Legislature(2003 - 2004)
05/14/2003 08:04 AM House STA
| 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
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
May 14, 2003
8:04 a.m.
MEMBERS PRESENT
Representative Bruce Weyhrauch, Chair
Representative Jim Holm, Vice Chair
Representative Nancy Dahlstrom
Representative Bob Lynn
Representative Paul Seaton
Representative Harry Crawford
Representative Max Gruenberg
OTHER LEGISLATORS PRESENT
Senator Ralph Seekins
COMMITTEE CALENDAR
SENATE BILL NO. 146
"An Act relating to a commemorative veterans' license plate; and
providing for an effective date."
- MOVED SB 146 OUT OF COMMITTEE
HOUSE BILL NO. 312
"An Act giving notice of and approving the entry into and the
issuance of certificates of participation for a lease-purchase
agreement for a seafood and food safety laboratory facility;
relating to the use of certain investment income for certain
construction costs; and providing for an effective date."
- MOVED CSHB 312(STA) OUT OF COMMITTEE
HOUSE BILL NO. 149
"An Act requiring nonprofit corporations under the Alaska Net
Income Tax Act to provide prior public notice of lobbying
expenditures and an annual report of lobbying expenditures to
the Department of Revenue; providing for a civil penalty for
failure to provide the notice; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL NO. 272
"An Act relating to motor vehicle dealers."
- MOVED CSHB 272(L&C) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 27
Relating to support for a federal appropriation for expansion of
the Anchorage Jail.
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 40
"An Act relating to issuance of a driver's license."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: SB 146
SHORT TITLE:COMMEMORATIVE VETERANS LICENSE PLATE
SPONSOR(S): SENATOR(S) GUESS
Jrn-Date Jrn-Page Action
03/17/03 0517 (S) READ THE FIRST TIME -
REFERRALS
03/17/03 0517 (S) STA, FIN
04/03/03 (S) STA AT 3:30 PM BUTROVICH 205
04/03/03 (S) -- Location Change --
04/08/03 (S) STA AT 3:30 PM BELTZ 211
04/08/03 (S) Moved Out of Committee
04/08/03 (S) MINUTE(STA)
04/09/03 0764 (S) STA RPT 4DP
04/09/03 0764 (S) DP: STEVENS G, COWDERY,
DYSON, GUESS
04/09/03 0764 (S) FN1: (ADM)
04/29/03 (S) FIN AT 9:00 AM SENATE FINANCE
532
04/29/03 (S) Heard & Held
04/29/03 (S) MINUTE(FIN)
04/30/03 1045 (S) FIN RPT 3DP 2NR
04/30/03 1045 (S) DP: WILKEN, TAYLOR, OLSON;
04/30/03 1045 (S) NR: GREEN, BUNDE
04/30/03 1045 (S) FN1: (ADM)
04/30/03 (S) FIN AT 9:00 AM SENATE FINANCE
532
05/02/03 1104 (S) RULES TO CALENDAR 5/2/03
05/02/03 1104 (S) READ THE SECOND TIME
05/02/03 1104 (S) ADVANCED TO THIRD READING
UNAN CONSENT
05/02/03 1105 (S) READ THE THIRD TIME SB 146
05/02/03 1105 (S) COSPONSOR(S): WILKEN, DYSON,
STEVENS G,
05/02/03 1105 (S) FRENCH, LINCOLN, WAGONER,
SEEKINS,
05/02/03 1105 (S) ELTON, TAYLOR, COWDERY,
OLSON,
05/02/03 1105 (S) THERRIAULT
05/02/03 1105 (S) PASSED Y19 N- E1
05/02/03 1105 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
05/02/03 1114 (S) TRANSMITTED TO (H)
05/02/03 1114 (S) VERSION: SB 146
05/05/03 1305 (H) READ THE FIRST TIME -
REFERRALS
05/05/03 1305 (H) MLV, STA
05/05/03 1333 (H) CROSS SPONSOR(S): LYNN,
MCGUIRE
05/12/03 (H) MLV AT 5:15 PM CAPITOL 17
05/12/03 (H) Moved Out of Committee
05/12/03 (H) MINUTE(MLV)
05/13/03 1596 (H) MLV RPT 6DP
05/13/03 1596 (H) DP: CISSNA, GRUENBERG, FATE,
MASEK,
05/13/03 1596 (H) DAHLSTROM, LYNN
05/13/03 1596 (H) FN1: (ADM)
05/14/03 1630 (H) STA RPT 5DP
05/14/03 1630 (H) DP: SEATON, GRUENBERG, HOLM,
CRAWFORD,
05/14/03 1630 (H) WEYHRAUCH
05/14/03 1630 (H) FN1: (ADM)
05/14/03 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 312
SHORT TITLE:SEAFOOD AND FOOD SAFETY LABORATORY
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
05/08/03 1477 (H) READ THE FIRST TIME -
REFERRALS
05/08/03 1477 (H) STA, FIN
05/08/03 1477 (H) FN1: (DEC)
05/08/03 1477 (H) GOV. TRANSMITTAL LETTER
FORTHCOMING
05/09/03 1521 (H) GOV. TRANSMITTAL LETTER
RECEIVED
05/13/03 (H) STA AT 8:00 AM CAPITOL 102
05/13/03 (H) Heard & Held -- Recessed to
Wed. 5/14/03 8:00 AM --
MINUTE(STA)
05/14/03 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 149
SHORT TITLE:LOBBYING BY NONPROFITS
SPONSOR(S): REPRESENTATIVE(S)WOLF
Jrn-Date Jrn-Page Action
03/05/03 0395 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0395 (H) STA, JUD, FIN
03/05/03 0395 (H) REFERRED TO STATE AFFAIRS
04/17/03 (H) STA AT 8:00 AM CAPITOL 102
04/17/03 (H) <Bill Hearing Postponed to
4/24/03>
04/24/03 (H) STA AT 8:00 AM CAPITOL 102
04/24/03 (H) Scheduled But Not Heard
04/29/03 (H) STA AT 8:00 AM CAPITOL 102
04/29/03 (H) Scheduled But Not Heard
05/01/03 (H) STA AT 8:00 AM CAPITOL 102
05/01/03 (H) Heard & Held
MINUTE(STA)
05/07/03 (H) STA AT 8:00 AM CAPITOL 102
05/07/03 (H) Heard & Held
MINUTE(STA)
05/08/03 (H) STA AT 8:00 AM CAPITOL 102
05/08/03 (H) Heard & Held
MINUTE(STA)
05/13/03 (H) STA AT 8:00 AM CAPITOL 102
05/13/03 (H) Scheduled But Not Heard
05/14/03 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 272
SHORT TITLE:MOTOR VEHICLE DEALERS
SPONSOR(S): REPRESENTATIVE(S)WEYHRAUCH
Jrn-Date Jrn-Page Action
04/16/03 1009 (H) READ THE FIRST TIME -
REFERRALS
04/16/03 1009 (H) L&C, STA
04/28/03 (H) L&C AT 3:15 PM CAPITOL 17
04/28/03 (H) Scheduled But Not Heard
04/30/03 (H) L&C AT 3:15 PM CAPITOL 17
04/30/03 (H) Scheduled But Not Heard
05/01/03 (H) STA AT 8:00 AM CAPITOL 102
05/01/03 (H) Scheduled But Not Heard --
05/05/03 (H) L&C AT 3:15 PM CAPITOL 17
05/05/03 (H) Heard & Held
MINUTE(L&C)
05/07/03 (H) L&C AT 3:15 PM CAPITOL 17
05/07/03 (H) <Bill Hearing Postponed to
Fri. 5/9/3>
05/09/03 (H) L&C AT 3:15 PM CAPITOL 17
05/09/03 (H) Moved CSHB 272(L&C) Out of
Committee
MINUTE(L&C)
05/12/03 1560 (H) L&C RPT CS(L&C) 6DP 1AM
05/12/03 1560 (H) DP: LYNN, GATTO, CRAWFORD,
DAHLSTROM,
05/12/03 1560 (H) ROKEBERG, ANDERSON; AM:
GUTTENBERG
05/12/03 1560 (H) FN1: ZERO(LAW)
05/13/03 (H) STA AT 8:00 AM CAPITOL 102
05/13/03 (H) Heard & Held
MINUTE(STA)
05/14/03 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
SENATOR GRETCHEN GUESS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of SB 146.
ROSEMARY HAGEVIG, Executive Director
Catholic Community Services (CCS)
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of CCS to inform the
committee that HB 149 would seriously impede CCS's ability to
fully meet its mission and would have negative impacts on a
number of organizations.
JOHN LYBERGER
Lyberger's Car & Truck Sales, LLC
Anchorage, Alaska
POSITION STATEMENT: During hearing on HB 272, expressed concern
about its effects on his business, employees, and customers;
explained his company's warranty policy and answered questions.
STEVE ALLWINE, Secretary
Alaska Auto Dealers Association (AADA)
Anchorage, Alaska
POSITION STATEMENT: Testified on behalf of AADA in support of
HB 272.
TERI PETRAM
Anchorage, Alaska
POSITION STATEMENT: Testifying on behalf of Lyberger's Car &
Truck Sales, LLC, answered questions for the committee during
the hearing on HB 272.
CLYDE (ED) SNIFFEN, JR., Assistant Attorney General
Fair Business Practices Section
Civil Division (Anchorage)
Department Of Law
Anchorage, Alaska
POSITION STATEMENT: Answered question during the hearing on HB
272.
ACTION NARRATIVE
TAPE 03-63, SIDE A
Number 0001
CHAIR BRUCE WEYHRAUCH called the House State Affairs Standing
Committee meeting to order at 8:04 a.m. Representatives
Weyhrauch, Holm, Seaton, Crawford, and Gruenberg were present at
the call to order. Representative Lynn arrived as the meeting
was in progress.
SB 146-COMMEMORATIVE VETERANS LICENSE PLATE
Number 0025
CHAIR WEYHRAUCH announced that the first order of business was
SENATE BILL NO. 146, "An Act relating to a commemorative
veterans' license plate; and providing for an effective date."
Number 0036
SENATOR GRETCHEN GUESS, Alaska State Legislature, as sponsor of
SB 146, explained that the proposed legislation would set up a
commemorative Alaska veterans' license plate, which any Alaskan
could purchase. She said the funds would be available for
appropriations for any services, but hopefully, she added, for
veteran services. She noted that the statute parallels the
"children's trust license plate."
Number 0105
REPRESENTATIVE SEATON moved to report SB 146 out of committee
with individual recommendations and the accompanying fiscal
note. There being no objection, SB 146 was reported out of the
House State Affairs Standing Committee.
HB 312-SEAFOOD AND FOOD SAFETY LABORATORY
Number 0128
CHAIR WEYHRAUCH announced that the next order of business was
HOUSE BILL NO. 312, "An Act giving notice of and approving the
entry into and the issuance of certificates of participation for
a lease-purchase agreement for a seafood and food safety
laboratory facility; relating to the use of certain investment
income for certain construction costs; and providing for an
effective date."
Number 0146
REPRESENTATIVE SEATON moved to report CSHB 312, Version 23-
GH1134\H, Bannister, 5/13/03, out of committee with individual
recommendations and the accompanying fiscal note.
REPRESENTATIVE GRUENBERG reminded the committee that a motion
was needed first to adopt Version H as a work draft.
CHAIR WEYHRAUCH asked for that motion.
[TWO UNIDENTIFIED SPEAKERS] simultaneously moved to adopt the
committee substitute (CS) for HB 312, Version 23-GH1134\H,
Bannister, 5/13/03, as a work draft. [There being no objection,
Version H was before the committee.]
CHAIR WEYHRAUCH, referring to Representative Seaton's previous
motion to move the bill, announced that there being no
objection, CSHB 312(STA) was reported out of the House State
Affairs Standing Committee.
HB 149-LOBBYING BY NONPROFITS
CHAIR WEYHRAUCH announced that the next order of business was
HOUSE BILL NO. 149, "An Act requiring nonprofit corporations
under the Alaska Net Income Tax Act to provide prior public
notice of lobbying expenditures and an annual report of lobbying
expenditures to the Department of Revenue; providing for a civil
penalty for failure to provide the notice; and providing for an
effective date." [Before the committee is Version 23-LS0354\H,
which had been amended at previous meetings. Although this
document is entitled and referred to as a sponsor substitute, it
was not officially such and thus the document only exists in the
committee packet.]
Number 0284
ROSEMARY HAGEVIG, Executive Director, Catholic Community
Services (CCS), informed the committee that CCS is a social
services organization that has been in business in Southeast
Alaska for 30 years. She emphasized that CCS is concerned about
the implications in this legislation in "all of its versions."
She said that she is unable to determine after reading the
sponsor statement, exactly what the rationale is for the changes
that are proposed.
MS. HAGEVIG stated that CCS has worked diligently on behalf of
vulnerable senior citizens, and it has provided a wide range of
services for families and children. Ms. Hagevig said that CCS's
mission statement is clear. She noted that it is on file with
the Department of Commerce, and is part of CCS's incorporating
papers. She said she would read the mission statement for the
record. It read as follows:
Catholic Community Service advocates and offers social
service opportunities for all Southeast Alaskans,
emphasizing social justice and compassion. We
accomplish this mission by fostering the self-
sufficiency and dignity of individuals and families
affirming diversity in culture, faith and way of life.
MS. HAGEVIG pointed out that it is a two-prong mission: CCS
provides services on the ground 24 hours a day, 7 days a week,
and 365 days a year; it also has an obligation to advocate for
the vulnerable people it serves.
MS. HAGEVIG revealed that CCS receives funding through grants
and contracts from the federal, state, and local governments, as
well as from tribal organizations. She stated, "These are
clearly restricted dollars and are never used for advocacy or
lobbying." She said that CCS's contributors understand the
scope of work it does and expects CCS to fulfill its mission.
[House Bill 149] would seriously impede CCS's ability to fully
meet its mission, she stated. She said she thinks that it's
important for the committee to understand that the proposed
legislation would have "really negative impacts in a very broad-
brushed way for a number of organizations."
Number 0525
REPRESENTATIVE SEATON noted that the federal law changed the
limit a "501(c)(3)" [nonprofit organization] could spend from
"an insignificant amount of this money," to 20 percent of its
money. He asked Ms. Hagevig if she could foresee ever spending
20 percent of CCS's funds on lobbying.
MS. HAGEVIG replied that that would be her fondest wish;
however, an organization such as CCS would never ever have that
kind of money available to it. She revealed that CCS spends a
miniscule amount of its total budget on advocacy. She added
that she cannot envision a time when CCS would "ever approach 20
percent."
Number 0619
REPRESENTATIVE GRUENBERG said that, technically, there should be
a CS before the committee; however, he indicated that there is a
typo. He clarified that HB 149 "did not incorporate an
amendment that the committee adopted."
CHAIR WEYHRAUCH replied that the committee would have to deal
with that another time.
[HB 149 was heard and held.]
HB 272-MOTOR VEHICLE DEALERS
CHAIR WEYHRAUCH announced that the next order of business was
HOUSE BILL NO. 272, "An Act relating to motor vehicle dealers."
[Before the committee was CSHB 272(L&C).]
Number 0708
JOHN LYBERGER, Lyberger's Car & Truck Sales, LLC ("Lyberger's"),
began by saying he has never been sued or sued anyone, and has
tried to live a life that considers his fellow man and helps
people. He expressed his belief that HB 272 will hurt consumers
while making a few people wealthy or wealthier. He also voiced
concern for his 40-some employees, cited examples of their
generosity, and mentioned thank-you letters, postcards, and
gifts from grateful customers. Speaking against Section 1, Mr.
Lyberger emphasized that competition is what the United States
of America is all about. Noting that just a short time ago many
people bought cars in the Lower 48 to drive or ship to Alaska,
he said if customers are treated well, they'll buy in Alaska.
He told members that he wants to be not just a little different
from other dealers, but as opposite as possible, and he wants
people to be 100 percent happy with the vehicles they purchase
from Lyberger's; if someone isn't happy with a deal or an
automobile, he said he wishes to return that person's money
immediately.
Number 1024
REPRESENTATIVE LYNN recalled coming onto Lyberger's lot the
previous autumn and seeing vehicles he was interested in. He
reported that a young man [who worked there], when asked, said
they were new cars.
MR. LYBERGER expressed concern and said, "He cannot be on the
premises."
REPRESENTATIVE LYNN further reported that this person hadn't
said a word about the vehicles' being manufactured in Canada or
that there was no [factory] warranty, for example. He
acknowledged that he hadn't gotten to the point of making an
offer or going through the paperwork, but said until these
hearings began on [HB 272] he'd believed that what appeared to
be new cars [at Lyberger's] were new. He said he is a little
upset about it.
MR. LYBERGER responded that whether it has 20 miles or 20,000
miles on it, every vehicle off Lyberger's lot is used, and
almost all are imported from Canada. Saying every vehicle has a
"100 percent warranty," he explained:
If the factory takes care of it, fine. If it does
not, ... there's a ... Heritage Warranty is what I put
on every vehicle if the factory warranty is not [in]
effect on any given vehicle. ... I do not want any
[customer] spending ... one dollar, one penny. ... It
comes from Lyberger's pocket. I don't want anyone's
[warranty] to be better than Lyberger's. I don't want
any to be as fine ... as mine.
Number 1270
REPRESENTATIVE HOLM asked what percentage of cars sold in the
United States are made in Canada, and whether this is a common
practice.
MR. LYBERGER spoke about many [vehicles] coming into the U.S.
for auctions and so forth. He said many cars at new-car
dealerships in the U.S., Mexico, and Canada are made in Canada.
Number 1333
REPRESENTATIVE HOLM asked whether there is a fairly open border,
with few restrictions with regard to automobiles. He also asked
about the role of the exchange rate.
MR. LYBERGER mentioned that it is possibly less expensive to
purchase vehicles in the Lower 48 and bring them to Alaska, and
indicated it is because of the exchange rate [that it is
profitable to purchase cars from Canada]. He also indicated
vehicles from Canada, the U.S., or Mexico will be identical.
Saying Canada was the first to have lights that come on
automatically when the car starts, he cited General Motors
[vehicles] as an example, noting that there are fines in some
places if people don't drive with headlights on at all times.
Number 1530
STEVE ALLWINE, Secretary, Alaska Auto Dealers Association
(AADA), testified on behalf of AADA in support of HB 272, as
written [CSHB 272(L&C)]. He noted that he is also the past-
president of AADA. He stated that the attorney general's office
and AADA share the goal of providing clear and concise
corrections to previous legislation, while retaining the
legislative intent. He stated it is his belief and that of
those dealers he represents that HB 272 accurately provides
those corrections.
MR. ALLWINE noted that HB 272 is comprised of 8 sections.
Section 1 addresses AS 08.66.015, which has been in effect for
approximately 10 years. The remaining sections of HB 272, he
said, would clarify statutes from "the prior session dealer bill
that was passed and became law." Mr. Allwine said that Section
1 of HB 272 serves to change AS 08.66.015. Currently, he noted,
under that statute, no new- or used-car dealers are permitted to
sell a current-model used vehicle, unless they have the sales
and service agreement - like a franchise agreement - with the
manufacturer of that specific vehicle; however, Section 1 would
[provide exceptions to that restriction]. Mr. Allwine
highlighted some of the exceptions [found on page 2, lines 2-10
of the bill] and illustrated with examples how they would work.
Without the amendments proposed in Section 1, he said,
"everybody's out of compliance."
MR. ALLWINE noted that there has been a lot of discussion
concerning Canadian vehicles, as related to this legislation.
He said he had heard questions regarding how vehicles are moved
between one country and another, and what the definition is of a
grey-market vehicle. He explained that [vehicle] manufacturers
have plants throughout Canada, the U.S., Mexico, and Brazil.
The vehicles are built and then the manufacturers designate
which market the vehicles will be shipped to. For example, Mr.
Allwine noted that he has trucks that are built in Mexico and
minivans that are built in Canada. He added that a designation
is also made that these vehicles are not to be resold "in a
foreign country."
MR. ALLWINE referred to a billing document [used by dealers],
which he said he provided to the committee. He read a portion
of it as follows:
The vehicle's manufactured to meet specific United
States requirements; this vehicle is not manufactured
for sale or registration outside of the United States.
MR. ALLWINE continued as follows:
Knowingly selling -- if you're a Canadian dealer and
you sell to an importer-somebody who imports into our
country, these vehicles will place your sales and
service agreement, or your franchise agreement, if you
choose to call it that, in serious jeopardy. They
have terminated dealer agreements in Canada over these
issues, so it's not in that dealer's interest to do
that. So, when you start at the beginning, the
acquisition of these vehicles is in question, at best.
Essentially what they do is they hire college kids ...
[who] go out and buy cars under the guise of
consumers. Then those cars are imported to this
country.
MR. ALLWINE informed the committee that the first thing that has
to happen when a vehicle comes into [the U.S.] is for the
speedometer to be changed from kilometers to miles. He noted
that there are two situations that can arise: One, he
explained, has to do with an error in the conversion, which
could be an honest mistake. He said that this type of error
will cost the consumer thousands of dollars and significant
inconvenience, because, the issue of "miles unknown" on an
odometer statement is significant and will render a vehicle
virtually worthless. Two, he revealed, the temptation for
odometer fraud is great. The added value of a vehicle with
3,000 miles versus a vehicle with 23,000 is, conservatively,
over $600 a vehicle, he said. He added that the equipment to
[tamper with an odometer] is available over the Internet for
approximately $1,800. He referred to a recent article that says
that this type of fraud is on the rise.
MR. ALLWINE turned to another issue regarding titling a vehicle.
He stated, "The potential for a "flood" or a totaled vehicle to
be dumped on the Alaska market is great. The recourse to the
importer, he said, is minimal. He asked, "[Have you] ever tried
to sue somebody in another country?" He also asked, "[Have you]
ever tried to take action on your credit card in another
country?" He said it is a difficult operation.
MR. ALLWINE turned to warranty issues, which he said are a big
problem with a manufactured used car. Many manufacturers, in an
effort to stem the tide of vehicles into [the U.S.] "in this
manner" have "eliminated all their warranty." The offering of a
no-charge service contract, under the guise of a warranty
creates a false impression that the consumer is getting a new
vehicle with a new vehicle warranty, he opined. He commented
that he believes he included "something that indicates it's a
warranty" in the attachment provided to the committee. He said,
"The fact is, if you're a dealer, you're paying for it, and if
you're paying for it - even if it's no charge - you're attaching
it to the car deal, and it's a service contract. That's the
long and short of it."
MR. ALLWINE stated that new-car dealers invest significant sums
of money in training, facilities, and tools. For example, he
noted that a 2004-model vehicle requires about $8,500 in
training and special tools. He said, "That's for one of the new
ones we have coming up." He added, "Oh, by the way, that
doesn't include the training, because it seems like none of the
training ends up in the great state of Alaska."
MR. ALLWINE stated that responsibility is a big issue. He
listed the purchase, the problems, the tools, the people, the
training, and said, "None of this is offered by a used-car
dealer." If [consumers] have a problem with a current-model
used vehicle, [the used-car dealer] is going to tell them to
take it to a new-car dealer to have it fixed. He added, "It's
always the new-car dealer."
MR. ALLWINE referred to previous testimony and indicated that
there was an impression left that there's a lot of certification
that goes on before "this vehicle comes into this country";
[that] the importers are certified. Mr. Allwine stated that
there's no certification required. He remarked that a little
bit of research indicates that "the registration to import into
our country, from our government, is simply 'stuff,' it doesn't
necessarily have to be cars - it can be anything." He clarified
that it is a commerce registration, not a technical one. He
said that the [U.S.] Department of Transportation and the
National Highway Traffic Safety Administration do not verify or
certify speedometers or "any of that traffic or that movement."
He noted one exception: "Our government requires a
certification of content." The only people who are authorized
to certify that content are the manufacturers; the importers do
not have this ability. He added, "And quite frankly, the
manufacturers will not certify the content." He continued as
follows:
How do they do it? How do they get them across? It's
real simple. They just print a copy off the Internet
and they hand it to the customs people, and away they
go.
MR. ALLWINE stated that the final argument is in regard to
legislative intent. At the time that the statute was originally
enacted, he said, numerous consumers and new-car dealers, both
in Alaska and Washington had lost hundreds of thousands of
dollars. The reason for that loss, Mr. Allwine noted, is "the
brokering of new cars and trucks." He stated that it was the
intent of the original law to eliminate the opportunity to sell
new cars without being a franchised new-car dealer, "so as to
rectify the existing situation at that time and to provide
protection to the public." He explained as follows:
They did this by providing that an individual may not
hold him or herself out to be a new-car dealer, unless
they hold a sales and service agreement for that
specific product, [and] that they may not represent a
used car as a new car ....
The wholesale manufacture and importation of these
cars is in violation of the original statute's intent.
These are new cars under a thin veil of being a used
car.
MR. ALLWINE noted that one of the attachments that he provided
to the committee, in addition to showing a warranty, shows the
miles on "those cars." He remarked, "And that was an
advertisement out of an Anchorage paper." He said, "A car with
seven miles on it is still a new car. They may call it a used
car, but this is the manufacturing of a used car to circumvent
the statute in our state." The statute as it stands right now,
he reiterated, doesn't allow anybody to sell a current-model
used car. The proposed legislation, he reminded the committee,
would change the statute so that "new- or used-car dealers have
the ability to sell a current-model used car, but it does not
allow for the brokering or the wholesale manufacturing and
importation of a Canadian vehicle." Mr. Allwine said that,
ultimately, if a consumer has a difficulty with a current-model
used car, he/she only turns to one source, which is the new-car
dealer. He posited that it is not appropriate for a used-car
dealer to have the ability to sell a new car, without having any
responsibility or obligation beyond the sale.
Number 2231
REPRESENTATIVE LYNN asked Mr. Allwine who placed the
advertisement to which he previously referred, because he noted
that the name was not showing on the handout.
MR. ALLWINE offered to hand out a clearer copy of that
advertisement to the committee.
Number 2250
The House State Affairs Standing Committee meeting was recessed
at 8:36 a.m. to a call of the chair.
Number 2251
CHAIR WEYHRAUCH called the meeting back to order at 9:36 a.m.
Present at the call back to order were Representatives Holm,
Seaton, Gruenberg, and Weyhrauch. Representatives Dahlstrom,
Lynn, and Crawford arrived as the meeting was in progress.
Number 2275
REPRESENTATIVE HOLM indicated a problem between "the timing"
regarding new cars versus "new-used cars." He noted that
"normal course of business" is not defined in statute. He asked
Mr. Allwine where he thinks the law could be changed [to] be
"somewhat of a fallback position for both used-car dealers and
new-car dealers."
Number 2370
MR. ALLWINE answered that the bill, as written, is an attempt to
level the playing field on used vehicles. He said it is
recognized that rental fleets will, historically, turn their
vehicles in approximately a six-month period. He added that
manufacturers require a retention [of] rental vehicles for a
specific period of time, which traditionally has been six
months.
MR. ALLWINE said that Representative Holm raises an issue that
Mr. Arpino had indicated yesterday, regarding a vehicle that's a
repossession. Ultimately, he said, [the intent of the bill] is
to correct the statute in such a manner that new-car dealers and
used-car dealers are in compliance. He said, "There are
essentially four ways that any of us would end up with another
... manufacturer's vehicle as a current-model vehicle." He
listed the four ways: taking it as trade-in; buying it directly
from a consumer; [obtaining the vehicle] from a rental [fleet],
either directly, or through auctions; or "a repossessed
vehicle." He continued:
So, if you were to include repossessed vehicle, you
have covered all of the legitimate sources of used
vehicles that would be available to all of the
dealers.
Number 2491
REPRESENTATIVE SEATON referred to the previous testimony of
someone who obtains most of his cars at dealer auctions. He
said that it appears that [the proposed legislation would]
exclude "those sources of cars."
MR. ALLWINE responded that that is incorrect. He clarified, "If
it ... has been a rental vehicle and it has been retained for a
period of six months - as the bill states - that vehicle is
available for sale to any dealer."
REPRESENTATIVE SEATON clarified that he was not talking about
rental cars, but about "other cars." He said, "I mean there are
dealer auctions on used cars all the time." He stated his
understanding that the proposed legislation "wants to carve out
an exception so that no current-year model could be sold at
dealer auctions to anyone other than a dealership that has a
service and sales agreement with a manufacturer."
MR. ALLWINE stated that that is not exactly correct. He
continued as follows:
These are the basic sources that I have cited; these
are how the cars are run through an auction. This
would not permit any dealer to buy a vehicle that was
imported to this country as a manufactured used car
with a handful of miles on it, at an auction.
REPRESENTATIVE SEATON asked Mr. Allwine to "forget about the
'imported to this country,' because this doesn't talk about
that." He said that [HB 272] addresses any current-model-year
car. He stated his interpretation that HB 272 says that a used-
car dealer cannot go to an auction and buy any car that's a
current-year model. The only people who can do so, he
continued, would be the manufacturers' licensed dealers.
MR. ALLWINE responded that he believes Representative Seaton is
reading [the language] incorrectly, because the source of those
used cars would either be a lender offering vehicles that have
been repossessed, or rental vehicles. He asked Representative
Seaton to remember, "We're doing this very small window of only
current-model year." He noted, "Those are the prime sources,
excluding - as you mentioned before - ... imported vehicles."
Number 2560
REPRESENTATIVE SEATON said that he has purchased vehicles
through the insurance auction frequently. The cars may be
"dinged up," and some of them are current-year models that are
sold. However, he offered his understanding that, according to
HB 272, only the manufacturer or dealer could buy a current-
model-year car.
Number 2586
MR. ALLWINE replied as follows:
The type of vehicles you're citing - if you chose to
include that, I suppose it would be acceptable;
however, those vehicles - if they're disposed of by an
insurance carrier, and they're current-model vehicles
- those vehicles are usually totaled vehicles, and
they're traditionally not purchased by new- and used-
car dealers. That's a little bit out of the realm.
Number 2669
REPRESENTATIVE GRUENBERG noted that the committee had heard a
lot of testimony yesterday regarding auctions. He stated his
understanding that used-car dealers buy their vehicles at
auctions, but under this proposed legislation they would no
longer be able to do that. He said that he would like to have
"a person from that group" join Mr. Allwine at the witness table
to find out exactly what it is "they are not able to do under
the bill," and to hear [Mr. Allwine's] response.
Number 2700
TERI PETRAM, testifying on behalf of Lyberger's Car & Truck
Sales, LLC, joined Mr. Allwine at the witness table per the
request of the chair.
REPRESENTATIVE GRUENBERG repeated his comment regarding the
previous day's testimony from used-car dealers. He asked Ms.
Petram, "Were you talking about exclusively for an auction?"
MS. PETRAM answered yes.
REPRESENTATIVE GRUENBERG offered his understanding that the
point of contention between Mr. Allwine and Ms. Petram is in
regard to the ability to purchase vehicles at foreign auction.
He asked if that is correct.
MS. PETRAM answered yes.
[AN UNIDENTIFIED SPEAKER commented, via teleconference, that
that is not correct.]
Number 2775
CHAIR WEYHRAUCH told the unidentified speaker that he is out of
order.
MR. ALLWINE stated that HB 272 will carve out the importation
and manufacture of used vehicles from Canadian markets -
vehicles that were not intended for the United States market.
He added, "It will not preclude Lyberger's or myself from buying
current-model vehicles at auction, if they come from the source
of rentals or potentially - if you choose to include it -
lenders repossessions. It will preclude grey-market cars."
REPRESENTATIVE GRUENBERG noted that he doesn't know the meaning
of grey-market cars; however, he said that he doesn't want to
get into that now. He asked, "Why shouldn't they be able to buy
cars at a foreign auction?"
MR. ALLWINE answered that it's not actually a foreign auction;
the auctions are in the U.S. He opined, "This does not place a
hardship on a used-car dealer." He revealed, "These vehicles,
when they go through the auction, are disclosed as Canadian
vehicles."
REPRESENTATIVE GRUENBERG asked, "Why should you be able to buy
these vehicles, and not them?"
MR. ALLWINE replied that, based on having a franchise agreement
with a manufacturer, that manufacturer is unwilling to "give me
that latitude for very long." He clarified, "In other words, I
also will not be able to buy those." He continued as follows:
And if you chose to say, "What's good for one is good
for the other," that would certainly be acceptable to
me; but the fact is, the manufacturers control that
situation with us, and they ... don't permit us for
very long to go purchase Canadian vehicles and resell
them in this market.
REPRESENTATIVE GRUENBERG asked Mr. Allwine if he would be
willing to have everybody prohibited from doing that.
MR. ALLWINE answered, "I'd love it, I just don't know that it's
appropriate at this time. But I would love it, yes, sir."
REPRESENTATIVE GRUENBERG asked if that would be acceptable to
the used-car industry.
Number 2900
MS. PETRAM answered that there is more than just her interests
involved in HB 272. She said that there are auctions that
employ hundreds of people who would be effected by this. She
noted, "And where they get their vehicles is different than
where Lyberger's gets [its] vehicles."
Number 2964
REPRESENTATIVE SEATON said it sounds like Mr. Allwine wants a
law passed that will say that it is illegal to import current-
model Canadian vehicles into the U.S. for sale, which would
involve changing a law that would change a trade relationship
between the U.S. and Canada. He stated that he is not
particularly comfortable [in] doing that.
MR. ALLWINE stated, "That is not what we're asking [the
legislature] to do." He said he would defer to the attorney
general's office for further clarification.
TAPE 03-63, SIDE B
Number 2983
CLYDE (ED) SNIFFEN, JR., Assistant Attorney General, Fair
Business Practices Section, Civil Division (Anchorage),
Department Of Law, testified that he has been working with the
auto dealers on language for HB 272, but primarily the language
contained in Sections 2-8. He emphasized that the bulk of the
bill is contained in those sections, which are important
revisions to the current auto dealer statute. He categorized
those changes as points of clarification and some deletions [of
language] that doesn't apply to the way car dealers advertise
and sell used cars in Alaska. He said, "So, with respect to
Sections 2-8, we request your support."
MR. SNIFFEN referred to the controversial Section 1. He turned
to a recent question regarding whether or not this law would
have an impact on foreign trade, whether there are some North
American Free Trade Agreement (NAFTA) issues that come up, and
whether it's the legislature's province to interfere with these
trade relations. He continued as follows:
If there is a problem, it already exists, because the
current statute already prevents these things from
happening. So, I don't know that the language of
Section 1, in HB 272, would change anything. ... [HB]
272, in a sense, carves out an exception to this
problem that allows at least some of these
transactions to proceed. That is, transactions that
involve the acquisition of a Canadian-manufactured
vehicle or a vehicle manufactured for sale in Canada
from an ordinary consumer, from a rental fleet, and
from some other areas.
I've listened to the testimony from Jim Arpino and
from the representative from Lyberger's, and I think
there [have] been some good points raised, in the
sense that: "What if you want to go to an auction and
purchase a vehicle manufactured for sale in the United
States and bring it up to Alaska? Would this
legislation prohibit that?" And the answer is:
"Well, the current legislation already prohibits
that." The changes suggested by HB 272 do not seem to
account for that sort of situation, and I'm not
certain whether or not it should or should not. There
are probably always going to be some of these nuances
that come up that we'll have to ... work with ... into
the future, to decide if there are issues that we need
to address through further amendments to the
legislation.
MR. SNIFFEN stated that the position of the attorney general
(AG) on Section 1 is to be looking out for the interests of the
consumers. The AG's office, he added, would prefer to stay out
of the battle between the new- and used-car dealers.
Notwithstanding that, he said he thinks some of the comments Mr.
Allwine made were appropriate, because there are situations
where consumers are simply not aware that these vehicles do have
some of these issues. For example: the vehicles may not have
manufacture warranties; they do not have Alaska "lemon law"
protections, because the are used vehicles; and they have had
odometer switches done, which may or may not have been done in
an inappropriate fashion. He added that [the AG's office] has
not investigated the latter, therefore it cannot testify with
any certainty on whether "the swaps" are consistently done in
violation of law, or not.
MR. SNIFFEN stated that those types of disclosures, at a
minimum, need to be made. He added that he is uncertain whether
or not they are done in all circumstances and, based on an
earlier question by one of the representatives, apparently they
are not made all the time.
Number 2810
MR. SNIFFEN stated his belief that the importation of these
vehicles manufactured for sale in Canada is illegal. He said he
thinks they are legally imported and that the importation
process is proceeding in accordance with state and federal law.
He continued as follows:
Where I think the problem lies is upstream from the
importation process. There is just simply no way you
can get a vehicle onto Mr. Lyberger's lot ... in
Anchorage that is a current-model vehicle with 100
miles on it, manufactured originally for sale in
Canada, that doesn't involve some kind of, if not
illegal, at least illegitimate practice upstream
somewhere: ... a dealer violating a franchise
agreement; ... an importer who has set up a dummy
company to buy vehicles somehow; [or] ... an importer
who's paying college kids to buy these vehicles.
There is a transaction of that kind that is taking
place, that results in these vehicles getting into the
hands of the importers, and then they're imported,
probably illegally, into the United States, and they
end up on used-car dealer lots.
If we want to open up a market for those kinds of
vehicles in Alaska, you're going to encourage that
kind of activity to continue. And I'm not certain how
other states have dealt with this issue. I'm sure
this happens in some of the bordering states in the
Lower 48. I don't know if there's legislation
considered in those states to stop this, but Alaska
doesn't need to follow necessarily, we can perhaps
lead in this area, since we do have a close connection
with our Canadian friends.
And it is going to be a policy call on whether or not
we want to do something to prohibit that practice.
Actually, we already have law that prohibits that
practice. And if we're going to keep that law, do we
want to carve out at least some exceptions that allow
some of the more legitimate transactions to take
place, so new- and used-car dealers can sell at least
some of these cars?
Number 2710
REPRESENTATIVE SEATON asked Mr. Sniffen to confirm that his
feeling is that these cars are probably being imported legally,
but there was probably a Canadian franchise violation that most
likely occurred before the importation.
MR. SNIFFEN responded that that is the understanding of [the
AG], based on reports received from importers in Alaska and from
some of the new- and used-car dealers. He reiterated that the
AG has not investigated this issue in any detail.
REPRESENTATIVE SEATON said that he doesn't know if the franchise
agreements are private or have to do with Canadian laws. He
asked Mr. Sniffen what he is suggesting be done by the
legislature.
MR. SNIFFEN said he doesn't think that the AG or the new-car
dealers proposing [Section 1] are suggesting that [the
legislature] should do something to stop those kinds of
transactions. He added that, frankly, he doesn't think that
there is anything that can be done to stop those things from
happening. He continued as follows:
I think it's meant to just point out that these used-
car dealers seem to be suggesting, "Hey, we're going
to auctions and we're buying these cars and doing
everything [legally]." Well, they are, because
they're ignoring some of these other problems that
occur upstream. And to say that these vehicles are
imported ... legally and [that] everything is fine and
dandy is only good to a point. Sure, they're fine and
dandy ... once you get to the importers, but upstream
from that there are some transactions that shouldn't
be taking place, and if dealers in Canada and, I
think, laws in Canada were enforced properly, they
wouldn't find their way to the importer.
... The current law actually says you couldn't sell
these cars anyway, and HB 272 continues in that same
vein, but at least carves out exceptions for certain
kinds of transactions.
Number 2577
REPRESENTATIVE GRUENBERG stated that he has a large number of
questions on the entire bill. He said he wanted [the committee]
to at least get a handle on what he called, "the Canadian
problem." He remarked that the more testimony he hears, the
more questions he has.
CHAIR WEYHRAUCH stated that his intent is to ask that the bill
be moved out of committee, so he invited Representative
Gruenberg to ask his questions of Mr. Sniffen.
Number 2534
REPRESENTATIVE LYNN moved to report CSHB 272(L&C) out of
committee with individual recommendations and the accompanying
fiscal note. There being no objection, CSHB 272(L&C) was
reported out of the House State Affairs Standing Committee.
ADJOURNMENT
Number 2504
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 9:51
a.m.
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