Legislature(1993 - 1994)

03/17/1994 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         March 17, 1994                                        
                            8:00 a.m.                                          
  MEMBERS PRESENT                                                              
  Representative Al Vezey, Chairman                                            
  Representative Pete Kott, Vice Chairman                                      
  Representative Bettye Davis                                                  
  Representative Gary Davis                                                    
  Representative Harley Olberg                                                 
  Representative Jerry Sanders                                                 
  Representative Fran Ulmer                                                    
  MEMBERS ABSENT                                                               
  COMMITTEE CALENDAR                                                           
  *HB 491:       "An Act relating to reports by the Alaska                     
                 Science and Technology Foundation."                           
                 MOVED OUT OF COMMITTEE WITH A DO PASS                         
  HB 453:        "An Act amending the motor fuel tax to                        
                 establish a different tax levy on residual                    
                 fuel oil used in and on watercraft; and                       
                 providing for an effective date."                             
                 MOVED OUT OF COMMITTEE WITH A DO PASS                         
  *HB 430:       "An Act requiring certain applicants for a                    
                 driver's license to take a driver training                    
                 HELD IN COMMITTEE                                             
  HB 410:        "An Act relating to real estate appraisers                    
                 and the Board of Certified Real Estate                        
                 HELD IN COMMITTEE                                             
  (*First public hearing)                                                      
  WITNESS REGISTER                                                             
  REPRESENTATIVE GARY DAVIS                                                    
  Alaska State Legislature                                                     
  Alaska State Capitol, Room 420                                               
  Juneau, AK  99811-0460                                                       
  Phone:  465-2693                                                             
  POSITION STATEMENT:  Prime sponsor of HB 453                                 
  REPRESENTATIVE JOE GREEN                                                     
  Alaska State Legislature                                                     
  Alaska State Capitol, Room 114                                               
  Juneau, AK  99811-0460                                                       
  Phone:  465-4931                                                             
  POSITION STATEMENT: Answered questions on CSHB 453 and                       
                      Sponsor of HB 430                                        
  ROBERT M. ERICKSON                                                           
  Teamsters Local 959                                                          
  306 Willoughby Ave.                                                          
  Juneau, AK  99801                                                            
  Phone:  586-3225                                                             
  POSITION STATEMENT:  Supported CSHB 453                                      
  BERNIE SMITH, Manager                                                        
  Government Affairs                                                           
  Tesoro Alaska                                                                
  P.O. Box 3369                                                                
  Kenai, AK  99611                                                             
  Phone:  776-8191                                                             
  POSITION STATEMENT:  Supported CSHB 453                                      
  JAMES BURNS, Senior Vice President                                           
  Marketing, Petromarine Services                                              
  3111 C St., No. 500                                                          
  Anchorage, AK  99504                                                         
  Phone:  562-5000                                                             
  POSITION STATEMENT:  Commented on CSHB 453                                   
  C.J. ZANE, Director                                                          
  Government & Community Relations                                             
  Holland America Lines                                                        
  Westours, Inc.                                                               
  880 H St., No. 200A                                                          
  Anchorage, AK  99501                                                         
  Phone:  274-9019                                                             
  POSITION STATEMENT:  Supported on CSHB 453                                   
  JUANITA HENSLEY, Chief of Driver Services                                    
  Department of Public Safety                                                  
  P.O. Box 20020                                                               
  Juneau, AK  99802                                                            
  Phone:  465-2650                                                             
  POSITION STATEMENT:  Answered questions on HB 430                            
  WENDY MULDER, Special Assistant                                              
  Department of Commerce & Economic Development                                
  P.O. Box 110800                                                              
  Juneau, AK  99811-0800                                                       
  Phone:  465-2500                                                             
  POSITION STATEMENT:  Gave the sponsor statement for CSHB 410                 
  ALFRED FERRARA, Chairman                                                     
  Alaska Board of Real Estate Appraisers                                       
  1116 Shady Lane                                                              
  Anchorage, AK  99516                                                         
  Phone:  561-1031                                                             
  POSITION STATEMENT:  Supported CSHB 410                                      
  KARL LUCK, Director,                                                         
  Occupational Licensing Division                                              
  Department of Commerce & Economic Development                                
  P.O. Box 110806                                                              
  Juneau, AK  99811-0806                                                       
  Phone:  465-2534                                                             
  POSITION STATEMENT:  Gave a sectional analysis of CSHB 410                   
  PREVIOUS ACTION                                                              
  BILL:  HB 491                                                                
  SPONSOR(S): REPRESENTATIVE(S) VEZEY                                          
  JRN-DATE     JRN-PG               ACTION                                     
  02/14/94      2380    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2380    (H)   STATE AFFAIRS                                    
  03/17/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 453                                                                
  SHORT TITLE: TAX ON RESIDUAL MARINE FUEL OIL                                 
  SPONSOR(S): REPRESENTATIVE(S) G.DAVIS                                        
  JRN-DATE     JRN-PG               ACTION                                     
  02/09/94      2316    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/09/94      2316    (H)   L&C, STATE AFFAIRS, FINANCE                      
  03/15/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  03/16/94      2850    (H)   L&C RPT  CS(L&C) NEW TITLE                       
                              4DP 1NR                                          
  03/16/94      2850    (H)   DP:PORTER,HUDSON,WILLIAMS,                       
  03/16/94      2850    (H)   NR:GREEN                                         
  03/16/94      2850    (H)   -ZERO FISCAL NOTE (REV) 3/16/94                  
  03/17/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 430                                                                
  SPONSOR(S): REPRESENTATIVE(S) GREEN,Foster                                   
  JRN-DATE     JRN-PG               ACTION                                     
  02/02/94      2220    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/02/94      2220    (H)   STATE AFFAIRS, FINANCE                           
  03/03/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  03/17/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 410                                                                
  SHORT TITLE: REAL ESTATE APPRAISERS                                          
  SPONSOR(S): LABOR & COMMERCE BY REQUEST                                      
  JRN-DATE     JRN-PG               ACTION                                     
  01/28/94      2177    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/28/94      2177    (H)   L&C, STATE AFFAIRS, FINANCE                      
  02/17/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  02/17/94              (H)   MINUTE(L&C)                                      
  02/18/94      2453    (H)   L&C RPT  CS(L&C)  6DP                            
  02/18/94      2454    (H)   DP:HUDSON,PORTER,SITTON,MULDER                   
  02/18/94      2454    (H)   DP:WILLIAMS, GREEN                               
  02/18/94      2454    (H)   -ZERO FISCAL NOTE (DCED)                         
  02/18/94      2454    (H)   REFERRED TO STATE AFFAIRS                        
  03/17/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  ACTION NARRATIVE                                                             
  TAPE 94-32, SIDE A                                                           
  Number 000                                                                   
  CHAIRMAN AL VEZEY called the meeting to order at 8:01 a.m.                   
  Members present were REPRESENTATIVES SANDERS, G. DAVIS,                      
  OLBERG, and B. DAVIS.  A quorum was present.                                 
  HB 491 - REPORTS BY SCIENCE & TECHNOLOGY FOUNDATION                          
  CHAIRMAN VEZEY opened HB 491 for discussion.  He stated HB
  491 changes the reporting period from a calendar year to a                   
  fiscal year.  Currently, the Science & Technology Foundation                 
  reports January 1-December 31; however, the report has to be                 
  into the legislature by January 15.  The calendar year does                  
  not coincide with the fiscal year on which the Budget                        
  Committee reviews their budget.                                              
  Number 041                                                                   
  REPRESENTATIVE BETTYE DAVIS moved to pass HB 491 out of                      
  committee with individual recommendations and attached zero                  
  fiscal note.                                                                 
  (REPRESENTATIVE KOTT joined the meeting at 8:03 a.m.)                        
  Number 045                                                                   
  CHAIRMAN VEZEY asked the committee secretary to call the                     
  IN FAVOR:      REPRESENTATIVES VEZEY, KOTT, B. DAVIS, G.                     
                 DAVIS, SANDERS, OLBERG.                                       
  ABSENT:        REPRESENTATIVE ULMER                                          
  CHAIRMAN VEZEY announced HB 491 passed from the House State                  
  Affairs Committee.                                                           
  (REPRESENTATIVE ULMER joined the meeting at 8:04 a.m.)                       
  CSHB 453, Version U:  "An Act establishing, for purposes of                  
  the levy and collection of the motor fuel tax and for a                      
  limited period, a different tax levy on residual fuel oil                    
  used in and on certain watercraft; and providing for an                      
  effective date."                                                             
  CHAIRMAN VEZEY opened CSHB 453 for discussion.                               
  Number 090                                                                   
  453, version U.  He stated CSHB 453 attempts to create an                    
  equal playing between Alaska's residual fuel oil industry                    
  and their counterparts in the Lower 48 and Canada.  The                      
  sponsor statement is as follows:                                             
  "Residual fuel oil is the residue from crude oil after the                   
  light oils, gasoline, naphtha, kerosene, and mid-distillates                 
  are extracted in the refining process.  The only                             
  applications for residual fuel oil in Alaska are asphalt,                    
  cruise ship fuel and reinjection into the pipeline."                         
  Alaska's motor fuel tax rate for residual fuel oil is five                   
  cents per gallon.                                                            
  "As a result of the current rate of taxation on this                         
  product, Alaska's residual fuel oil is automatically                         
  noncompetitive with the same product available elsewhere.                    
  The cruise ship industry is the prime potential market for                   
  this fuel oil.  However, even though many ships cruise                       
  Alaska waters during the summer, minimal quantities of this                  
  extremely tax sensitive fuel oil are purchased in Alaska.                    
  Consequently, the state receives minimal revenue from the                    
  "House Bill 453 will reduce the tax rate levied on the sale                  
  of residual fuel oil, which will stimulate sales of residual                 
  fuel oil and benefit Alaska's economy.  This legislation                     
  will increase job opportunities in the trucking and fuel                     
  industries.  Simultaneously, state revenues will likely                      
  remain consistent and possibly increase."                                    
  REPRESENTATIVE G. DAVIS commented, in the final report of                    
  the Governor's Task Force on Regulation Review, it was                       
  recommended that the marketing of "heavy bunker oil" be made                 
  more economically competitive by eliminating or reducing the                 
  taxes.  He noted the cruise ship industry is growing every                   
  year and all of the ships run on "bunker oil," which is a                    
  blend of residual fuel and No. 2 diesel.                                     
  REPRESENTATIVE G. DAVIS stated Princess Tours has been                       
  landing in Seward for quite a while; using only a bit of                     
  residual loaded there for ballast only.  They currently                      
  purchase their fuel in Vancouver, Canada; however, they have                 
  indicated, without guarantee, that they will purchase                        
  adequate quantities to compensate for the revenue Alaska has                 
  taken in on residual fuel over the past few years.                           
  REPRESENTATIVE G. DAVIS mentioned the Tesoro refinery in                     
  Kenai probably has upward of 200 million gallons of residual                 
  fuel oil per year that they have to market.  Without a local                 
  market, they ship out from Cook Inlet to the West Coast and                  
  the Far East.  He believed 13+ million gallons could be sold                 
  in Seward on the assurances from a few of the cruise lines                   
  e.g., Princess Tours, Holland America, etc.                                  
  REPRESENTATIVE G. DAVIS stated last year, Alaska received                    
  about $205,000 from residual taxes.  The estimation of the                   
  proposed sale of 13 million gallons would compensate for                     
  this loss, plus each year they believe the sales will                        
  increase.  He noted in Sitka, with the pulp mill closing                     
  down, they have tanks that can store the oil and keep it                     
  heated.  Sitka is also looking for commitments from the                      
  cruise lines that fuel would be bought from there.  All of                   
  these results are predicated on the reduction of the fuel                    
  REPRESENTATIVE G. DAVIS stated information in the packets                    
  shows the increase in California's fuel taxes made their                     
  markets plummet.  Alaska had significant fuel sales before                   
  the 5 cent tax, and after the tax the market plummeted just                  
  as California did.  He believed 15-20 jobs would arise from                  
  CSHB 453.  He also noted Alaskan fuel burns cleaner than                     
  CHAIRMAN VEZEY wanted to know why CSHB 453 was being limited                 
  to passenger watercraft and he felt the definition of                        
  residual fuel oil should be improved.                                        
  REPRESENTATIVE G. DAVIS responded last year Tesoro sold fuel                 
  to Marathon to fuel Liquid Natural Gas (LNG) tankers, which                  
  amounted to $300,000-$400,000 in tax dollars to the state.                   
  He commented in order to make CSHB 453 revenue neutral and                   
  improve revenues in the future, they believed they should                    
  focus the bill on passenger ships.                                           
  REPRESENTATIVE G. DAVIS referred to the question of the                      
  definition of residual fuel oil.  The Labor & Commerce                       
  Committee attempted to correct the definition of residual                    
  fuel oil in their committee substitute, version U.                           
  Number 290                                                                   
  CHAIRMAN VEZEY clarified residual fuel is a product that has                 
  to be heated to reduce its viscosity and it is rated                         
  kinematic units.  He had believed reducing viscosity was the                 
  result of an increase in kinematic units.                                    
  Number 300                                                                   
  REPRESENTATIVE JOE GREEN addressed CHAIRMAN VEZEY's                          
  question.  He stated the higher the kinematic viscosity, the                 
  less likely the fluid is to flow.  Conversely, the lower the                 
  kinematic rate, the less viscous the fuel becomes.                           
  CHAIRMAN VEZEY commented, to avoid future disputes, a trade                  
  standard for the fuel should be mentioned in CSHB 453.                       
  REPRESENTATIVE HARLEY OLBERG believed the notation of No. 6                  
  fuel oil was specific.                                                       
  CHAIRMAN VEZEY replied No. 6 fuel oil would probably                         
  describe 100 different fuels.  He felt the No. 6 fuel oil                    
  could be stated as rated by "API" to close the loophole.                     
  Number 325                                                                   
  REPRESENTATIVE G. DAVIS interjected that JAMES BURNS was on                  
  teleconference and he might be able to answer those                          
  questions in his testimony.                                                  
  Number 334                                                                   
  ROBERT M. ERICKSON, TEAMSTERS LOCAL 959, supported CSHB 453.                 
  He stated CSHB 453 was an attempt to attract new businesses                  
  into the state.  Teamsters Local 959 has a collective                        
  bargaining agreement with Weaver Brothers, who presently                     
  hauls fuel from Nikiski to Seward using four tankers and                     
  four drivers, during the tourist season.  Weaver Brothers                    
  has notified him that if CSHB 453 were to materialize like                   
  it should, they would employ up to 12-14 more people to haul                 
  the fuel back and forth.  Both Nikiski and Seward would have                 
  one-two more people working at the plants.  He emphasized                    
  the unemployment rate in the Kenai Peninsula has been for                    
  quite some time the highest in the state of Alaska.                          
  Number 363                                                                   
  CHAIRMAN VEZEY moved to the Kenai teleconference site.                       
  Number 370                                                                   
  supported CSHB 453.  He referred to CHAIRMAN VEZEY's                         
  previous question about why CSHB 453 focuses on passenger                    
  watercraft and responded, in 1993, Tesoro paid $450,000 in                   
  state taxes on bunker fuel.  He noted if Tesoro had to sell                  
  51-55 million gallons more of bunker fuel, CSHB 453 would                    
  not be revenue neutral.                                                      
  MR. SMITH stated both the Kenai and Soldotna Chambers of                     
  Commerce have passed resolutions supporting CSHB 453.                        
  Number 396                                                                   
  CHAIRMAN VEZEY reiterated there were indications that 13                     
  million gallons of Tesoro's fuel would be purchased if CSHB
  453 were to pass.  He estimated this to equal 1300+                          
  truckloads.  He noted currently 200 million gallons of                       
  bunker fuel is produced on the Kenai Peninsula and it is                     
  exported to foreign markets to dispose of it at a loss.  He                  
  asked if was correct.                                                        
  Number 406                                                                   
  MR. SMITH responded over 6.5 million barrels of residual oil                 
  was produced in 1993, equivalent to nearly 200 million                       
  gallons.  The oil is distributed to the West Coast                           
  refineries that can better process the fuel and then it is                   
  shipped overseas.  This oil is shipped at a substantial                      
  reduction of what was originally paid for the crude oil.                     
  Number 421                                                                   
  CHAIRMAN VEZEY moved to the Anchorage teleconference site.                   
  Number 430                                                                   
  SERVICES, commented on CSHB 453.  He stated Seward is set up                 
  to "in-line blend" the product transferred over from Kenai.                  
  The process of loading and storing the fuel, because it must                 
  be heated, is  complicated.  In 1993, about 4 million                        
  gallons were sold and $205,000 was paid in residual fuel                     
  tax.  If CSHB 453 were to achieve its objective by selling                   
  13 million gallons, the state treasury would receive an                      
  additional $30,000 above the $205,000 they paid last year.                   
  If Seward were developed to be the choice bunker port for                    
  the cruise industry the potential sale of fuel increases to                  
  around 22 million gallons.  The state treasury would then                    
  receive an additional $260,000 above the current $205,000.                   
  If Tesoro were to sell 13 million gallons in the summer of                   
  1994, they would employ four dock workers, one supervisor                    
  and eight truck drivers.  He believed Weaver Brothers would                  
  have to purchase three additional tankers.                                   
  MR. BURNS noted residual fuel is not taxed by any other                      
  state in the Union.  Canada does have a sales tax, however,                  
  their price is still comparable with Seattle.  Tesoro,                       
  therefore, has to compete with the entire West Coast.  In                    
  his negotiations, he has been assured that if Tesoro were to                 
  lower their prices closer to the others, the cruise lines                    
  would be very interested in having Seward as their bunker                    
  port, as opposed to Vancouver.                                               
  Number 484                                                                   
  CHAIRMAN VEZEY asked to have the definition of residual fuel                 
  oil clarified.                                                               
  Number 486                                                                   
  MR. BURNS answered CSHB 453 was written to cover any                         
  situation where residual fuel is blended with another                        
  product, typically No. 2 Diesel.  He had requested the use                   
  of the "No. 6 fuel oil" and "kinematic viscosity" as                         
  terminology in CSHB 453.  Blended residual fuel is sold by                   
  the kinematic number.  The fuel is labeled "Intermediate                     
  Fuel Oil" and it is given a number such as 100, 180, 380,                    
  and 420.  He noted, however, the names for fuel differ                       
  internationally with varied definitions.                                     
  MR. BURNS stated the importance was to not allow the tax                     
  reduction to No. 2 diesel.  By definition No. 2 diesel has a                 
  viscosity no greater than 4.1.  He emphasized if even a                      
  small portion of residual fuel was mixed with No. 2 diesel,                  
  the viscosity would rate 6 or greater.  Therefore, the                       
  definition in CSHB 453 would in no way qualify No. 2 diesel                  
  for the tax break.                                                           
  Number 513                                                                   
  CHAIRMAN VEZEY asked what unit of viscosity MR. BURNS meant                  
  when he mentioned 4 and 6.                                                   
  MR. BURNS answered 4 and 6 refer to the number of                            
  centistokes.  The higher the centistoke, the more fluid the                  
  product.  He gave the example that a 380 centistoke product                  
  would take 380 seconds to fall through whatever device it is                 
  being read in.  Temperature is also a factor.  He noted 180-                 
  420 material is very thick and viscous, therefore it must be                 
  kept warm in order to flow.                                                  
  Number 526                                                                   
  CHAIRMAN VEZEY stated he had wanted to refer to a                            
  professional organization for a standard of quality control                  
  for fuel oils.  For example, API or ASTM.                                    
  Number 536                                                                   
  MR. BURNS responded there are three international standards,                 
  International Council of Combustion Engines, The British                     
  Standard Institute and The International Standards                           
  Organization (ISO).                                                          
  Number 539                                                                   
  CHAIRMAN VEZEY stated he was very familiar with ISO and                      
  asked about their standard for No. 6 fuel oil.                               
  MR. BURNS answered they refer to it as Fuel Oil Grade No. 6.                 
  He noted the problem is, on the international level, marine                  
  fuels are also heavy oils.  There is a marine fuel grade,                    
  title DMV, that has a viscosity at a maximum of 11.  The                     
  grades decrease from 11.  He was concerned that narrowing                    
  the definition to ISO standards would focus on kinematic                     
  viscosity, thereby becoming too complicated.                                 
  Number 553                                                                   
  HOLLAND AMERICA LINE/WESTOURS INC., supported CSHB 453.  He                  
  stated Holland America contributes close to $600 million per                 
  year to Alaska's economy in goods and services, and they                     
  would like to increase this amount with the purchase of                      
  MR. ZANE  stated in 1994, Holland America will operate five                  
  large modern cruise ships in Alaska, increasing to six ships                 
  in 1995.  Their total demand for residual fuel in 1994 will                  
  be nearly 57,000 metric tons or just over 15 million                         
  gallons.  This amount will increase in 1995 to 68,000 metric                 
  tons or 18+ million gallons.                                                 
  MR. ZANE noted Holland America has to take in other                          
  considerations when determining which bunker port to use.                    
  For one of their ships to take on a load of bunker fuel it                   
  takes 8-10 hours, therefore, they need to know how long they                 
  can be in port.  If they cannot be in port long enough, they                 
  would need to adjust their cruise itineraries.  They were                    
  also concerned about guaranteed supply.  He mentioned Sitka                  
  might also be a possible stop, besides Seward.                               
  MR. ZANE emphasized the reduction in the residual sales tax                  
  he was sure would increase both the demand and the purchases                 
  of fuel.                                                                     
  (REPRESENTATIVE SANDERS left the meeting at 8:32 a.m.)                       
  Number 617                                                                   
  CHAIRMAN VEZEY asked the pleasure of the committee.                          
  Number 626                                                                   
  REPRESENTATIVE OLBERG moved to pass CSHB 453 with individual                 
  recommendations and the accompanying fiscal note.                            
  Number 628                                                                   
  CHAIRMAN VEZEY asked the committee secretary to call the                     
                 ULMER, KOTT, VEZEY.                                           
  CHAIRMAN VEZEY announced CSHB 453 passed from the House                      
  State Affairs Committee.                                                     
  CHAIRMAN VEZEY called for a recess at 8:42 a.m.                              
  HB 430 - LICENSING REQUIREMENTS FOR DRIVERS                                  
  TAPE 94-32, SIDE B                                                           
  Number 000                                                                   
  CHAIRMAN VEZEY called the meeting back to order at 8:50 a.m.                 
  Members present were REPRESENTATIVES B. DAVIS and G. DAVIS.                  
  CHAIRMAN VEZEY opened HB 430 for discussion.                                 
  Number 008                                                                   
  REPRESENTATIVE JOE GREEN, SPONSOR OF HB 430, gave a brief                    
  statement.  He stated the 18th Alaska Legislature works                      
  toward providing future jobs for young individuals; however,                 
  many teenagers will not reach those jobs because of "the                     
  carnage that happens on our highways."                                       
  (REPRESENTATIVE OLBERG rejoined the meeting at 9:52 a.m.)                    
  REPRESENTATIVE GREEN stated he was concerned not because                     
  teenagers do not have the reflexes or coordination for                       
  driving, but because they lack the maturity to realize that                  
  a vehicle is a lethal weapon.  HB 430 is an attempt to                       
  reduce automobile accidents that are primarily caused by                     
  people who either have a disregard for existing laws or have                 
  a feeling of indestructibility.                                              
  REPRESENTATIVE GREEN outlined HB 430 breaks into categories                  
  14-16, 16-18, and 18-21, a system of provisional licensing                   
  which allows young people to learn to drive as long as they                  
  are accompanied by a licensed driver, 25 years or older.                     
  The 16-18 period is an instructional permit period, whereby                  
  they can drive by themselves.  The 18-21 period is a                         
  provision of license.  All of the stages are tied to a                       
  penalty for abuse.                                                           
  (REPRESENTATIVE ULMER and KOTT rejoined the meeting at 9:54                  
  REPRESENTATIVE GREEN continued HB 430 contains provisions to                 
  restrict young drivers to not driving during the most                        
  accident prone hours, 1 a.m. to 5 a.m.  Our current point                    
  system, which states an individual is subject to license                     
  revocation above 12 points, has been dropped in half to 6                    
  points for the provisional drivers.   He directed the                        
  committee to the information in their packets, which states                  
  the people who are more prone to accidents are between the                   
  ages of 13-21.                                                               
  REPRESENTATIVE GREEN mentioned there is a Federal High Risk                  
  Drivers Act (FHRDA) expected to pass, and this should give                   
  Alaska incentive to pass HB 430 because it may include many                  
  similar provisions.                                                          
  Number 122                                                                   
  PUBLIC SAFETY (DPS), outlined HB 430.  She stated HB 430                     
  would place Alaska into a "graduated license system."                        
  Statistics show the crash rates, injuries and fatalities                     
  drastically increase between the hours of 9 p.m. and 6 a.m.,                 
  especially among male drivers.  The FHRDA was proposed to                    
  reduce the carnage on the highways, and she noted it is not                  
  a mandate for the states.  The FHRDA offers incentives                       
  whereby, if the state meets certain criteria, they can apply                 
  for grants for the implementation of a program such as HB
  430.  DPS did not expect HB 430 would have any fiscal impact                 
  on Alaska, because if it were to pass, Congress already has                  
  incentive moneys in front of it to take care of the                          
  Number 171                                                                   
  REPRESENTATIVE FRAN ULMER asked the status of the money                      
  Congress had available to it.  Was it pending?                               
  MS. HENSLEY answered Congress has the FHRDA before it now;                   
  however, there are other grants available which the state                    
  could apply for now to implement a program.  She mentioned                   
  Section 410 grants which the Highway Safety Planning Agency                  
  currently receives for alcohol programs.  The graduated                      
  licensing system would fall under the 410 grant money                        
  because it places teen-age drivers in a .00 based alcohol                    
  program.  Section 402 grant moneys for highway safety                        
  programs, which graduated licensing would also fall under.                   
  The FHRDA would create additional moneys the state could                     
  apply for to implement further driver education.                             
  MS. HENSLEY said that Alaska already has a demerit point                     
  system in statute for drivers.   If the DPS came across a                    
  habitual reckless driver, they could request the driver to                   
  come in for a driver improvement interview and place certain                 
  requirements upon that person.  The driver could be required                 
  to attend an alcohol information school, a defensive driving                 
  course, or watch eight hours of accident films.  She noted                   
  the state could apply for extra money to go towards buying                   
  films to supply the operators of driving schools and                         
  defensive driving courses in the state.                                      
  Number 221                                                                   
  REPRESENTATIVE G. DAVIS asked if a 16-year-old  individual                   
  would receive a provisional driver's license.                                
  Number 226                                                                   
  MS. HENSLEY answered if a person is between 16-18 years old                  
  they can receive a provisional driver's license, providing                   
  they have held a six month instruction permit.                               
  Number 231                                                                   
  REPRESENTATIVE G. DAVIS inquired if the provisional license                  
  applied to the restrictive hours, or if they too always had                  
  to be accompanied by an adult.                                               
  Number 234                                                                   
  MS. HENSLEY replied between the ages of 14-16, a licensed                    
  driver 25 years or older, would have to accompany the permit                 
  driver.  Between the ages of 16-18 with a provisional                        
  license, a driver would not have to be present.                              
  Number 244                                                                   
  REPRESENTATIVE B. DAVIS asked how many states had                            
  implemented a program like HB 430.                                           
  Number 247                                                                   
  MS. HENSLEY directed the committee to the "Young Driver                      
  Laws" portion of their packets, for specific documentation                   
  on each state's laws.  She noted both Oregon and California                  
  have an effective provisional license program with nighttime                 
  driving restrictions.  Their programs have proven to reduce                  
  crashes between the ages of 16-19.                                           
  Number 267                                                                   
  REPRESENTATIVE B. DAVIS clarified the only change in the                     
  provisional license status for teenagers would be that they                  
  could not drive their cars between 1 a.m. and 5 a.m.                         
  Number 270                                                                   
  MS. HENSLEY affirmed REPRESENTATIVE B. DAVIS, and added if                   
  they are violating traffic laws they would lose their                        
  license after a six point violation.                                         
  Number 276                                                                   
  REPRESENTATIVE B. DAVIS continued in order to get the                        
  provisional license they must first hold an instructional                    
  license.  Current law allows an individual to just take a                    
  test.  She asked if a person, regardless of age, would have                  
  to first have an instructional permit.                                       
  Number 281                                                                   
  MS. HENSLEY stated REPRESENTATIVE B. DAVIS was correct.                      
  Number 283                                                                   
  REPRESENTATIVE GREEN mentioned if a person had a license                     
  from another state with a comparable program, then they                      
  would not have to revert back to an instructional license.                   
  Number 286                                                                   
  REPRESENTATIVE B. DAVIS clarified everyone in the state                      
  would have to have some form of instructional permit for six                 
  Number 298                                                                   
  REPRESENTATIVE PETE KOTT asked where the statistics were                     
  drawn from in reference to the hourly restrictions on night                  
  driving.  What is the basis they gauge upon to determine the                 
  times a teenager should not be on the rode.                                  
  Number 306                                                                   
  MS. HENSLEY answered the hourly restrictions are a                           
  nationwide trend and Alaska's youth are the same as those in                 
  the Lower 48.  She noted there is a substantial number of                    
  individuals who have had their license suspended each year                   
  because of an accumulation of points gained during these                     
  hours.  She offered to research the number of crashes,                       
  injury accidents and fatalities, involving the 14-21 age                     
  group.  She would also look up the societal cost to Alaska.                  
  Number 322                                                                   
  REPRESENTATIVE KOTT asked who the hour restrictions would                    
  apply to.                                                                    
  Number 326                                                                   
  MS. HENSLEY replied hour restrictions apply to those                         
  individuals who are ages 14-17.                                              
  Number 329                                                                   
  REPRESENTATIVE KOTT questioned how the restriction would                     
  affect a 16-year-old individual working at McDonald's that                   
  did not get off work until 1:30 a.m.                                         
  MS. HENSLEY responded that person would be in violation of a                 
  curfew.  The restriction from 1 a.m. to 5 a.m. was imposed                   
  because most businesses close at midnight and the extra one                  
  hour would allow an individual to get home.                                  
  Number 338                                                                   
  REPRESENTATIVE KOTT mentioned delivery services for various                  
  restaurants as examples.  He asked if other states imposed                   
  restrictions because of daylight hours, noting that                          
  Fairbanks in the summer, would not have that problem.                        
  Number 346                                                                   
  MS. HENSLEY answered the restrictions are not based on                       
  daylight hours, but driving habits between the hours of 9                    
  p.m. and 6 a.m.  Between these hours, teenage driving habits                 
  are more reckless and they are involved in more injury and                   
  fatal accidents, as compared to the 30-50 year old age                       
  group.  She noted Illinois restricts from 11 p.m. to 6 a.m.,                 
  Sunday through Thursday, and 12 a.m. to 6 a.m., Saturday and                 
  Sunday.  She preferred a consistent seven-day-a-week program                 
  to cut down on the hassle for those people trying to enforce                 
  the law.  She stated several more examples with night hour                   
  Number 373                                                                   
  REPRESENTATIVE KOTT stated he would like to see the                          
  comparison chart for the age groups and their accident                       
  rates.  He asked if not accepting an individual's license                    
  from another state, knowing that a test had been taken to                    
  obtain it, would be compromising constitutionally.                           
  MS. HENSLEY answered the testing requirement for those                       
  individuals with a valid license from another state is                       
  waived.  Alaska statute, however, gives DPS the discretion                   
  to issue every person a driving test if they choose.  As                     
  long as everyone in the same age bracket is treated the same                 
  it is not unconstitutional.                                                  
  Number 401                                                                   
  REPRESENTATIVE KOTT clarified he was referring to the                        
  requirement for a one-year instructional permit, noting                      
  several states do not have it.  He felt those individuals                    
  could complete requirements for a driver's license with two                  
  months worth of a permit.                                                    
  Number 411                                                                   
  MS. HENSLEY replied the state of Kansas issues a driver's                    
  license at the age of 14 and Alaska does not honor it                        
  because Alaska statute states a person cannot be licensed                    
  until they are 16.  Therefore, a 14-year-old individual from                 
  Kansas with a valid driver's license could not receive an                    
  Alaska driver's license until they reached the age of 16.                    
  Number 417                                                                   
  REPRESENTATIVE GREEN clarified the restriction was added not                 
  to test the technical ability to drive, but the maturity of                  
  the driver.  The restrictive hours are meant to reduce the                   
  problem Alaska faces with carnage on the highways.  He                       
  mentioned the problem of young individuals who work late,                    
  noting the percentage would be rather low and that laws are                  
  made to address the majority.                                                
  Number 431                                                                   
  REPRESENTATIVE KOTT felt there was a correlation between                     
  technical ability and ability.  He noticed HB 430 increases                  
  the age of the person who must accompany the driver from 19                  
  to 25.  Why not a parent?                                                    
  Number 440                                                                   
  MS. HENSLEY responded REPRESENTATIVE KOTT's suggestion was a                 
  legislative call.  The state of Oregon, for example, is set                  
  at 21 for the accompanying driver.  She did not see a                        
  problem with working on the age of the person who must                       
  accompany the driver.                                                        
  Number 447                                                                   
  REPRESENTATIVE GREEN stated insurance companies drop their                   
  rates at the age of 25 because of the degree of maturity a                   
  driver is supposed to have gained by that age.  He noted                     
  young drivers do have the benefit of faster reflexes;                        
  however, maturity gained with age, hopefully outweighs what                  
  is lost in reflexes.                                                         
  Number 472                                                                   
  CHAIRMAN VEZEY asked if the statistics regarding the                         
  increase in responsibility were the same for both males and                  
  REPRESENTATIVE GREEN answered, from his knowledge, they are.                 
  Number 474                                                                   
  REPRESENTATIVE G. DAVIS referred to the restricted hours of                  
  driving from 1 a.m. to 5 a.m.  This restriction was of                       
  concern to him because cannery workers tend to work 24 hours                 
  a day when the fish are coming in.  He noted there are                       
  hundreds of workers starting at the age of 16, and they may                  
  be restricted from doing some of their normal activities                     
  such as going to a minimarket 1-2 miles from the cannery.                    
  He emphasized the canneries are only open in the summer                      
  months, there is a lot of daylight, and they do not drink                    
  during this time.  In relation to the young workers at                       
  McDonalds, he felt the schedules could be shifted to                         
  accommodate them so they could make it home before 1 a.m.                    
  Number 507                                                                   
  REPRESENTATIVE ULMER directed the committee to packet                        
  information entitled "Young Driver's Law", state law facts                   
  of 1993.  She noticed many states require a blood alcohol                    
  content of .00 or .02 for drivers.  She asked if HB 430                      
  might be the appropriate vehicle to add this requirement to                  
  state law.                                                                   
  MS. HENSLEY replied HB 299, sponsored by REPRESENTATIVE                      
  CYNTHIA TOOHEY, has been introduced this session which                       
  requires .00 based drug and alcohol driving for anyone under                 
  the age of 21.  HB 299 is now in House Finance.                              
  Number 524                                                                   
  REPRESENTATIVE KOTT added HB 299 relates to everyone in the                  
  vehicle, whether they are driving or not.                                    
  Number 527                                                                   
  CHAIRMAN VEZEY stated he would like a teleconference on HB
  430 and it would be rescheduled.                                             
  Number 531                                                                   
  REPRESENTATIVE B. DAVIS agreed with CHAIRMAN VEZEY.  She                     
  mentioned the instance of two 17-year-old people married                     
  with a child.  She wondered how the situation would be                       
  handled if the child got sick during the restricted hours                    
  and needed to be taken to the hospital in a vehicle.  Would                  
  the restriction apply to the 17-year-old parents.                            
  MS. HENSLEY answered marriage is emancipation which would                    
  automatically make them adults.                                              
  Number 543                                                                   
  CHAIRMAN VEZEY announced HB 430 would be held in committee                   
  to be rescheduled.                                                           
  HB 410 - REAL ESTATE APPRAISERS                                              
  CHAIRMAN VEZEY opened CSHB 410, sponsored by the House Labor                 
  & Commerce Committee, for discussion.                                        
  Number 556                                                                   
  ECONOMIC DEVELOPMENT (CED), addressed CSHB 410.  She stated                  
  CED had asked the House Labor & Commerce Committee to                        
  introduce HB 410 because they realized they had a problem                    
  which would soon affect many Alaskans.  The sponsor                          
  statement read as follows:                                                   
  "The U.S. statutes enacted the Financial Institutions                        
  Reform, Recovery and Enforcement Act of 1989 (FIRREA).  This                 
  act requires federal lending programs to have the appraisal                  
  certified by a state-certified appraiser.                                    
  "Initially, FIRREA set the number of classroom instruction                   
  hours required for residential appraisers at 75.  In 1990,                   
  the Alaska Legislature enacted legislation which complied                    
  with FIRREA standards.  However, in 1992 FIRREA increased                    
  the minimum required classroom hours to 105.  Again in 1994,                 
  they increased the minimum number of hours to 120.                           
  "Officials from the Federal Financial Institutions                           
  Examinations Council (FFIEC) audited the Alaska certifying                   
  program.  They granted the Alaska board an extension to meet                 
  the new requirements through December 31, 1993.                              
  "The FFIEC has advised that appraisers who do not meet 120                   
  hours of training, will no longer be recognized as certified                 
  appraisers and therefore, will not be qualified to conduct                   
  appraisals in which federally-financed loans are involved.                   
  "Examples of federally-financed programs include such                        
  programs as Federal National Mortgage Corporation, and the                   
  Resolution Trust Corporation.  These requirements may extend                 
  to loans provided through FDIC-insured banks and credit                      
  "Currently, there are 73 residential real estate appraisers                  
  and 73 general real estate appraisers licensed by the Alaska                 
  Real Estate Appraiser Board.  The general real estate                        
  appraisers do meet FIRREA requirements and are recognized                    
  for federal appraisals; however, general real estate                         
  appraisers work with commercial properties and it is very                    
  unlikely that they will begin conducting residential                         
  appraisals.  The 73 residential appraisers are no longer in                  
  compliance with FIRREA and may not be recognized as                          
  certified appraisers if the FFIEC removes Alaska's                           
  "There were approximately 12,000 residential loan closures                   
  this past year in Alaska (this figure includes refinancing).                 
  It is unclear how many of these loans involve federal                        
  financing, however, it is highly probably that the vast                      
  majority of loans in Alaska do involve a federal program and                 
  it will only take a few loans in this category to create a                   
  statewide crisis.                                                            
  "The proposed changes in HB 410 will remove the reference to                 
  a specific number of hours required for certification in the                 
  statute and will allow the board to set the minimum                          
  requirements in regulation.  By allowing the minimum number                  
  of hours to be set in regulation, the Alaska Real Estate                     
  Appraiser Board will be able to make changes as they occur                   
  to meet the FIRREA requirements."                                            
  MS. MULDER commented the House Labor & Commerce committee                    
  had concerns expressed to them by the banking industry that                  
  the board would not set the requirements to exceed the                       
  federal requirements.  Therefore, HB 410 was changed on line                 
  12, page 1, by adding language which states "to comply with,                 
  but not exceed."  They also decided to grant the extension                   
  to the board, rather than having to do it again in 1995.                     
  (REPRESENTATIVE SANDERS rejoined the meeting at 9:28 a.m.)                   
  Number 619                                                                   
  CHAIRMAN VEZEY moved to the Anchorage teleconference site.                   
  Number 621                                                                   
  ESTATE APPRAISERS, supported CSHB 410.  He stated the                        
  problem they face is that Alaska, unlike other states, has                   
  put in statute the hours required.  CSHB 410 would basically                 
  give the board the right to meet the hours as they change on                 
  a national level.  He emphasized the hours will continue to                  
  change because the federal law came in at minimal levels in                  
  order to meet the requirements of most states and not                        
  deprive individuals of their livelihood.                                     
  MR. FERRARA stated the FIRREA has been broadened to cover                    
  any bank or credit union loan, therefore, nothing would be                   
  financed by any lending institution unless they have a                       
  certified appraiser perform the appraiser reports.  Agencies                 
  such as the Federal Highway Administration are now requiring                 
  work be done by certified appraisers.  He noted most active                  
  appraisers are certified in Alaska because of this trend.                    
  Number 653                                                                   
  REPRESENTATIVE ULMER moved to pass CSHB 410 from committee                   
  with individual recommendations.                                             
  Number 655                                                                   
  CHAIRMAN VEZEY asked REPRESENTATIVE ULMER to hold her motion                 
  in order to hear from another witness.  He asked MS. MULDER                  
  to outline the sections of CSHB 410 for the committee.  He                   
  stated section 1 extends the board for four more years, and                  
  asked about section 2.                                                       
  Number 668                                                                   
  MS. MULDER responded section 2 amends the powers and duties                  
  of the board to clarify authority to adopt regulations                       
  necessary to comply with FIRREA.  She deferred the rest of                   
  the sectional analysis to KARL LUCK.                                         
  Number 672                                                                   
  COMMERCE & ECONOMIC DEVELOPMENT, gave a sectional analysis                   
  of CSHB 410.  He said Section 2 gives authority to the board                 
  to set the education hour requirement and directs them to                    
  not exceed the FIRREA requirement.  Section 3 repeals the                    
  specific number of classroom hours in each category, thereby                 
  requiring the board to put the requirements into                             
  regulations.  He stated section 3 referred to the general                    
  real estate appraisers and section 4 referred to the                         
  residential real estate appraisers.                                          
  TAPE 94-33, SIDE A                                                           
  Number 000                                                                   
  MR. LUCK continued.  Section 5 is the continuing education                   
  requirement for renewal of certification for both general                    
  and residential.  Section 6 refers to the registration of                    
  trainees and places them subject to the hours set forth by                   
  the board.                                                                   
  MR. LUCK felt CSHB 410 was "straightforward" and the                         
  statutory requirement should be placed back into regulation                  
  to enable the board to maintain the federal requirement.                     
  Number 027                                                                   
  CHAIRMAN VEZEY asked if the current requirement for 150 or                   
  more hours of classroom instruction is greater than the                      
  federal requirement.                                                         
  MR. LUCK answered the General Real Estate Appraiser                          
  certificate program meets the federal requirement; however,                  
  he would have to research to find out what the general                       
  requirement is.  If the general requirement did exceed the                   
  federal requirement, the board would be required to reduce                   
  it.  He emphasized the intent of CSHB 410 is to "ratchet up"                 
  the requirements so over a period of time they would be much                 
  higher than the original FIRREA.  He did not know what the                   
  federal intent would be in the future in regards to the                      
  general real estate appraisers, whether or not they would                    
  raise the requirements.                                                      
  Number 059                                                                   
  CHAIRMAN VEZEY commented Alaska currently has a stricter                     
  licensing requirement for general real estate appraisers                     
  than it does for residential real estate appraisers.  He                     
  mentioned MAI and asked if it was a form of state licensing                  
  or national recognition.  Would CSHB 410 produce one                         
  category of licensing from the present two.                                  
  Number 075                                                                   
  MR. LUCK replied he was not familiar with MAI.  He answered                  
  there would still be general and residential licensing.                      
  Only the education requirements would be changed with CSHB
  Number 082                                                                   
  CHAIRMAN VEZEY inquired how many hours were currently                        
  required for general real estate appraisal.                                  
  MR. LUCK responded 150 classroom hours, of which 15 hours                    
  are in a specific area.                                                      
  Number 088                                                                   
  REPRESENTATIVE OLBERG cited the sponsor statement that the                   
  FIRREA requirement for a general real estate appraisal is                    
  120 hours as of 1994.  He noticed the statement references                   
  the Alaska Legislature complying with FIRREA standards, but                  
  he believed they exceeded them.                                              
  Number 101                                                                   
  CHAIRMAN VEZEY commented CSHB 410 did not seem to be                         
  amending the statute for residential real estate appraisers.                 
  Number 106                                                                   
  MR. LUCK directed the committee to section 4, which states                   
  the board shall issue a residential real estate appraisal                    
  certificate.  Line 30, page 2, amends the residential                        
  section.  Section 3 specifically addresses the general real                  
  estate appraisal certificate.                                                
  Number 113                                                                   
  CHAIRMAN VEZEY clarified CSHB 410 provides a less stringent                  
  requirement on the general real estate appraisal and a more                  
  stringent requirement on the residential real estate                         
  Number 115                                                                   
  MR. LUCK added "than current requirement."  He deferred to                   
  ALFRED FERRARA to confirm his statement.                                     
  MR. FERRARA commented the federal requirement for the                        
  general appraisal license is 150 hours, plus 15 hours of a                   
  standards course.  The residential requirement is 120 hours,                 
  plus a standards course.  He clarified Alaska does comply                    
  with the federal standards.   Alaska is not above the                        
  federal minimum on a general appraiser, but it is below the                  
  minimum on the residential.  CSHB 410 would enable the board                 
  to meet both of the federal sections.  Residential, not                      
  general would have to change.  He added Alaska currently has                 
  a higher requirement on recertification credit hours than                    
  the FIRREA.  The reason for this is if more courses were                     
  offered in Alaska, more people would be able to receive the                  
  education and become certified.  CSHB 410, however, would                    
  lower the Alaska requirement to meet the federal standards.                  
  He noted the registered trainee was an internship way to                     
  start someone in the business, offering a lesser experience                  
  requirement than if they started working as an appraiser                     
  without a certified person.                                                  
  MR. LUCK referred to CHAIRMAN VEZEY's previous question                      
  about an MAI designation, stating it was a nationally known                  
  designation issued by a private organization.  MAI is not                    
  part of the Alaska program at all.                                           
  Number 152                                                                   
  CHAIRMAN VEZEY commented he thought there was only a                         
  "handful" of MAI appraisers in Alaska.                                       
  Number 153                                                                   
  MR. FERRARA continued Alaska has about 22 MAI appraisers                     
  which he felt was a really high percentage.  He noted                        
  Alaskan appraisers are typically more educated and                           
  experienced than those in other states.                                      
  Number 162                                                                   
  CHAIRMAN VEZEY stated he would hold CSHB 410 in committee so                 
  he may further research it.  CSHB 410 would be rescheduled.                  
  Having no more business before the committee, CHAIRMAN VEZEY                 
  adjourned the meeting at 9:45 a.m.                                           

Document Name Date/Time Subjects