Legislature(1993 - 1994)
03/17/1994 08:00 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 None COMMITTEE CALENDAR *HB 491: "An Act relating to reports by the Alaska Science and Technology Foundation." MOVED OUT OF COMMITTEE WITH A DO PASS RECOMMENDATION 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 RECOMMENDATION *HB 430: "An Act requiring certain applicants for a driver's license to take a driver training course." HELD IN COMMITTEE HB 410: "An Act relating to real estate appraisers and the Board of Certified Real Estate Appraisers." 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 SHORT TITLE: REPORTS BY SCIENCE & TECH FOUNDATION 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, SITTON 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 SHORT TITLE: LICENSING REQUIREMENTS FOR DRIVERS 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) 2/18/94 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 roll. 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 REPRESENTATIVE GARY DAVIS, PRIME SPONSOR, addressed CSHB 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 tax. "House Bill 453 will reduce the tax rate levied on the sale of residual fuel oil, which will stimulate sales of residual fuel oil and benefit Alaska's economy. This legislation will increase job opportunities in the trucking and fuel industries. Simultaneously, state revenues will likely remain consistent and possibly increase." 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 tax. 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 others. 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 BERNIE SMITH, MANAGER, GOVERNMENT AFFAIRS, TESORO ALASKA, 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 JAMES BURNS, SENIOR VICE PRESIDENT OF MARKETING, PETROMARINE 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 C.J. ZANE, DIRECTOR, GOVERNMENT & COMMUNITY RELATIONS, 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 fuel. 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 roll. IN FAVOR: REPRESENTATIVES OLBERG, G. DAVIS, B. DAVIS, 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 a.m.) 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 JUANITA HENSLEY, CHIEF OF DRIVER SERVICES, DEPARTMENT OF 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 implementation. 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 months. 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 restrictions. 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 females. 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 WENDY MULDER, SPECIAL ASSISTANT, DEPARTMENT OF COMMERCE & 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 unions. "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 certification. "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 ALFRED FERRARA, CHAIRMAN, ALASKA BOARD OF CERTIFIED REAL 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 KARL LUCK, DIRECTOR OF OCCUPATIONAL LICENSING, DEPARTMENT OF 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 410. 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 appraisal. 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. ADJOURNMENT Having no more business before the committee, CHAIRMAN VEZEY adjourned the meeting at 9:45 a.m.