clients.
MR. WAGNER replied it depends on the situation. Normally their
delinquency runs anywhere from 6 to 11 percent. They play
"catch-up" during January because people tend to overspend during
the holidays. He commented his business works with the customers.
Mr. Wagner indicated his business would not have to change anything
if this legislation passes.
Number 1799
CHAIRMAN ROKEBERG questioned whether anyone else wished to testify
on HB 128. The chairman asked Representative Murkowski if she had
contacted any of the music stores in the Anchorage area to see if
they had any interest in this legislation.
REPRESENTATIVE MURKOWSKI responded she did not believe so.
MR. WAGNER indicated he believed Mr. Denison had referred to APRO,
the Association of Progressive Rental Organizations. He commented
some local music stores are renting musical instruments to own but
he does not believe the stores are members of APRO, and it is a
very small percentage.
CHAIRMAN ROKEBERG stated his intention to close the public hearing
on HB 128, noting to Representative Murkowski he had a concern that
these music stores would be impacted and might not be aware of
that. He commented this is the legislation's only committee of
referral.
REPRESENTATIVE MURKOWSKI stated she would be happy to contact music
stores that are rent-to-own businesses and solicit their comments.
Number 1866
CHAIRMAN ROKEBERG indicated he was in agreement with that. He
asked the will of the committee.
REPRESENTATIVE HALCRO indicated he was satisfied with
Representative Murkowski's presentation of the legislation, felt
there was time in the legislation's progress for possible input
from those music stores, and was in favor of moving the legislation
because he thinks it is a good, pro-consumer bill that creates a
level playing field.
CHAIRMAN ROKEBERG confirmed there were no further comments.
Number 1910
REPRESENTATIVE HALCRO made a motion to move HB 128 out of committee
with two attached zero fiscal notes and individual recommendations.
There being no objections, HB 128 moved out of the House Labor and
Commerce Standing Committee.
Number 1918
CHAIRMAN ROKEBERG called an at-ease at 3:53 p.m. The committee
came back to order at 3:57 p.m.
HB 110 - SALE/LABELING OF MEAT/MILK PRODUCTS
Number 1923
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 110, "An Act relating to the sale, offer to sell, and
labeling of fluid milk, meat, and meat products."
Number 1929
REPRESENTATIVE HARRIS, as the bill sponsor, said he has been asked
to introduce this legislation by Alaskan dairy farmers. The bill
does two things: 1) it institutes a pull date on milk for shelf
life in Alaska; 2) it gives a niche market for milk produced
without hormones in Alaska. He commented he thinks all milk
produced in the state is produced without the use of synthetic
hormones, unlike a lot of milk produced outside Alaska and sold in
the state. The bill provides a penalty if milk is labeled as
produced without hormones but does contain them; it would be false
advertising. He understands that there is a market for
non-hormone-induced milk and this provides a penalty if producers,
especially Alaskan producers, label their milk falsely in this
respect. Representative Harris indicated Pete Fellman would
provide the committee with more detail. He commented Mr. Fellman
has been working with the dairy farmers and is a dairy farmer
himself.
Number 2016
PETE FELLMAN, Researcher for Representative John Harris, Alaska
State Legislature, came forward to explain HB 110. He commented
Representative Harris had said everything he had intended to say.
Mr. Fellman noted a March 15, 1999, Monsanto Company letter in the
bill packet indicates voluntary labeling of milk as
non-hormone-induced is legal and is happening in the Lower 48. The
letter further indicates Monsanto supports the labeling as long as
it meets the guidelines set forth. Mr. Fellman said there is milk
labeled non-hormone-induced for sale in Alaska, in Juneau. The
authority to regulate this comes from the state where the milk is
produced. He believes the milk sold in Juneau comes from
Minnesota, therefore Minnesota sets the standard for the
regulations and enforcement. Alaska has no such law. Mr. Fellman
indicated the intent is to support Alaskan agriculture which is
small and 40 years behind the Lower 48. The hope is to put this
legislation through as a consumer-choice bill. Whether bST [bovine
somatotropin, also called bovine growth hormone] is harmful or not
is not the issue, the issue is the choice to not drink milk
produced by a synthetic hormone. Consumers currently have that
choice from milk produced outside the state; the intent is to allow
the same choice with milk produced in the state. This will create
niche markets. Mr. Fellman stated he personally is attempting to
build a cheese plant and would like to be able to label his cheese
non-hormone-induced. He commented they cannot compete with Lower
48 thousand-cow dairy farms, and noted he believes about 72 percent
[of these farms] use bST to increase milk production. By creating
markets for milk and meat producers, HB 110 will help protect
Alaska's already substantial investment in agriculture. Mr.
Fellman said they are looking for ways to secure agriculture and
the state's investment.
Number 2168
CHAIRMAN ROKEBERG asked where Mr. Fellman's dairy farm is located.
MR. FELLMAN replied Delta Junction.
REPRESENTATIVE HARRIS asked Mr. Fellman if he has read the letter
from Monsanto and has any answers to their questions. [The March
15, 1999, letter from Michael J. Diamond, Associate Director,
Monsanto State Government Affairs, to Chairman Rokeberg reads:
On behalf of Monsanto, I am pleased to provide you with
some additional information concerning the voluntary
labeling of milk, dairy and other meat products as
proposed by HB 110. While Monsanto does not oppose
voluntary labeling, we do express our concerns over the
way in which labeling is addressed.
Attached, please find some information which I think you
will find helpful in discussing the issue of milk/dairy
safety. I would, however, like to point out the
following points, which I believe merit serious
consideration:
1. The federal Food and Drug Administration determined
there is no significant difference between dairy products
produced by cows administered with rBGH and cows not
administered with rBGH. The products are essentially the
same, and in fact, no differentiation can be made.
2. In a 1997 court ruling in Illinois, Ben & Jerry's
Homemade Inc. was prohibited from placing a "no rBGH"
label on their product because it was deemed misleading
to consumers.
3. The FDA has reaffirmed its 1993 finding that rBGH is
safe for human consumption. A letter from Health
Secretary Donna Shalala to House Minority Leader Gephardt
stated that "the lack of oral activity of rBST/rBGH and
insulin [-like] growth factor 1 (IGF-1) and the low level
and non-toxic nature of the residues of these compounds,
even at exaggerated doses, results in an extremely large
margin of safety for humans consuming dairy produced from
rBST-treated cows.["?] In 1998, the Joint Food and
Agricultural Organization/World Health Organization
Expert Committee on Food Additives (JECFA) reaffirmed the
safety of milk and meat from treated cows.
4. Current law already permits producers to engage in
voluntary labeling, provided their claims are truthful
and not misleading, nor do they make a claim they cannot
support.
Additional concerns, which should be considered, include:
1. Are the state's Agricultural Department or Health
agencies capable of testing milk, meat, or dairy products
for the presence of rBGH? Unlikely, since the products
are essentially identical and BST is a naturally
occurring protein found in cows - hence, it would be
impossible to support a claim that any product is, in
effect, "BST-Free."
2. What kind of affidavit would be needed to guarantee
compliance by dairy producers?
3. Finally, who is liable in a situation where a producer
sells a milk/dairy product from a treated cow, despite
claiming that his product is rBGH free? The producer?
The packager? Or the State?
Monsanto does not oppose voluntary labeling, since it is
already legally permissible - however, we do maintain
that any voluntary labeling must follow FDA guidelines,
and be entirely truthful and verifiable.]
Number 2178
MR. FELLMAN replied he received this information about an hour
before the hearing and commented he has spoken with Mr. Diamond.
Monsanto is not against this labeling, the company is concerned the
bill itself meets the criteria. Mr. Fellman indicated he believes
it might be possible to address this language in the Alaska
Administrative Code if such legislation is enacted.
REPRESENTATIVE HALCRO referred to a letter in opposition to HB 110
in the bill packet from the National Food Processors Association
(NFPA). He noted part of the letter says that HB 110 is
unnecessary because voluntary disclosure is already permitted under
FDA [Food and Drug Administration] rules. He asked if Mr. Fellman
is aware of this.
MR. FELLMAN answered in the affirmative, but his research shows
that individual states have the right to regulate milk and milk
labeling. There is a federal milk quality guideline that must be
met for bacteria, pasteurization, et cetera, but the state sets
certain limits and can set certain guidelines.
Number 2255
REPRESENTATIVE HALCRO pointed out that criminal sanctions are being
proposed when bST is a naturally-occurring hormone and it might be
in any given cow. He asked if Mr. Fellman could address this.
MR. FELLMAN replied he has talked to Monsanto's veterinarians at
length and has entertained the idea himself over the years of
injecting his cows because it is profitable. The bST in the milk
cannot be distinguished from naturally-occurring bST, although the
levels are higher. However, a veterinarian can examine the known
injection sites: at the tail-head or in the shoulders. Mr.
Fellman indicted the cows develop a small cyst because the product
is oil-based and is slowly released into the bloodstream. If there
was a consumer complaint, the state veterinarian could exhume that
cyst and, if all or many of a farmer's cows had these cysts, make
a reasonable determination or correlation that the cattle were
being given bST.
Number 2328
CHAIRMAN ROKEBERG stated he believes the question is: If it is
naturally occurring, how do you differentiate and why make it
criminal?
MR. FELLMAN referred to information in the bill packet on the
milk-cancer connection ["Milk and the Cancer Connection," Hans R.
Larsen, MSc ChE, International Health News, Editor/Publisher: Hans
R. Larsen]. Mr. Fellman stated there is evidence the higher levels
change some of the components in milk. He said when that happens,
"IGF" [IGF-1, insulin-like growth factor 1] changes. Mr. Fellman
indicated there may be possible connections to breast cancer. All
they are speaking of is giving people the right to choose.
REPRESENTATIVE HALCRO questioned whether Alaska has a state
veterinarian that would actually go out and enforce this.
MR. FELLMAN indicated the farms are inspected on a regular basis by
the state veterinarian. He confirmed for Representative Halcro
that there is an enforcement mechanism in place; the state vet
could be called in if there would be a complaint.
Number 2384
REPRESENTATIVE SANDERS asked if Mr. Fellman markets his milk
through Matanuska Maid [Matanuska Maid, Incorporated].
MR. FELLMAN replied they market their milk through Northern Lights
Dairy in Delta Junction; their milk goes to Fairbanks. He
confirmed for Representative Sanders that the labeling would be on
the carton and would be voluntary. Mr. Fellman mentioned that a
small producer in the "Valley" [Trytten Farms, Wasilla, Matanuska
Valley, letter of support in bill packet] would like to start its
own processing plant. Since the owner milks his own cows and is
there for all aspects of the process, he would be able to purchase
a carton stating he does not use hormones in his milk. However,
"Mat-Maid" [Matanuska Maid, Incorporated] could not use the label
because 70 percent of its milk comes from out-of-state. This milk
is pooled with Alaskan-produced milk. There is no way to tell if
that 70 percent has been produced with bST; therefore Mat-Maid
would not be able to use the label. Mr. Fellman noted it is
essentially a voluntary label for small family farmers.
Number 2433
CHAIRMAN ROKEBERG asked if North Star Dairy imported milk.
MR. FELLMAN stated all of their milk is produced in Delta from five
dairy farms. Everything they have goes into fluid milk right into
the market. Mr. Fellman noted the decision to use the label would
be up to Don Lintelman, the owner of Northern Lights Dairy. If so,
Mr. Lintelman and all the farmers would have to sign a statement
guaranteeing they are not using the hormone. Mr. Fellman noted he
doesn't think Mr. Lintelman is interested in using the label, but
he himself and others in the state are interested in attacking the
small niche markets.
Number 2479
REPRESENTATIVE MURKOWSKI returned to the enforcement aspect and the
associated criminal negligence penalties. She asked, "If you have
a small dairy, say you only have five cows, and you inject four of
them, and you get caught, all you..." [TESTIMONY INTERRUPTED BY
TAPE CHANGE]
TAPE 99-23, SIDE B
Number 0001
REPRESENTATIVE MURKOWSKI continued, "... hang over somebody's head
without the enforcement aspect being clear. So if you can help me
out with that I'd appreciate it."
MR. FELLMAN commented there is going to be an element of honesty
here. He doesn't know anyone milking five cows who is selling
their milk legally. Normally, anybody who is milking five cows is
not pasteurizing or homogenizing their milk, and does not have a
"Grade A" permit to start with.
Number 0024
CHAIRMAN ROKEBERG noted Department of Environmental Conservation
(DEC) personnel were available via teleconference for questions.
REPRESENTATIVE BRICE said they might want to move from a Class A
misdemeanor to a violation, to possibly address Representative
Murkowski's concern and for Representative Harris's consideration.
With a violation, a ticket could be written and the farmer could be
penalized economically.
CHAIRMAN ROKEBERG announced the committee would go to
teleconference testimony.
Number 0076
JANICE ADAIR, Director, Division of Environmental Health,
Department of Environmental Conservation testified via
teleconference from Anchorage. She noted Bert Gore is the state
veterinarian and Belinda Clifton is the division's dairy
specialist. Both are present for technical questions.
CHAIRMAN ROKEBERG pointed out that HB 110 includes meat and
products as well as milk. The chairman asked Mr. Fellman why this
had been expanded to meat products.
MR. FELLMAN replied that rBGH [synthetic bovine growth hormone] is
being used to induce growth in beef cattle. Instead of an
injection, the hormone is most commonly introduced through an
implant in the steer's ear for sustained release, enhancing the
cow's growth.
Number 0129
REPRESENTATIVE BRICE asked if Mr. Fellman could show him where
cheese would be included in the legislation regarding the labeling.
He noted it appeared to speak to fluid milk.
MR. FELLMAN said he thought it covered cheese, and with
Representative Halcro's assistance noted page 2, line 6. [This
subsection reads:
* Section 1. AS 17.20.005 is amended to read:
Sec. 17.20.005. Powers and duties of commissioner.
To carry out the requirements of this chapter, the
commissioner may issue orders, regulations, permits,
quarantines, and embargoes relating to ...
(4) labeling, subject to AS 17.20.013 and
17.20.015, and grading of milk and milk products and
standards of sanitation for dairies offering to the
public or selling milk or milk products to at least he
minimum of current recommendations of the United States
Public Health Service pasteurized milk ordinance as it
may be periodically revised;]
Number 0167
CHAIRMAN ROKEBERG asked if Ms. Adair or her support staff wished to
comment on the legislation.
Number 0171
MS. ADAIR answered in the affirmative and began her formal
testimony as director of the Division of Environmental Health,
Department of Environmental Conservation. Food safety issues fall
within this division. She said the legislation essentially has two
aspects: 1) the pull date for milk, 2) the bST labeling. The
division finds the milk pull date problematic: there are new
pasteurization techniques that can give milk a 65 to 70 day shelf
life. There are also pasteurization techniques that give
shelf-stable product not requiring refrigeration. A scenario could
be set up where a lot of good milk would be thrown away because it
would not be bad after 18 days. The division also wonders how this
would affect shipment into rural Alaska, where the milk products
could be arriving in villages around the pull date.
Number 0212
MS. ADAIR noted there is guidance from the FDA regarding synthetic
hormone labeling. This is something which has been the subject of
many court suits and has generated a lot of consumer interest. The
FDA does not oppose labeling of milk or meat products as not being
produced using bST. It does oppose the labeling "bST-free" but
that is not being proposed here, to Ms. Adair's understanding.
However, the FDA says labeling must be truthful and not misleading
in any way. Ms. Adair stated there is no health effect from bST;
the milk from bST-supplemented cows is the same in every way -
safety, composition, (indisc.) nutrition - as milk from other cows.
She indicated very low levels of bST occur naturally in milk. The
division would have no way to test a milk product and determine
whether or not it was obtained from a bST-induced cow. Bovine
somatotropin (bST) has no effect on people; it is destroyed during
digestion just like any other protein. Ms. Adair noted, therefore,
no safety reason has been found to label products as not being from
bST-induced cows.
Number 0275
MS. ADAIR confirmed it would be possible for Dr. Gore to determine
whether or not a living cow had been induced with bST. Because the
injection location is part of the animal discarded during
slaughtering, according to Ms. Adair's understanding, it is
unlikely Dr. Gore could make this determination for a nonliving
animal. Ms. Adair stated, therefore, the division is unsure it
could fairly enforce this. Because of these problems, the FDA
recommends that states require firms using such claims to establish
a plan, maintain records to substantiate the claim, and make those
records available for inspection. Ms. Adair said she would hate to
see them establish a large recordkeeping requirement for a
voluntary label but she is not sure they would be able to ensure
the label was accurately used any other way.
CHAIRMAN ROKEBERG confirmed that concluded Ms. Adair's testimony.
He asked about the zero fiscal note and its relation to her last
statement.
Number 0327
MS. ADAIR indicated the fiscal note is zero because she is not
really sure how the division could deal with the legislation. She
confirmed to the chairman that an indeterminate [fiscal note] might
be a better characterization. Ms. Adair added that the Department
of Law had been considering submitting a fiscal note because of
potential legal challenges based on some issues with interstate
commerce. She was not sure what that department had decided, if it
had decided.
CHAIRMAN ROKEBERG asked about the problems regarding the issue of
meat and meat products.
MS. ADAIR replied that, as she understands it, they would not be
able to tell if the meat was from cattle "injected with bST." She
stated, "The injection site on the animal is not saved, and, as was
testified previously, that is one of the things the state vet would
need to look for in order to tell if a cow had been injected, and
that wouldn't be available to him."
Number 0385
REPRESENTATIVE HALCRO asked if it is correct that in other states
with these voluntary labeling requirements, it is basically up to
the individual farmer or cattle raiser to keep records that would
be audited if there is a question.
MS. ADAIR replied she understands that is what the FDA recommends
but the division has not checked into other states' practices. To
Representative Halcro's further question, Ms. Adair answered that
she is not aware of any other states with criminal penalties for
false labeling on this issue, but she has not checked with all 49
other states.
Number 0441
MR. FELLMAN said he wanted to address the pasteurization issue. He
noted there are two types of pasteurization: ultrapasteurization
and high-temperature pasteurization. Ultrapasteurization is fairly
new technology. Regarding the issue of interstate commerce, he
brought up Florida's 12-day milk pull date and Georgia's 18-day
pull date. The only problem occurs if Georgia wants to send milk
to Florida; in this situation Georgia must label its milk
accordingly. Most of the milk Alaska imports comes from Washington
State; Washington is presently at 18 days. Mr. Fellman indicated
the 18-day labeling requirement in the legislation is set because
of Washington's date. Mr. Fellman noted, "But we did include
high-temperature pasteurization [ultrapasteurization?]. Like I
stated before, we are 40 years behind here in Alaska and it will be
a long time before any producers can afford the technology for
high-temperature pasteurization [ultrapasteurization?]. So, if we
don't support the small farmer now, ... if the small farmer cannot
compete with longer shelf life, then the state of Alaska has lost
everything that it has invested in agriculture."
REPRESENTATIVE MURKOWSKI indicated that almost completely answered
her question regarding ultrapasteurization, the technology
improvements, et cetera. However, the language in Section 2 of the
bill speaks about 18 days after the date of ultrapasteurization or
high-temperature pasteurization. She thought Mr. Fellman had said
because it was 40 years behind Alaska was not to that
ultrapasteurization point.
Number 0538
MR. FELLMAN replied this is correct but some of the milk coming
from Washington State has been ultrapasteurized. The largest
percentage is still high-temperature pasteurization and has an
18-day shelf life. Mr. Fellman cited that he has been given
anywhere from 25 to 90 days for ultrapasteurization shelf life.
REPRESENTATIVE MURKOWSKI questioned whether it is reasonable to
pull ultrapasteurized milk off the shelf when it still has another
25 or 50 good days left. She asked if there couldn't be two
different categories, one for regular pasteurized and one for
ultrapasteurized.
MR. FELLMAN said there are two categories, but the problem is that
as ultrapasteurization becomes more and more prevalent, the Alaskan
farmer is going to be pushed out of the market. Alaskan milk will
only have an 18-day shelf life, but out-of-state ultrapasterized
milk will have a much longer shelf life. Mr. Fellman commented it
is a tough position but said the state has the right to set the
standard although the technology may be different.
Number 0619
CHAIRMAN ROKEBERG indicated there are a number of people who wish
to testify.
REPRESENTATIVE CISSNA asked if any portion of the bill has problems
with interstate commerce provisions.
CHAIRMAN ROKEBERG noted the question was good. He emphasized there
were witnesses waiting to testify for both this and the following
bill.
MR. FELLMAN said, regarding interstate commerce, there isn't a
problem as long as Alaska's standard for imported milk is the same
as wherever the milk is being imported from.
CHAIRMAN ROKEBERG asked if Mr. Gore and Ms. Clifton wished to add
anything before the committee proceeded to local testimony.
Number 0673
BERT GORE, DVM, State Veterinarian, Animal Industries, Division of
Environmental Health, Department of Environmental Conservation,
testified next via teleconference from Anchorage. He is located in
Palmer and gets out to the farms probably two to four times a year.
Dr. Gore said he does not understand the controversy with bST
regarding called a synthetic hormone. It is usual and customary
practice for the farmers to use the following synthetic hormones in
their cows on a regular basis. These hormones are exempt drugs
that do not require a veterinary prescription and have no
withholding period for the milk or the meat. Oxytocin - the most
commonly used one; it is used to let the milk down and can cause
increased uterine contractions during labor. Lutalyse - the second
most prevalent hormone used. It is used for estrus synchronization
in heifers, induces ovulation in cows, causes uterine contractions
to expel the afterbirth and fluids associated with endometritis.
It is an abortifacient in cattle and can cause abortion if handled
by pregnant women. Cystorelin - used to lyse cysts in cows that
have nymphomaniac ovaries [used to lyse ovarian follicles which
cause nymphomania in dairy cattle]. ECP [estradiol cypionate] - a
synthetic estrogen used to tone the uterus. Dexamethasone - a
synthetic steroid used quite frequently. It is for use in horses
and dogs but also given to cattle. Dr. Gore noted these are few of
the synthetic hormones and steroids used in our milk cows. He does
not understand what makes bST different, and he guesses the big
problem is that bST is manufactured in a biochemistry lab not the
chemistry lab. He commented bST is a naturally occurring protein
secreted in the pituitary, it has no residue in the milk or meat.
Like its naturally-occurring counterpart, rbST [bST produced using
fermentation technology] has the same characteristics. Dr. Gore
indicated it is not detectable. Its purpose is to allow the cow to
produce more milk. Dr. Gore further indicated it seems this would
be desirable if the state is supposed to become more
self-sufficient in agriculture.
Number 0787
BELINDA CLIFTON, Environmental Health Officer II, Animal
Industries, Division of Environmental Health, Department of
Environmental Conservation, testified next via teleconference from
Anchorage. Ms. Clifton stated there are four pasteurization
processes used in the Lower 48 allowed by the "pasteurized milk
ordinance" which Alaska has adopted. 1) High-temperature
short-time pasteurization which usually starts at 161 degrees for
15 seconds. 2) High-heat short-time pasteurization which allows
milk to be pasteurized at a minimum of 191 degrees for 1 second.
3) Ultrapasteurization short-time which requires temperatures of
290 degrees for 2 seconds. 4) Ultrapasteurized short-time
temperature with an aseptic process filler; this is a packaging
process where the product goes into a hermetically-sealed container
that keeps the milk sterile and shelf-stable for non-refrigerated
conditions. Ms. Clifton mentioned this last product is used quite
a bit by the United States Army and also probably goes out to Bush
Alaska. Ms. Clifton said these pasteurization processes used in
the Lower 48 are highly technical and she agreed with Mr. Fellman
that Alaska is about 40 or more years behind in these processes.
CHAIRMAN ROKEBERG asked if state regulations currently determine
the pull date of milk.
MS. CLIFTON answered in the negative.
CHAIRMAN ROKEBERG asked what determines the pull date in Alaska.
Number 0871
MS. CLIFTON replied that in Alaska it is left up to the processing
facility. This is pretty much how it is handled throughout the
entire United States. The facility determines what type of quality
it wants at the end of its pull date. For the majority of the
facilities, the pull date will usually be about a week before the
milk will spoil. Ms. Clifton said a lot of the Texas processing
plants have a 14-day pull date; that is simply because they want
their milk to be good a full week after. The pull date depends on
the quality the plant wants to give to the consumer.
CHAIRMAN ROKEBERG asked if the plant dictates where the milk is
shipped.
MS. CLIFTON answered in the positive.
CHAIRMAN ROKEBERG commented, then, there is a lack of state
regulation and statute in regard to pull dates.
MS. CLIFTON replied, "I'm not aware of any that actually require
certain states to have mandated pull dates, especially with the
higher pasteurization process, like the ultrapasteurization process
and the aseptic processing."
Number 0938
CHAIRMAN ROKEBERG announced the committee would take testimony in
Juneau on HB 110.
Number 0961
JULIE KOEHLER came forward to testify in Juneau in support of HB
110. Ms. Koehler stated she lives in Juneau and is testifying on
her own behalf. She believes this bill is an important step in the
public's right to know about what ingredients are, or are not, in
our food products. This labeling gives her the information
necessary to make purchasing decisions as an individual about
foods, products, and brands. Ms. Koehler mentioned known
carcinogens in today's world. She is concerned because she has
heard differing information about whether or not this hormone is a
carcinogen. She buys organic as much as possible to protect
herself and her family, reading labels to find out whether or not
things are added and specifically checking for that hormone. Ms.
Koehler noted the government never addresses the cumulative amounts
of all these small amounts of carcinogens, so she, as an
individual, can address the cumulative effects of all of those
things in her foods by reading the labels and making purchasing
decisions. She asked the committee to amend the bill to make the
punishment to the farmer for false labeling a fine large enough to
hurt. She commented a small fine, a misdemeanor of $1,000 or
whatever, could just be considered a cost of business. All the
organic products are sold at a higher price; this is why the
farmers want to be able to say it is free of the hormone. Ms.
Koehler indicated a higher fine that couldn't be considered a cost
of doing business would protect the individual. She mentioned that
the enforcement is a matter of honesty. Ms. Koehler stated she is
willing to pay that higher price and she hoped the committee would
pass the legislation.
Number 1102
DONALD LINTELMAN, Northern Lights Dairy, testified next via
teleconference from Delta Junction in support of HB 110. He stated
they pick up milk from five farms and, at this point, do not use
these hormones in the milk and would like to be able to label the
milk that way because he thinks they could end up with more sales.
Mr. Lintelman indicated at some time the Fairbanks newspaper had
mentioned bST was coming up and there were some legal problems with
the state of Minnesota. He indicated people had called his dairy
saying they wouldn't buy the milk because it contained bST. Mr.
Lintelman said he needs every customer he has, so he assures these
people it is not in there. He reiterated his support for the
legislation.
CHAIRMAN ROKEBERG asked what restricts him from labeling that now.
MR. LINTELMAN replied that he did not know. He indicated there
aren't any laws in Alaska regarding this and he would be worried
about being sued. He added, " And I would like to see this
hormones (indisc.) for this area, at least for this present time."
CHAIRMAN ROKEBERG said he understands and appreciates Mr.
Lintelman's point, noting some people think we have too many laws.
Number 1187
REPRESENTATIVE HALCRO confirmed Mr. Lintelman buys milk from five
independent farms. He further confirmed Mr. Lintelman had heard
the state veterinarian's testimony about the enforcement problems
with the legislation and the veterinarian's own disagreement with
the concern over bST. Representative Halcro then asked Mr.
Lintelman if he wouldn't have some liability, some exposure, if,
giving an example, one of his farmers is caught misrepresenting his
milk.
MR. LINTELMAN agreed. He said it would probably put him out of
business.
CHAIRMAN ROKEBERG commented he has been following the Matanuska
Valley dairy industry for a long time. He asked how many dairy
farmers are left in the "Mat Valley."
MR. LINTELMAN guessed five, noting he has no idea at this point.
Number 1263
MARGARET CARR came forward to testify in Juneau in support of HB
110. Ms. Carr noted she lives in Anchorage and is testifying on
her own behalf. She thinks this bill is a step in the right
direction for both the consumers and the farmers in Alaska. First,
it supports her right to know and choose as a consumer. There are
too many instances where we do not know what is going into the
products we eat and drink. Encouraging the labeling of milk that
does not contain bovine growth hormone, for example, allows us to
make decisions regarding which products we would like to purchase.
In addition, Ms. Carr thinks those Alaskan farms not using the
bovine growth hormone can create a positive niche and attract a
greater consumer base. She indicated she personally would like to
support the business of these farmers. Ms. Carr echoed Ms.
Koehler's request for an amendment providing a more severe penalty
to those mislabelling their products. She urged the committee to
support the legislation.
CHAIRMAN ROKEBERG confirmed Ms. Carr is a natural foods consumer,
not a marketer.
Number 1360
MICHELLE WILSON, Alaska Conservation Voice, came forward to testify
next in Juneau in support of HB 110. Ms. Wilson stated she was
representing both the Alaska Conservation Voice and herself as a
new mother. She is part of that market niche being discussed
today. Ms. Wilson emotionally expressed her concern that it had
not been that long ago that committees discussed "DDT" and said
there were no long-term health problems with "DDT" and other
chemicals. Ms. Wilson is learning that there are many studies
showing that this hormone is affecting cows. Cows are having more
heart attacks. It worries her that all these people are being
exposed to this hormone, the long-term effects are not known, and
there are all these cancers currently in our society linked to the
food we are eating. Ms. Wilson said Alaskans have to celebrate
that small Alaskan family farmers are not using this hormone yet.
She indicated small Alaskan family farmers need the kind of support
the legislature can give so that they can keep their farms healthy,
allowing Alaskans to buy Alaskan-grown food and healthy food. Ms.
Wilson indicated she saw some contradictions in the DEC's Ms. Adair
first saying there are no known health effects of bST and Ms.
Adair's later statement that her knowledge is not necessarily
complete. Ms. Wilson emphasized that the long-term effects [of
bST] are not known.
Number 1547
BOB SHAVELSON came forward to testify next in Juneau in support of
HB 110. Mr. Shavelson stated he is representing himself and he is
from Homer. He said some of the earlier testimony made him think
he was listening to a Monsanto commercial. He thinks it is
accurate to depict the debates going on here as a raging debate
going on throughout the country as to whether rbGH, or bovine
growth hormone, is safe to use. Mr. Shavelson commented he thinks
it is safe to say a lot of the Monsanto-supported research shows
this. Recently there has been a very serious debate in the Vermont
legislature and elsewhere in that state, and evidence is coming out
that it is not safe. Mr. Shavelson noted Ms. Wilson's testimony
that the cows get sicker; as a result of that, increases in
antibiotic use are seen. Mr. Shavelson said there are also
problems in our society with the influx of those chemicals in the
environment, and in our bodies. He perceives a dichotomy between
the zero fiscal note and "then all of a sudden it becomes ... this
great burden." He does not know what transpired at DEC to cause
this great shift in the administrative burden. One possible
solution is that anyone distributing rbGH in the state be required
to report who it is being sold to. Mr. Shavelson does not think
that would create a great administrative burden for anyone to
handle. He indicated the legislation supports the consumer's right
to know and right to choose between his or her food products. He
added, "Just because some large, multinational chemical corporation
is telling us it's safe based on their studies, I don't think
Alaskans need to bow to that pressure. I think we should have the
right to choose and support our local farmers."
Number 1656
MR. SHAVELSON commented on a couple of items not mentioned, but
that he considers relevant. Monsanto is moving forward with a
"terminator" seed: genetically-altered products meant to be
sterile after one or two seasons. There is great concern there
that this will affect wild seed stocks across the world. Monsanto
is also developing a special chemically-resistant strain of cotton
and other products to be marketed with its pesticide Roundup. Mr.
Shavelson concluded that Monsanto has a vested interest in making
a profit and selling these items to consumers; the company will not
want to reveal there may be some problems with this. Monsanto
vigorously litigates anybody that opposes them. There was extended
litigation in the situation with Ben and Jerry's mentioned earlier
[3/15/99 Monsanto letter]. Mr. Shavelson indicated the issues of
the terminator seed and the Roundup-dependent crops comes back to
the rbGH labeling. He stated, "This is just common-sense stuff.
We have a right to know what's in our food and we have a right to
choose, and I would encourage you to pass this bill out of the
committee."
Number 1738
REPRESENTATIVE HALCRO commented Mr. Shavelson had raised a good
question as far as disclosure, but there is the state
veterinarian's testimony that several "synthetics" [hormones] can
be purchased without a veterinarian's assistance. Representative
Halcro asked how disclosure could be mandated when any farmer could
just buy these things over the counter.
MR. SHAVELSON replied he does not pretend to know all the
mechanisms of the distribution of these hormones. He imagines it
is a fairly discrete market and the distribution within the state
could be tracked. Mr. Shavelson continued, "The other idea where
typically in a policy matter where we have a difficulty enforcing
something, we do tend to elevate the penalty for it ... The
disincentive increases as the monetary penalty increases ...."
CHAIRMAN ROKEBERG confirmed there were no further questions for Mr.
Shavelson. The chairman stated the public testimony on HB 110 is
concluded for this hearing but would be kept open. He indicated he
is concerned about the pull date requirement because of the new
technology, and is wondering if, since the private sector has been
doing this, why it can't be left to them. The chairman indicated
the committee might want to hear from Matanuska Maid and some of
the others involved in the Alaska dairy business.
Number 1868
REPRESENTATIVE CISSNA commented she sees a variety of Alaskan
markets, some wanting to know there are no artificial hormones, et
cetera, preferring an Alaskan product and something that is not
ultrapasterized; others, especially in more remote areas of the
state, seeking a product with as long a shelf life as possible.
She indicated she thinks it is important they ensure that Alaskan
consumers have a variety of choices and that is her problem with
the legislation's pull date requirement.
Number 1927
REPRESENTATIVE BRICE noted for Representative Harris that the
labeling statutes in Section 1 are subject to AS 17.20.013 and AS
17.20.015 which refer specifically to fluid milk. This would not
allow for the labeling of cheese products or other milk products.
Representative Brice commented there has been conflicting
testimony, asking the sponsor to check into this because he
(Representative Brice) thinks there is a niche market for these
products. He indicated he would like to make sure the legislation
includes these products.
CHAIRMAN ROKEBERG commended the bill to the sponsor for further
work, noting the committee would hear the legislation again when
the sponsor is ready. The chairman said he is supportive of
anything that can help the state's small businesses and farmers.
He indicated the labeling issue has certain merit, but said there
are a lot of problems that need to be worked out with the DEC, the
dairy industry, et cetera. The chairman commented the meat aspects
of the legislation had not been addressed except by Mr. Fellman.
Number 2097
CHAIRMAN ROKEBERG called an at-ease at 4:54 p.m. The committee
came back to order at 4:57 p.m.
TAPE 99-24, SIDE A
HB 17 - PERS CREDIT FOR NONCERTIFICATED EMPLOYEES
Number 0001
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 17, "An Act relating to the calculation of employee
contributions and credited service in the public employees'
retirement system for noncertificated employees of school
districts, regional educational attendance areas, the Alaska
Vocational Technical Center, and the state boarding schools; and
providing for an effective date." The chairman confirmed from
Representative Brice that the legislation had been heard the
previous legislative session as "HB 223" [HB 323]. He noted the
bill had been completely rewritten in the House Finance Standing
Committee.
Number 0087
REPRESENTATIVE BRICE indicated the changes had been made to address
AVTEC [Alaska Vocational Technical Center] but the bill had not
been completely rewritten. Representative Brice stated HB 17
addresses an inequity within the Alaska's school districts between
certificated and noncertificated employees. Certificated
employees, teachers and principals, receive a year's credit for a
nine-month contract year. This additional cost is split between
the school district and the employee. Noncertificated employees
such as janitors and secretaries receive a day-for-day credit in
their retirement system. This means they have to work 40 years to
receive a 30-year retirement if they are on a nine-month contract.
House Bill 17 would allow the employees the option of buying that
extra three months of credit, covering the entire cost themselves.
It is applicable to state boarding schools, school districts, REAAs
[Rural Education Attendance Areas] and "Alaska Voc-Tech Centers."
It is voluntary, the employee chooses to participate. In response
to questions from Representatives Halcro and Murkowski based on
NEA-Alaska's position paper in the bill packet, Representative
Brice noted that position paper also refers to other legislation.
[The sponsor statement for HB 17 reads:
Alaska has many noncertificated employees in its schools
who work nine, ten or eleven months out of the year along
with their certificated counterparts. The certificated
employees receive full year credit for the part of the
year they work while the noncertificated employee only
get credit for the actual time worked. Because of this,
a nine month employee has to work 40 years to receive a
30-year retirement.
This bill addresses the inequity in state law and PERS
system [Public Employees' Retirement System] by giving
noncertificated school employees who work a comparable
amount of days the option to use the same retirement
formula that certificated employees use. This bill will
allow those noncertificated school district employees to
receive the same amount of credit toward retirement as
those certificated employees who work the same amount of
time and receive a full year of credit toward retirement.
The cost of changing the PERS system, under this bill,
will be supported by the employees, rather than
increasing the burden to school districts. Employees
currently active in the system will have 180 days to opt
into the new program. New employees will have the option
to participate within 90 days of inception. That is
within beginning employment within the system.]
Number 0381
REPRESENTATIVE HARRIS referred to the comment in the fiscal note,
"The $72.4 [$72,400] is needed to hire contractors to update the
division's computer system to accommodate the proposed changes."
Representative Harris questioned what the obligation of the
education units described here would be to these employees for
their retirement. He asked if there would be added financial
responsibility for those institutions.
REPRESENTATIVE BRICE responded there is no added financial
responsibility in terms of the retirement system itself. He
indicated there might be a cost of a couple hundred to a thousand
dollars to provide the paperwork for an employee to elect in. He
stated there is no financial obligation to the school district; the
school employee shoulders the entire burden of the change to ensure
actuarial soundness of the system. In response to the chairman's
question about the whether the fiscal note was a disappointment
and/or surprise, Representative Brice indicated there is some
question with the Department of Administration about the costs of
developing the tracking and estimating computer programming. On
the other hand, he noted those are non-general fund dollars; the
employees would pay for the cost of those changes. Representative
Brice agreed with the chairman that that could be discussed in the
House Finance Standing Committee.
Number 0548
RICK HELMS, Southeast Political Alternate, Board of Directors,
Alaska Public Employees Association/Alaska Federation of Teachers
(APEA/AFT), came forward to testify in support of HB 17. He asked
for the committee's support, noting this legislation would benefit
the approximately 600 APEA/AFT members who work nine months out of
the year. These members are professionals just like the teachers
and administrators; they should not be penalized for choosing this
career. Referring to Representative Brice's comments, Mr. Helms
said it takes 37.5 years of work for 30 years of service. He
commented a companion Senate bill, SB 9, has already passed out of
the Senate Labor and Commerce Standing Committee, and he encouraged
this committee to do the same. Mr. Helms noted, as Representative
Brice had also mentioned, this legislation had passed the previous
session as HB 323, which died on the Senate floor due to late
action. Mr. Helms expressed the hope that with sooner action, HB
17 or SB 9 might be passed into law this year.
Number 0667
JOHN CYR, President, NEA-Alaska, came forward to testify in support
of HB 17. He noted NEA-Alaska, the National Education Association
of Alaska, represents about 11,000 employees. Three thousand of
these are classified employees: janitors, classroom aides, food
service workers. House Bill 17 would directly affect these
employees' lives. Mr. Cyr noted the committee has NEA-Alaska's
position statement. He said this has been a priority of NEA and
its members for a number of years. They believe they have finally
worked out a way to do this where the employees would bear the
total costs and he reiterated NEA-Alaska's support for the
legislation.
REPRESENTATIVE MURKOWSKI asked who would actually be covered under
this plan.
Number 0722
MR. CYR replied that it covers anyone who works in a school who is
not certified. Teachers, principles and administrators are
certified employees and are in TRS [Teachers' Retirement System].
CHAIRMAN ROKEBERG confirmed with Mr. Cyr that the classified
employees would be under the state program, PERS. The chairman
asked if they receive any SBS [Supplemental Benefits System] and
whether it varies by district.
MR. CYR replied some districts get SBS and some do not. For
example, the classified employees in "Mat-Su" [Matanuska-Susitna
Borough] are eligible. He believes that was a one-time opt-in
provision districts had.
CHAIRMAN ROKEBERG questioned if the employees have social security,
or if they are not allowed.
MR. CYR replied he thinks they do not have social security,
indicating he is not really familiar with PERS. Referring to the
previous questions about the NEA-Alaska position statement, Mr. Cyr
indicated he believes the inability of classified employees to
collect unemployment during layoff does have a bearing on HB 17
because custodians and secretarial staff used to be year-round
employees in Alaska. However now because of budget cuts, et
cetera, they are nine-month, and some even less. The employees are
laid off, cannot collect unemployment, and do not receive
retirement for that period. Mr. Cyr stated that to NEA-Alaska this
really is equity: if the classified employees are willing to pay
their own way, the state should allow them to do so.
CHAIRMAN ROKEBERG invited Guy Bell and Bill Church forward [Bill
Church, Retirement Supervisor, Division of Retirement and Benefits,
Department of Administration].
Number 0885
GUY BELL, Director, Division of Retirement and Benefits, Department
of Administration, came forward to testify on HB 17. Mr. Bell said
he has little to add to Representative Brice's testimony. He noted
a couple of small points: this will be prospective only; it would
apply from the date of passage forward. Those people in the system
today would be able to, within six months of the bill's effective
date, elect to pay a higher charge for the future service they
would accrue. New employees would have 90 days to make that
determination. In working on the bill last year with
Representative Brice, Mr. Bell indicated the concern was expressed
to the division that this be a fixed charge to the employee, so the
employee would know the charge from year to year. This concern was
brought to the division's actuaries in the development of the rate
calculation. The revised number given last week by the actuaries
is approximately 1.25 percent. Mr. Bell explained that if a person
wants this service they would be paying approximately 8 percent of
their salary as opposed to 6.75 percent, the current PERS
contribution. He confirmed to the chairman that it is an
irrevocable election; once the decision is made it cannot be
changed. In response to the chairman's further question about what
kinds of problems a revocable decision would add to the
administration, Mr. Bell said he thinks technically it would become
more difficult to administer because each year the employee would
have to be asked his or choice for that year; he thinks that why it
was drafted as irrevocable.
Number 1011
CHAIRMAN ROKEBERG said this is done all the time with benefits and
health insurance, noting elections and open periods.
MR. BELL stated, "Our thought was to try to keep this as benign as
possible and the way we thought about administering it is develop
a form in our division [and] send it out to the school districts.
When the people come in on the job at the beginning of the school
year, they would provide that form with some basic education, sign
the form and that's the time they make their decision. Certainly
it could be done otherwise, it would -- the bill would need to be
changed if that were the decision."
Number 1044
REPRESENTATIVE BRICE indicated that there have been other systems
where a move was made from a 30-year retirement plan to a 20-year
plan, specifically correctional officers. This vote [election] has
been patterned along that same irrevocable system to insure that
the administrative costs would stay very low. The intention is to
minimize the impact as much as possible.
CHAIRMAN ROKEBERG asked Mr. Bell if there are problems with Section
1 regarding the contribution surcharge. He mentioned the
stipulated amount.
MR. BELL indicated that, since it will be a fixed cost, the
alternative could be the deletion of the second sentence in Section
1 which discusses the way the calculation would be made and the
insertion "of 1.25 percent" on page 1, line 11, after "surcharge".
It does the same thing, it just says it more directly. In response
to the chairman's question about where the 1.25 percent comes from,
Mr. Bell noted it comes from the language in the second sentence.
It is the actuarial cost of that additional benefit the employees
would receive if they made the selection.
CHAIRMAN ROKEBERG asked if it could vary by contract.
MR. BELL explained that the actuary did it on a universal charge
basis, which means it may vary slightly from individual to
individual. However, in the aggregate, that is the cost arrived at
if a fixed rate which would apply to the entire group is being
sought. Doing it on an individual-by-individual basis would
produce something similar but it would also be much more costly
because characteristics and status - age, salary, et cetera - would
have to be examined for each individual.
Number 1190
REPRESENTATIVE BRICE indicated there has been some discussion on
whether a specific percentage should be included, or not included
"but ... have one number generated that every employee would have
to kick in if they wanted to opt to discuss." It comes down to the
possibility of a future change that might affect the actuarial
soundness of the system, whether an increase or decrease in
contribution. Representative Brice noted he wants to ensure that
a number is not set in statute and then left to the political whims
of the legislature: if that number were to increase and the
administration has no authority to increase that number. He
commented he is willing enter into this discussion, and added that
the fiscal note had not surprised him, it is the same or very close
to the previous session's.
CHAIRMAN ROKEBERG commented on the apparent size of the fiscal note
this year as compared to the previous year.
MR. BELL said the fiscal note is smaller this year.
Number 1289
REPRESENTATIVE MURKOWSKI asked if HB 17 is basically the same bill
that went through last year.
REPRESENTATIVE BRICE answered it is very substantially the same.
He thinks there was one change on page 1, line 10, and that the
first word, "and", should probably be "or" for complete clarity.
Representative Brice indicated "or" was used in the previous
legislation but legislative legal counsel feels it can be either
one. [HB 17, page 1, lines 9 and 10, "of a state boarding school,
of a school district or regional educational attendance area, and
of the Alaska Vocational Technical Center determined by reference
to".]
CHAIRMAN ROKEBERG stated that AVTEC was added.
REPRESENTATIVE BRICE explained that the addition of AVTEC was the
primary change from last year's House Labor and Commerce Standing
Committee version. He indicated the changes were made last year in
the House Finance Standing Committee.
CHAIRMAN ROKEBERG commented lightly he probably shouldn't take it
personally that the entire bill had been changed after leaving
House Labor and Commerce the previous session.
REPRESENTATIVE BRICE replied that the election of participation had
come from discussions with the Administration, and the addition of
AVTEC from other discussions. He indicated it was the continuation
of the committee process.
Number 1390
BARBARA HUFF TUCKNESS, Director, Governmental and Legislative
Affairs, General Teamsters Local 959 State of Alaska, came forward
to testify in support of HB 17. She referred to a letter of
support in the bill packet in lieu of giving more detailed
testimony. Ms. Huff Tuckness noted HB 17 would have an impact on
several hundred members within the Anchorage School District
including food service employees, bus drivers, and a few
maintenance workers. [The March 8, 1999, letter mentioned is to
the committee from Gerald L. Hood, Secretary-Treasurer, Teamsters
Local 959, and reads:
Teamsters Local 959 represents non-certified employees
most predominantly in the Anchorage School District.
Several hundred of those members actually work less than
twelve months of the year due to the nature of their
jobs. As we understand HB 17, it would allow those
members, by individual choice, the opportunity to receive
the same credited year as their certified counterparts
for purposes of retirement. Any increased cost under
this bill would be born by the employee, not the employer
(Anchorage School District).
We urge your support and passage of this bill to allow,
by employee choice, the opportunity to increase their
credited service time as is currently the option for the
certified employees.]
Number 1426
CHAIRMAN ROKEBERG indicated to Representative Brice that there had
been conversations about some special education personnel.
REPRESENTATIVE BRICE replied there had been some talk by SESA, the
Special Education Service Agency [stated as "Special Education
Support Agency"], at the end of the previous session. He noted
SESA is a function of state government [Department of Education],
not necessarily of a school district. Representative Brice said he
had been contacted after the end of the previous session but had
not heard from the organization in three months. He indicated he
would be happy to follow this up if the chairman wished.
Number 1493
CHAIRMAN ROKEBERG responded it was just something that had been
brought to his attention and that he did not have an opinion on.
Confirming there were no further witnesses, Chairman Rokeberg
announced the public testimony on HB 17 was closed. He commented
on the absence of a supporting letter from the Anchorage School
District (ASD) in the bill packet.
REPRESENTATIVE BRICE replied that Larry Wiget [Director, Government
Relations, Anchorage School District] had said there is no problem
with the bill during an informal discussion. Representative Brice
noted this discussion had been after the strike. However, he
indicated he does not know if the Anchorage School District has
taken a formal position on HB 17.
CHAIRMAN ROKEBERG indicated ASD was not in opposition to the
legislation.
Number 1606
REPRESENTATIVE HARRIS made a motion to move HB 17 out of committee
with individual recommendation and the attached fiscal note. There
being no objection, HB 17 moved out of the House Labor and Commerce
Standing Committee.
ADJOURNMENT
Number 1632
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee at 5:22 p.m.
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