Legislature(1995 - 1996)
04/10/1996 01:08 PM House TRA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
April 10, 1996
1:08 a.m.
MEMBERS PRESENT
Representative Gary Davis, Chairman
Representative Beverly Masek, Vice Chair
Representative Jeanette James
Representative Tom Brice
Representative Jerry Sanders
Representative Bill Williams
Representative Don Long
MEMBERS ABSENT
All members were present
COMMITTEE CALENDAR
HOUSE BILL NO. 136
"An Act mandating the sale of the Alaska Railroad; and providing
for an effective date."
- MOVED CSHB 136 (TRA) OUT OF COMMITTEE
HOUSE BILL NO. 403
"An Act relating to consumer protection involving contracts for the
sale, transfer, or assignment of used motor vehicles and involving
telephonic solicitations."
- MOVED OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 136
SHORT TITLE: MANDATE SALE OF ALASKA RAILROAD
SPONSOR(S): REPRESENTATIVE(S) MARTIN
JRN-DATE JRN-PG ACTION
01/30/95 174 (H) READ THE FIRST TIME - REFERRAL(S)
01/30/95 174 (H) TRA, STA, FIN
04/03/96 (H) TRA AT 1:00 PM CAPITOL 17
04/03/96 (H) MINUTE(TRA)
04/10/96 (H) TRA AT 1:00 PM CAPITOL 17
BILL: HB 403
SHORT TITLE: CONSUMER PROTECTION:USED CAR & MAIL ORDER
SPONSOR(S): REPRESENTATIVE(S) BROWN,B.Davis
JRN-DATE JRN-PG ACTION
01/08/96 2382 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2382 (H) TRANSPORTATION, L&C, JUDICIARY, FINANCE
04/10/96 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
TOM ANDERSON, Legislative Aide
for Representative Martin
Alaska State Legislature
State Capitol, Room 502
Juneau, AK 99801
Telephone: (907) 465-3783
POSITION STATEMENT: Testified on CSHB 136 (TRA)
MARK HICKEY, Lobbyist
Alaska Railroad Corporation
P.O. Box 107500
Anchorage, Alaska 99501-7500
Telephone: (907) 265-2403
POSITION STATEMENT: Testified on CSHB 136 (TRA)
KENNETH HUBBARD
P.O. Box 1703
Palmer, Alaska 99645
Telephone: (907) 745-3136
POSITION STATEMENT: Testified against CSHB 136 (TRA)
REPRESENTATIVE KAY BROWN
Alaska State Legislature
State Capitol, Room 517
Juneau, Alaska 99801
Telephone: (907) 465-4998
POSITION STATEMENT: Sponsor of HB 403
DAVEED SCHWARTZ, Assistant Attorney General
Commercial Section Civil Division
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
POSITION STATEMENT: Testified on HB 403
STEPHEN CONN, Member
Alaska Public Interest Research Group, (AKPIRG)
P.O. Box 101093
Anchorage, Alaska 99503
Telephone: (907) 278-3661
POSITION STATEMENT: Testified on HB 403
RICK MORRISON, Past President
Alaska Auto Dealers Association
935 Gambell Avenue
Anchorage, Alaska 99501
Telephone: (907) 272-5522
POSITION STATEMENT: Testified on HB 403
DON JANSSEN, Member
I/M Task Force
P.O. Box 231031
Anchorage, Alaska 99523
Telephone: (907) 344-3370
POSITION STATEMENT: Testified on HB 403
RICK GILMORE, President
Better Business Bureau
2805 Bering Street
Anchorage, Alaska 99503
Telephone: (907) 562-6135
POSITION STATEMENT: Testified on HB 403
ACTION NARRATIVE
TAPE 96-16, SIDE A
Number 000
The House Transportation Standing Committee was called to order by
Chairman Gary Davis at 1:08 p.m. Members present at the call to
order were Representatives G. Davis, Masek, James, Brice, Sanders,
Long, and Williams. A quorum was present. This meeting was
teleconferenced to Anchorage, Fairbanks and Mat-Su.
CHAIRMAN GARY DAVIS announced that the agenda consisted of HB 136
and HB 403.
HB 136 - MANDATE SALE OF ALASKA RAILROAD
Number 0048
CHAIRMAN GARY DAVIS announced the first item on the agenda was HB
136, an act mandating the sale of the Alaska Railroad; and
providing for an effective date. He said a committee substitute
was developed as a result of the testimony that was presented at
the last meeting.
Number 0078
REPRESENTATIVE JERRY SANDERS made a motion to adopt CSHB 136 (TRA),
version F, dated April 9, 1996. Hearing no objection CSHB 136
(TRA) was now before the House Standing Committee on
Transportation.
Number 0125
TOM ANDERSON, Legislative Aide for Representative Martin, testified
on CSHB 136 (TRA). He provided a sectional analysis and said in
response to Representative James' concerns, although he could not
say that all of her concerns were addressed in CSHB 136 (TRA), and
the concerns of other committee members, CSHB 136 (TRA) changes the
emphasis and inserts a more definitive plan for the sale of the
Alaska Railroad. He said CSHB 136 (TRA) is identical to the Senate
companion bill SB 64, by Senator Rieger.
Number 0252
CHAIRMAN GARY DAVIS said there is a short time frame in CSHB 136
(TRA) and asked if the bill only referred to this year. He said an
request for proposal might go out in October of 1996 and in
February 15, 1997, it indicates that the Governor shall enter an
agreement, if an agreement is reached. He asked if any information
could be given on the timing.
Number 0301
MR. ANDERSON said it was done to expedite the process and concurred
that CSHB 136 (TRA) offers one window of opportunity without any
carry over. He said legislation would need to be resubmitted
regarding this issue in following years if there was not a response
or the offers were not sufficient for the selling of the Alaska
Railroad.
Number 0337
CHAIRMAN GARY DAVIS said existing statute allows for the sale of
the Alaska Railroad at any time.
MR. ANDERSON said, yes, a sale could occur and that CSHB 136 (TRA)
merely stipulates the provisions during this time frame.
Number 0363
CHAIRMAN GARY DAVIS said CSHB 136 (TRA) relates to the appraisal of
the lands, as well as ownership and appraisal of all the railroad
properties. He said a question regarding the value was asked, and
added the concern that this being an election year it would be
unclear to know who would return to work on this issue in the
upcoming years.
Number 0444
REPRESENTATIVE TOM BRICE referred to Section F, page two, "contract
for the appraisal under this section is exempt from 36.30" and
clarified that this referred to the procurement procedure.
MR. ANDERSON said the second page of the sectional analysis states
that this language relates to the procurement procedure in (j).
Number 0490
CHAIRMAN GARY DAVIS asked about the fiscal notes regarding the
appraisal.
Number 0498
MR. ANDERSON said a fiscal note was not available, but requested
that a fiscal note be adopted. He said the Senate Finance
Committee, through the guidance of Mr. Hickey, recommended a fiscal
note for a fair market report, as compared to an appraisal, to be
set at $900,000. He said an appraisal could lead to a fiscal note
of $2 million as projected by the Alaska Railroad Corporation, who
said a fair market report would "entail primarily the same."
Number 0563
REPRESENTATIVE BRICE referred to Section C, "Upon entering into an
agreement to sell the Alaska Railroad, the Governor shall
immediately submit the agreement to the legislature for review
during a regular session of the legislature." and asked if this
precluded a special session called by the Governor to review this
bill.
MR. ANDERSON said yes it would preclude a special session and
referred to the four month window of opportunity to buy the Alaska
Railroad which would make it difficult to incorporate action during
a special session.
Number 0629
REPRESENTATIVE SANDERS referred to Section 1(a) and asked for a
definition of what the "other assets" entailed.
Number 0652
MR. ANDERSON deferred to Mr. Hickey to address those questions.
A discussion ensued regarding the hotel property that the railroad
owns 40 percent of and what would happen to that upon the sale of
the railroad.
Number 0679
REPRESENTATIVE DON LONG asked if there was a provision in CSHB 136
(TRA) for expansion of the railroad.
Number 0691
MR. ANDERSON said CSHB 136 (TRA) does not address this issue. The
bill addresses that operations must continue for 20 years and
referred to the sectional analysis (b) that the purchaser accept
all the contracts including the collective bargaining agreements
and retirement obligations as well as provide for or above a fair
market price. He said CSHB 136 (TRA) does not address the
expansion issue, but said it could do so.
Number 0725
REPRESENTATIVE BILL WILLIAMS referred to page two, Section 1(d),
"The Alaska Railroad Corporation may not enter into a contract or
other agreement.." and asked that this be explained further.
Number 0725
MR. ANDERSON said this was included to prevent any pre-changes
which could occur through the corporation prior to CSHB 136 (TRA)
becoming effective. He said once CSHB 136 (TRA) went into effect,
this provision would go into the act, but the sponsor felt that
there might be a shift or an attempt to sell a portion or transfer
a portion and he wanted to maintain everything as is up to the
sale.
Number 0803
MARK HICKEY, Representative, Alaska Railroad Corporation, said he
would be available to answer any questions.
Number 0805
REPRESENTATIVE BRICE asked how much land the Alaska Railroad had
outside the easements and rolling stock yards.
Number 0861
MR. HICKEY said the total acreage is around 38,000 acres. He said
12,000 of this is tied up in the right-of-way and directly adjacent
to switching yards and sidings. He said quite a bit of the other
26,000 acres is under active lease to (indiscernible), many of whom
are customers of the railroad. He said there are three or four
large, vacant areas along the railroad line where the majority of
the acreage is. He clarified that this remaining 26,000 is tied up
in leases or is in three or four specific spots along the line such
as the 5,000 acres in Healy.
Number 0925
REPRESENTATIVE BRICE asked if the corporation sells the land or
just participates in leases.
Number 0940
MR. HICKEY said the Alaska Railroad Corporation primarily
participates in leases and said state law prohibits the disposal of
the full interest and real property without legislative approval.
He said the legislature has given their approval once or twice on
very special matters.
Number 0975
REPRESENTATIVE BRICE said if the railroad was sold, there did not
appear to be anything in CSHB 136 (TRA) which would continue this
legislative oversight and added that this would be an issue he
would want to address. He asked if it was reasonable to provide an
appraisal by next January.
Number 1031
MR. HICKEY said when the Alaska Railroad was purchased, the United
States Railway Association (USRA) did a fair market value
assessment, what was called an evaluation. He said, as part of
this evaluation, a full appraisal of real property was done as well
as an analysis of "going concern assessment" of the operation in a
ten year length of operation, as required under federal law, and
then discounting that back to present value. He said the process
took eight months. He said the weather, winter time conditions,
and when various people involved will be on the property need to be
factored into this time process. He said the question of whether
or not there is enough time depends on how detailed you want the
evaluation to be. He said four months is a tight timeline and it
could be a problem.
Number 1108
REPRESENTATIVE BRICE asked how much a contract would cost for this
type of appraisal.
Number 1115
MR. HICKEY referred to the USRA figure which is what the Senate
Finance Committee was given yesterday and was used by them to
determine the $900,000 fiscal note. He said the price, that the
Alaska Railroad Association could recall, was $863,000 in 1983 to
perform the evaluation. He said the group that did the evaluation
was at that time a branch of the federal government and the
appraiser was a firm out of Philadelphia. He said there were
travel costs as a result. He concluded that these types of costs
would be involved as there is not that type of expertise available
in the state. He said the cost also depends on the scope of the
fair market value assessment.
Number 1175
REPRESENTATIVE BRICE expressed concern about exempting the contract
from the procurement procedure as it is a substantial amount of
money not to have any legislative oversight.
Number 1225
CHAIRMAN GARY DAVIS asked what the railroad would recommend for the
Comfort Inn property.
Number 1234
MR. HICKEY said the Alaska Railroad Corporation owns 40 percent
interest in the partnership, which owns the Comfort Inn. He said
the railroad obtained that equity position by foregoing a land
lease and forming a joint venture. He said the Comfort Inn is an
asset of the corporation and said there is no current position on
what would occur in a disposition or sale. He said the Comfort Inn
is a performing property, part of the asset base and contributes to
the bottom line of the operation. He said a purchaser would
probably be interested in obtaining the position that the railroad
has.
Number 1300
REPRESENTATIVE JAMES said she understood that the arrangement
regarding the Comfort Inn was going to be done on a lease basis,
not ownership by the railroad.
Number 1315
MR. HICKEY concurred with what she said, it is a straight ground
lease. He said if he finds out any different information he will
let her and the committee know.
Number 1346
REPRESENTATIVE JAMES said, when she was involved in this situation,
there was a negotiated agreement between the city of Fairbanks and
the railroad for the railroad to put some money into water and
sewer for that section in order to create a subdivision and allow
other people to use their land. She said CSHB 136 troubles her
because it does not seem workable. She referred to Section 1(e),
"Notwithstanding other provisions of this act, the state of Alaska
shall retain an easement for transportation, communication, and
transmission purposes on all land within the right-of-way of the
Alaska Railroad received by the state under the Alaska Railroad
Transfer Act of 1982.." and asked, if the railroad is the only
access available for gas or an oil pipeline why would a purchaser
let them have this easement.
Number 1440
MR. HICKEY said this is an issue of concern. He said this
provision was included as part of the federal transfer law which
has some specific language about what happens to the right-of-way
if there is a failure to continue rail service. He said if there
is a 18 year period of non-use, there is a reversion of the
remaining "easement" and said he believed this was included in the
federal law to address this issue. He said this inclusion creates
the problem of who then has the authority over the right-of-way for
these kinds of purposes as well as a second problem that there is
not this level of interest throughout the right-of-way for the
state to retain.
Number 1513
REPRESENTATIVE JAMES said she is in favor of privatizing the
railroad, but if this right-of-way is important to the state, then
the state might not want to sell. She referred to Section 1(2)
which would require a purchaser to, "accept assignment of all
contracts, including collective bargaining agreements and
retirement obligations and agreements with connecting carriers,
shippers, or other persons concerning services, operation,
property, and facilities...provided that the contracts are
assignable under terms of the contract..." and said this seemed to
also be restrictive for a purchaser. She said this provision means
that the purchaser would run the railroad as it is currently being
run.
Number 1575
MR. HICKEY said this provision is similar to the provisions that
the state had when they took over the Alaska Railroad Corporation.
He said there were concerns regarding this provision at the time of
the takeover and a thorough job was conducted to determine what
liabilities would be involved. He said, in the state transfer,
there were some timelines regarding how long this provision would
be in effect to allow the state, as the new owner, to have
flexibility to run the railroad differently. He said shippers,
employees and various entities which have contractual relationships
will need some level of comfort that it will "be business as usual"
to every extent possible. He said this provision would be a
concern to the buyer about how much their hands are going to be
tied as well as concerns by Alaskan businesses and employees who
depend on the railroad.
Number 1663
CHAIRMAN GARY DAVIS said the sale of the railroad would have some
detrimental impacts on business in the state if contractual
agreements were voided. He mentioned such contracts as Suneel, who
haul coal from Healy to Seward, and MAPCO.
Number 1694
REPRESENTATIVE JAMES asked if there had been any evaluation or any
kind of report on any suspected environmental clean-up that needs
to be done along the railroad, the properties including the
Fairbanks rail yard.
Number 1714
MR. HICKEY said he would get back to the committee regarding this
issue. He said there is some environmental clean-up and that there
has been an ongoing effort to deal with those types of questions in
various places around the railroad, the Anchorage yard in
particular. He said he did not know the details around the
Fairbanks situation. He said this issue has involved the
Environmental Protection Agency (EPA) as well as the Federal
Railroad Administration because, under the transfer law any
problems, pre-dating the acquisition by the state of the railroad,
belong to the federal government. He said there has been work on
these issues, but could not say to what extent.
Number 1758
REPRESENTATIVE SANDERS said it had been his understanding that the
Alaskan Railroad owns the docks down in Seward. He asked if this
is correct, what would happen to those docks under a sale.
Number 1770
MR. HICKEY said the railroad owns the railroad dock in Seward, it
does not own the coal loading facility despite the fact that this
facility is on land leased from the railroad. He said the state
helped to build some of that facility. He said the railroad also
owns a facility in Whittier. He said these properties would
probably be viewed as an integral part of the rail operations as it
is tied to the moving of freight. He said the communities might
want to do something different and the state might not want to see
that property in private hands.
Number 1829
REPRESENTATIVE SANDERS referred to Section 1(c) and said CSHB 136
requires legislative approval and the legislature would have the
opportunity to object to the ultimate sale once the conditions of
the sale were known.
Number 1844
MR. HICKEY said a number of answers could be provided to the
legislature, but mentioned the short time span and said how
thoroughly things are thought through depends on how good of a job
is done. He said CSHB 136, according to his interpretation, states
that the Governor has to enter into an agreement with the most
responsive offer so long as that offerer agrees to conditions one,
two and three. "It does come to you and if you act to disapprove
it doesn't occur, but if you fail to act, as I read it, then it
does go forward." He said CSHB 136 (TRA) does not require a
subsequent act by the legislature to allow the sale to happen, but
it does give the legislature one opportunity to stop the sale.
Number 1886
REPRESENTATIVE BRICE said requiring affirmative action by the
legislature to stop the sale, rather than a positive action by the
legislature to agree to the sale raises some concerns which will
need to be addressed in the amendment process. He asked what
happens to those jointly owned assets such as facilities which were
bought by the state and used by the railroad, specifically the coal
facility. He also asked what would happen to the coal cars which
the legislature has appropriated money to purchase.
Number 1938
MR. HICKEY said on the question of the coal dock, currently, it is
a lease arrangement. He referred to Section 1(b)(2) and said it
would require the continuation of that arrangement, but the new
private owner would be the lessor. He said other assets would have
to be evaluated on a case by case basis. He said he had forgotten
about the Wishbone Hill money which was an appropriation to the
Alaska Railroad, for a specific asset to facilitate the Wishbone
Hill coal project and the movement of coal if it comes on line. He
said this issue would have to be addressed now in legislative
input.
Number 2000
REPRESENTATIVE BRICE asked if there were other appropriations which
would be similar to the Wishbone Hill and asked about those assets
bought by the state.
Number 2021
MR. HICKEY said there is one other appropriation for Ship (ph.)
Creek. An issue currently being debated for reappropriation by the
Anchorage caucus. He said this appropriation was for facilitating
development, using private money on a matching basis. He said
another appropriation involves the purchase of railcars for the Ag.
(Agricultural) Project, but he said he believed these cars were all
gone. He said these are the types of questions that arise when you
consider a sale. He said the better part of four years was spent,
going through federal and state legislation, three maybe four
separate sessions of the legislature dealing with the acquisition,
and two years for the Alaska Railroad Corporation to get on its
feet and run. He said the Alaska Railroad has successfully run
without the need for any state money and money earned has been
reinvested into the company.
Number 2089
REPRESENTATIVE JAMES said there is $11 million that is in the
Wishbone Hill account and cannot be spent without appropriation by
the legislature even though it remains in the bank.
Number 2109
MR. HICKEY said the Wishbone Hill fund is an appropriation to the
railroad for purchases by the railroad which consists of a
contractual agreement signed by the state, the Department of
Transportation Commissioner, and questioned if it would or would
not be transferred to the purchaser.
Number 2130
CHAIRMAN GARY DAVIS said the passage of CSHB 136 (TRA) will bring
about a lot of questions and it is a benefit that those questions
will be answered. He said different requests have been made to
find out if the railroad is for sale, such as the expressed
interest by Montana Rail Link.
Number 2171
CHAIRMAN GARY DAVIS said he would like to keep CSHB 136 (TRA)
intact.
Number 2203
REPRESENTATIVE BRICE made a motion to adopt proposed Amendment 1,
striking, "by February 15, 1997," and capitalizing, "Governor". He
said the date limits it to ten months and questioned whether or not
it was a realistic timeline.
Number 2262
REPRESENTATIVE WILLIAMS objected to proposed Amendment 1. He said
the smaller amount of time that a business is up for sale, the
smaller the impact on the business.
Number 2299
REPRESENTATIVE JAMES concurred, but added another objection which
was that she did not believe CSHB 136 (TRA) was workable and said
removing the date just makes it more unworkable. She said she
would want to amend the whole bill, but since she can't do that she
doesn't want to see it amended at all.
Number 2315
REPRESENTATIVE BRICE said once CSHB 136 (TRA) is put into law,
potentially it would become law in May or June. He said the
Railroad Corporation has stated that an honest appraisal might take
upwards of eight months, yet the time constraints in the bill limit
this from occurring. He said a realistic time frame must be
included in legislation.
Number 2352
A roll call vote was taken on Amendment 1. Representative Brice
voted yea. Representatives Williams, James, Sanders, Long and
Chairman Gary Davis voted nay. Representative Masek was absent for
the vote. Amendment 1 failed to be adopted to the CSHB 136 (TRA)
by the House Standing Committee on Transportation.
Number 2416
KENNETH HUBBARD was next to testify via teleconference from Mat-Su.
He said this sale would be too sudden and that replacement cost
appraisals should have been received before this bill was proposed.
He said the bridges and (indiscernible) may be worth more than what
will be offered for the railroad. He said freight companies might
make an offer or Princess Tours and said it should be a closed bid
process.
TAPE 96-16, SIDE B
Number 0000
REPRESENTATIVE BRICE referred to Section 1(c) and said CSHB 136
(TRA) is requiring an affirmative action by the legislature to
disapprove of the sale. He said language needs to be added to
approve of the sale. He said, considering the amount of questions,
that a sale proposal should go through the committee process.
Proposed Amendment 2, on line 11, Section 1(c), read, "the
legislature may approve the agreement by a concurrent resolution,
if the agreement is not approved by the legislature before the
adjournment of the regular session during which the agreement was
submitted the agreement is disapproved."
Number 0075
REPRESENTATIVE JAMES objected to the proposed Amendment 2.
Number 0078
CHAIRMAN GARY DAVIS said he objected because a sale would come
before the legislature anyway.
Number 0085
REPRESENTATIVE BRICE said a sale would only come before the
legislature if "a majority member, to put it bluntly, wants to
disapprove of the contract." He said assets of this type and size,
which affects the private and public economic well being of the
state, should require an affirmative action by the legislature.
Number 0144
A roll call vote was taken on Amendment 2. Representative Brice
voted yea. Representatives Masek, Williams, James, Sanders, Long
and Chairman Gary Davis voted nay. Amendment 2 failed to be
adopted to the CSHB 136 (TRA) by the House Standing Committee on
Transportation.
Number 0171
REPRESENTATIVE BRICE proposed Amendment 3 in Section 1(f),
deleting, "A contract for the appraisal under this section is
exempt from AS 36.30." and striking Section 1(j). He said this is
a potential million dollar contract that will not receive one iota
of public oversight. He said the procurement procedure would allow
for oversight to insure that the necessary appraisals, determining
the valid cost, were done in an appropriate manner.
REPRESENTATIVE JAMES objected to the proposed Amendment 3.
Number 0248
A roll call vote was taken on Amendment 3. Representative Brice
voted yea. Representatives Masek, Williams, James, Sanders, Long
and Chairman Gary Davis voted nay. Amendment 3 failed to be
adopted to the CSHB 136 (TRA) by the House Standing Committee on
Transportation.
Number 0264
REPRESENTATIVE BRICE said he is proposing Amendment 4 which would
give the Alaskan Railroad employees the first right of refusal to
insure that if they come up with a proper amount of money they be
given the first opportunity to purchase the railroad.
REPRESENTATIVE WILLIAMS objected to the proposed Amendment 4.
Number 0325
REPRESENTATIVE JAMES said she would not want to change CSHB 136
(TRA) today, but said the employees should have the opportunity to
buy the railroad.
Number 0347
CHAIRMAN GARY DAVIS said there was no provision in CSHB 136 (TRA)
precluding the employees from making a bid to buy the railroad.
Number 0365
REPRESENTATIVE BRICE said the reason behind giving the employees
the first right of refusal gives them a legal standard by which
they must be considered.
Number 0248
A roll call vote was taken on Amendment 4. Representative Brice
voted yea. Representatives Masek, Williams, James, Sanders, Long
and Chairman Gary Davis voted nay. Amendment 4 failed to be
adopted to the CSHB 136 (TRA) by the House Standing Committee on
Transportation.
REPRESENTATIVE BRICE proposed Amendment 5 which would require the
sale of the Alaska Railroad to be approved by the railroad
employees as it is such an important change. He said giving the
employees this power would give them the surety and the stability
that they need.
Number 0471
REPRESENTATIVE JAMES objected to the proposed Amendment 5. She
said the legislature does not think as businesses do. She said if
she was the person who had the money to buy the railroad, made an
offer and then found out that the offer was contingent upon whether
or not someone could meet that offer, she did not think she would
make the offer in the first place. She said the proposed Amendment
5 does this when it gives the employees of the railroad 90 days,
after the Governor enters into an agreement, to make an offer to
purchase the railroad.
Number 0514
REPRESENTATIVE BRICE said if this amendment does anything, it is to
require that the purchasing group to be involved with the employees
of the corporation, which would prevent any displacement of
employees.
A roll call vote was taken on Amendment 5. Representative Brice
voted yea. Representatives Masek, Williams, James, Sanders, Long
and Chairman Gary Davis voted nay. Amendment 5 failed to be
adopted to the CSHB 136 (TRA) by the House Standing Committee on
Transportation.
Number 0600
REPRESENTATIVE BRICE said there are too many questions surrounding
CSHB 136 (TRA) which have not been answered. He said the timelines
are unrealistic, there are no real assurances for the employees of
the corporation, nothing that requires the legislature to address
this issue once an agreement has been made and the legislation does
not allow for any scrutiny by the public, the Administration or the
legislature. He said there is no oversight regarding the
"contract" and said anyone can participate in this without any
scrutiny.
Number 0700
REPRESENTATIVE JAMES disagreed that anyone is qualified to bid on
this, CSHB 136 (TRA) states that it needs to be done by a qualified
railroad appraiser and she said she doubted whether or not anyone
on the committee would fit that standard.
Number 0720
REPRESENTATIVE JAMES said she is not comfortable with CSHB 136
(TRA), but could not find any easy way to fix it. She said she
liked the provision for the continuation of the railroad for a
minimum of 20 years and agree to all signed labor contracts and
agreements. She questioned whether or not the amount of the
purchase price should exceed the fair market value of the railroad
or equal the amount the state has expended to obtain, maintain and
subsidize the Alaska Railroad. She said, when you sell an asset,
it is not realistic to say that the state is going to get the money
back. She said everything that is sold is based on fair market
value, which could be more or it could be less. She said all the
appraisals in the world can be done, but if no one is willing to
offer that amount, then that appraisal is incorrect. She said
enough time should be given to make offers yet prevent the
disruption of the railroad and avoid the appearance of a "fire
sale." She said the state should avoid acting like they need to
get rid of the railroad "before next Tuesday."
Number 0793
REPRESENTATIVE JAMES said CSHB 136 (TRA) has a good intent, the
state should move forward to privatize the railroad and find a
purchaser who has the money and the ability to expand the railroad.
She said the railroad will never expand as long as it is under the
control of the state and it should pay money to the tax rolls for
its operation. She does not believe that CSHB 136 (TRA) is going
to do anything. She moved CSHB 136 (TRA) from the committee with
the attached fiscal note and individual recommendations.
Number 0833
REPRESENTATIVE BRICE said CSHB 136 (TRA) requires a qualified
railroad appraiser and then questioned what this was as there was
nothing in statute to define what that was.
Number 0843
REPRESENTATIVE SANDERS said he was going to vote for CSHB 136 (TRA)
to "stir things up." He said the bill protects the workers because
it requires the purchaser to comply with all the bargaining
agreements.
Number 0877
A roll call vote was taken on whether to move CSHB 136 (TRA) out of
committee. Representatives Masek, Williams, James, Sanders, Long
and Chairman Gary Davis voted yea. Representative Brice voted nay.
The CSHB 136 (TRA) was moved from the House Standing Committee on
Transportation.
HB 403 - CONSUMER PROTECTION:USED CAR & MAIL ORDER
Number 0933
CHAIRMAN GARY DAVIS said the next item on the agenda was HB 403, an
act relating to consumer protection involving contracts for the
sale, transfer, or assignment of used motor vehicles and involving
telephonic solicitations.
Number 0933
REPRESENTATIVE KAY BROWN, sponsor of HB 403, said she introduced
this bill at the request of the Department of Law (DOL) and the
Governor's office to address some consumer protection issues
related to the sale of used cars and telephone solicitations. She
noted that HB 403 is a straightforward bill and said Section 1
requires the used car dealer to provide a buyer with a copy of a
certificate of auto emissions compliance or non-compliance before
a contract is consummated. Section 2 requires telemarketers, who
are under the mail order exemption, to have legitimate mail order
businesses. She said she would answer any questions and said she
would defer to Mr. Schwartz, who works in consumer protection and
put forth these concepts for legislative consideration.
Number 0991
REPRESENTATIVE WILLIAMS asked if the sponsor would be willing to
amend HB 403 so that a seller would be obligated to show if a car
had been involved in an accident.
Number 1026
REPRESENTATIVE BROWN said she would be willing to include this
consumer protection right in HB 403. She said the concept of
requiring disclosure, if a car has been damaged and rebuilt, seems
to be good.
Number 1046
CHAIRMAN GARY DAVIS said it is a good concept, but questioned how
effective this provision would be. He questioned the degree of
inspection that would be needed and said a walk around inspection
would often prove to be insufficient.
Number 1086
REPRESENTATIVE LONG asked if HB 403 affected people who
occasionally worked on vehicles, in a "moonlighting" capacity.
Number 1104
REPRESENTATIVE BROWN said the language in HB 403 applies to a
person engaged in the business of selling used motor vehicles.
Number 1110
CHAIRMAN GARY DAVIS said that does appear to be a bit restrictive,
there are plenty of auto sales done on a private basis that this
would not cover, I think it is probably the crux of your question.
Number 1130
REPRESENTATIVE BEVERLY MASEK asked how the language in HB 403 would
affect the rural areas where vehicles are sold.
Number 1160
REPRESENTATIVE BROWN said it was her understanding that there are
only a few areas of the state that are subject to this emission
inspection program. She did not know of any rural areas that would
require the emission certificate.
Number 1176
CHAIRMAN GARY DAVIS said the rural areas which are not affected now
by the emissions certification would not be affected later.
Number 1190
REPRESENTATIVE BRICE referred to page one, line 13 and 14, "under
the air pollution control requirements applicable in that area" and
said this would answer Representative Masek's question.
Number 1202
REPRESENTATIVE MASEK asked why used cars and telemarketers were
combined in HB 403.
Number 1220
REPRESENTATIVE BROWN said the common thread in HB 403 is consumer
protection and said it was the DOL's preference to put these
separate items together in this manner. She said the two items are
clearly addressing different aspects of consumer protection.
Number 1264
DAVEED SCHWARTZ, Assistant Attorney General, Commercial Section,
Civil Division, Department of Law, testified next via
teleconference from Anchorage. He said he was responsible for the
consumer protection responsibilities for the state. He began
discussion on Section 1 of HB 403 relating to auto emissions,
inspection certificates and used cars. He said AS 45.45.400,
enacted in 1992, prohibits a used car dealer from transferring or
assigning the owners title or interest in a vehicle intended for
use in a state approved auto emissions inspection area, currently
Anchorage or Fairbanks, unless a vehicle has a certificate of auto
emission compliance or non-compliance as required by the local
areas.
Number 1390
MR. SCHWARTZ said the legislative history reveals that the prime
sponsor of AS 45.45.400, then HB 454, intention was that consumers
who were considering the purchase of a vehicle, from a used car
dealer, be informed of the current Inspection and Maintenance (I/M)
status of the vehicle before they actually made the purchase. He
said four years ago, in February of 1992, the prime sponsor of HB
454 explained that the intent was to require used car dealers to
provide a certificate of compliance or non-compliance to the
prospective purchaser and explained that the rational was to allow
the prospective purchaser that piece of information to help them in
their decision. The prospective purchaser would know, up front,
what the I/M status was. He said, despite this intent, the statute
as presently worded does not appear to require a used car dealer to
present or display any I/M information to the prospective
purchaser.
MR. SCHWARTZ said the present statute only requires that a used
vehicle have an I/M certificate of compliance or non-compliance at
the time of transfer or assignment of the owners title or interest.
Frequently, the vehicle title is not transferred to the purchaser
until days or even weeks after the contract sale is signed. He
said the transfer of ownership can happen 30 days after the sale
contract. He said HB 403 amends the statute to clarify that the
I/M certificate must be presented to the prospective purchaser
before the sale of the used vehicle and added that it is a consumer
protection safeguard. He reiterated that the prime sponsor of HB
454 recognized and intended for the statute to achieve this goal.
Number 1497
MR. SCHWARTZ said, given the current and long standing low level of
consumer protection funding in Alaska, HB 403 gives consumers a
measure of self help by making a violation of HB 403 a violation of
the Consumer Protection Act. He said, currently, consumers are not
told about the I/M status of the vehicle if they didn't think to
ask which might cost them, at minimum, hundreds of dollars to get
their vehicle into compliance. He said the Attorney General's
office, the I/M offices and the Better Business Bureau have all
received complaints over the last few years and continue to receive
complaints on this issue. He said there are horror stories about
people who have paid $3,000 to $5,000 to buy a used vehicle only to
find out they would need to spend that type of money, in addition,
to get their vehicle in compliance. He said, this year, a pizza
delivery person bought a $3,800 used vehicle and afterwards found
that this vehicle was not in compliance. She needed to quit her
job, temporarily, in order to make other transportation
arrangements as she used her vehicle in her line of work.
Number 1654
CHAIRMAN GARY DAVIS asked if Mr. Schwartz had any comments on the
telemarketing section of HB 403.
Number 1666
MR. SCHWARTZ said, as the mail order exemption stands right now, it
is possible for telemarketers, who would otherwise be regulated
under the Telemarketing Registration Act, to hide behind a mail
order catalog exemption. He said, currently, the scope of the mail
order exemption under the telemarketing law is the subject of an
Alaska Supreme Court case with oral arguments occurring over the
next few months. He said the provisions in HB 403 would require
that a person have a legitimate mail order catalog in order to
qualify under that exemption.
Number 1740
CHAIRMAN GARY DAVIS asked if the language in HB 403 would
adequately give the Attorney General's office enough information to
certify whether or not a mail order catalog was legitimate.
Number 1750
MR. SCHWARTZ said yes, particularly the proposed exemption which
would require "a mail order catalog company to sit back and wait
for a call initiated by the prospective customer, rather than
sending out a catalog and then flooding the consumers with
unsolicited, unwanted telephonic solicitations." He said the
problem of unwanted telephonic solicitations is being addressed by
HB 109. He said the provisions in HB 403 would assist the DOL in
its enforcement of the Telemarketing Registration Act.
Number 1817
REPRESENTATIVE BRICE said, on the mail order exemption, there
appeared to be a few parameters, under (b)(vi) and (b)(viii), and
asked if the numbers 10 and 10,000 were arbitrary.
Number 1856
MR. SCHWARTZ said in terms of the (b)(vi) parameter, "10 or more
pages" minimum is intended to guard against a telemarketer who
produces a one or two page flyer and tries to claim that the flyer
is a mail order catalog qualifying under the exemption. He said
the "10 pages or more" is designed to provide the consumer with
enough information to make an informed decision and contact the
telemarketer. If the mail order catalog has less than ten pages
they tend to provide less information. He said most catalogs, that
he has seen, have well over ten pages and so this provision should
not affect legitimate mail order companies.
MR. SCHWARTZ referred to the (b)(viii) provision and said other
states tend to have a higher circulation number. He said the
10,000 circulation number is designed to accommodate any Alaska
small businesses which might consider getting into the mail order
business. He said most catalogs and telemarketing centers are
based outside of Alaska.
Number 1995
STEPHEN CONN, Member, Alaska Public Interest Research Group,
(AKPIRG), said HB 403 prevents consumers from being cheated. He
said AKPIRG has 3,000 members and is the only non-profit consumer
protection organization exclusively representing the consumers. He
said the number one area that AKPIRG deals with is the purges of
defective vehicles. He said these vehicles were often wrecked
vehicles and camouflaged by people in the business of selling
vehicles.
Number 2087
MR. CONN said someone bought a vehicle, by what she thought was a
private owner, but upon investigation it was determined that this
person had put 500 advertisements into the Anchorage Daily News,
within a three year period, and had sold more than 300 vehicles.
The vehicle she purchased, at upwards of $15,000, was defective.
Number 2146
MR. CONN said the provision, where the I/M certificate is given
before the vehicle is purchased, will allow the purchaser to make
a good decision and protects the consumer against a dishonest car
dealer. He urged the committee to support HB 403.
Number 2259
RICK MORRISON, Past President, Alaska Auto Dealers Association, was
next to testify via teleconference from Anchorage. He said as a
car dealer he is concerned about the consumer, the business and the
dealers who take care of the business. He said the association is
involved with the Better Business Bureau and have had numerous
conferences with the Attorney General's office and others to become
educated about the laws and create an understanding of the
responsibilities.
MR. MORRISON said, when HB 454 passed, there were considerable
difficulties getting information on the aspects of the legislature.
He expressed concern over the confusion on what those items were
supposed to be and cited examples such as "title only waiver,"
"certificate of compliance or non-compliance," and the "I/M
certificate." He said there is a need for clarification of the
terms and added that additional information is needed because the
I/M requirements for Anchorage, Fairbanks and the state are not
consistent. He said there are laws that allow certain things in
Anchorage that cannot be done in Fairbanks. He said there are a
number of things the state says can be done which the municipality
says cannot be done. He said a consistency in provisions needs to
be determined.
MR. MORRISON referred to a new auto dealer, who also sells used
cars,...
TAPE 96-17, SIDE A
Number 0000
MR. MORRISON said the certificates are just like titles, the dealer
cannot change title until a certificate of compliance or non-
compliance is obtained. He said when a dealer does an I/M
compliance and the certificate must then go with the title to the
Department of Motor Vehicles (DMV). He said the general dealer
practice has been to do this I/M test on the vehicle when it
arrives. He said if the vehicle is not I/M passable then the
vehicle is disposed of or it is sold to a wholesaler.
MR. MORRISON said the statute states that in order to transfer the
title, a certificate of non-compliance has to be given. He said HB
403 is a "belt suspender approach" to a current law. He said the
confusion of where the I/M process is going needs to be addressed
so that each department is consistent.
Number 0128
MR. MORRISON said HB 403 creates a paperwork and logistical burden
for the dealers. He said 99 percent of the car dealers do not act
unscrupulously. He said there is a business of people selling cars
who are not car dealers and said the association has a problem with
those businesses. He said this is a different issue from the I/M
certificate and said the association would support legislation to
address that issue. He said, in regards to the damaged vehicle
concern, this is a national issue where there is an attempt to
brand titles. He said the current state process is ineffective
regarding branding titles and providing that information to the
consumer and the dealer. He said there are cases where even a
trained eye will not be able to spot the damages to the vehicle.
He said the association would be very interested in setting up
disclosure and branding of damaged vehicles. He said the
association would also support title regulation for people who are
in the business of selling cars, so that dealers are reputable and
are concerned about the consumer.
Number 0237
MR. MORRISON concluded that HB 403 would create a lot more
paperwork and burden especially for those dealers who own more than
one lot. He said in this case, the titles and I/M certificates are
all kept at one lot. He expressed concern over the combining of
this issue with the telemarketing issue as they are separate from
each other.
Number 0298
CHAIRMAN GARY DAVIS said it appeared that most of the objections
expressed would be geared to the regulations rather than the
statute. He said the statute only addresses a certificate of
compliance or non-compliance.
Number 0350
REPRESENTATIVE BROWN said she had found the same confusion with his
testimony.
Number 0363
MR. MORRISON said, "my understanding is that it would to
accompany...we would have to have the I/M certificate accompany the
car to its location, so as in the terms of the process of buying
the car we would have to have that available at that location.
Right now what we do is we have that available for them as they
close out their paperwork."
CHAIRMAN GARY DAVIS said he was reading that correctly and said a
key point in HB 403 is that the time of transfer can occur after
the sale.
Number 0422
REPRESENTATIVE BROWN said the language of HB 403 reads that the
certificate has to be made available before entering into the
contract.
Number 0433
MR. MORRISON says that it has to be a certified copy to be given to
the customer.
Number 0445
MR. SCHWARTZ said Mr. Morrison was describing a situation where a
dealer has several car lots and only one administrative office
where the I/M certificate are kept. He said there is no
requirement in HB 403 that the valid copy of a certificate of
compliance or non-compliance be in the vehicle on the lot where the
vehicle is. The only requirement in HB 403 is that the consumer be
presented with a certificate of compliance or non-compliance prior
to the sale. If the sale occurs at the administrative office where
the file is located, the I/M certificate would be available to
present to the consumer.
Number 0476
MR. SCHWARTZ said there is no language requiring a display of the
certificate or that the certificate be in the vehicle. He said one
suggestion, in informal discussions between the Attorney General's
office and the dealers association, was that it would be a
relatively simple thing to do to make a copy of the certificate of
compliance or non-compliance from the administrative file and put
the copy in the vehicle. He said there is nothing in HB 403 that
requires this.
Number 0592
REPRESENTATIVE JAMES said, in Fairbanks, an emissions test produces
a print out which is turned over to the state. She said, if these
used cars already have a license on them and had an emissions
certificate to get that license, the new owner would still have to
get an new I/M inspection to get another one for the file.
Number 0645
MR. MORRISON said she was correct. He said, as a dealer, if he
brings a car in he does an I/M certificate when it is brought in.
He said, up until a year ago, he had to do a new I/M certificate
every 90 days. He said the current state law is that the I/M
certificate is good for one year providing that the vehicle does
not change hands and go into a consumers possession. He said the
municipal law is not consistent with the state law. He said it is
expensive to maintain these certificates and it creates a burden.
Number 0715
REPRESENTATIVE JAMES said the only thing HB 403 requires is that a
seller give a copy of the certificate to the purchaser and the
purchaser signs something to acknowledge that they received it.
Number 0741
MR. SCHWARTZ said her statement was correct and added that all HB
403 does is to clarify that the consumer must be presented with a
certificate by the used car dealer prior to sale. He said HB 403
does not require a new certificate or requirement of any sort, nor
does it change the timing of the I/M certificate requirement.
Number 0772
REPRESENTATIVE JAMES referred to a vehicle which has been on a lot
for nine months, with no miles put on the vehicle, and asked if the
I/M certificate was okay to give to the consumer in context of the
state extension.
Number 0790
MR. SCHWARTZ said the statute as presently worded, not subject to
changes by HB 403, makes the certification requirement in line with
the local air pollution control requirements. He said the
differences in air pollution control creates different requirements
for Anchorage and Fairbanks. He said, in Anchorage, the seller has
to present an I/M certificate to a buyer where an I/M certificate
has been obtained not less than 90 days prior to the sale.
MR. SCHWARTZ said Mr. Morrison referred to the state providing an
exemption for dealers with vehicles in inventory. He said this
exemption was worked out between the Department of Environmental
Conservation (DEC) and the dealership association in 1995. He
said, other than that arrangement, the local air pollution control
requirements would apply. He said he is unclear whether or not the
municipality of Anchorage would agree with the interpretation of
their own ordinance by the DEC.
Number 0916
DON JANSSEN, Member, I/M Task Force, was next to testify via
teleconference from Anchorage. He said he auctions off vehicles
and said it is unclear as to who will purchase a car at an auction
until the hand is raised. He said a contract is signed by the
purchaser agreeing to the conditions of the sale which specifically
states the as, is, whereas conditions of the car and provides for
the removal of plates for vehicles which do not have current I/M
certificates and the acquisition of a title only waiver from the
municipality for $10.
MR. JANSSEN said HB 403 would put him out of business and it
requires additional paperwork. He said people do not read the
paperwork and ignorance is going to be the key thing. He said HB
403 is not going to do a thing to change the general public
awareness about having vehicles comply with the I/M conditions. He
said, with the advent of SB 28, there will be significant changes
in the way the testing is done. He said, until DEC does a better
job of educating the public, there will be continued litigation and
radical consumer activity on the part of individuals. He said it
costs small businesses money to protect themselves from the
activities of consumers. He said the government does not
understand their own rules and that a task force needs to be put
together that crosses departmental lines in conjunction with the
dealer association.
MR. JANSSEN said HB 403 would create a situation where he could not
comply as he does not know who the purchaser would be. He said the
municipality concluded in their I/M inspection and maintenance
program an exclusion specifically deferring themselves from EPA
guidelines. He said this is in "their own implementation of a
disclosure that no vehicle needs to have an I/M if it is sold to an
impound sale and all they have to do is take off the plates. But,
me if I sell a vehicle for $25, I have to go out pay $10 for a
certificate and this car did not run in the first place and the
people that bought it were aware of it. But, if a year later he
wants to sue me, because I did not provide him with that document.
He said it is out of line with what the intent of the law
originally was." He referred to a letter, dated in 1993, from
Michael Ford who responded that all of "this stuff" is voluntary
disclosure and that was the original intent, not the requirement of
passing multiple documents between buyers and sellers.
Number 1146
RICK GILMORE, President, Better Business Bureau (BBB), was next to
testify via teleconference from Anchorage. He said the BBB gets
about 40,000 phone calls a year and said used car sales is number
three on the list of complaints. He said BBB talks with consumers
every day who have received bad cars from both private parties and
from used car lots. He said he did not know if HB 403 was the
answer to the problem, but said something needs to be done to
address the concerns of the consumers.
Number 1187
MR. JANSSEN said DMV already tracks I/M certificates and the
municipality of Anchorage has the authority to implement the I/M
inspection program. He said a better process would be some type of
tab or sticker which shows what date the car was inspected attached
to the car.
Number 1254
CHAIRMAN GARY DAVIS said HB 403 has other referrals, but said most
of the debate centers around regulations, as opposed to the
statute, and differences in how some of these situations are
handled.
Number 1271
REPRESENTATIVE BRICE said many of the concerns also revolve around
the municipal ordinance versus the state laws. He then moved HB
403 with individual recommendations and zero fiscal note.
Number 1286
REPRESENTATIVE JAMES said she was not comfortable with this
business on the vehicles, but that she was willing to move HB 403
out of committee. She said government tries to make everything 100
percent risk free for people. She said people need to be
responsible for themselves. She said HB 403 requires extra things
for people to do in order to solve a problem which is not that
difficult to solve.
Number 1328
CHAIRMAN GARY DAVIS said HB 403 will go next to the House Labor and
Commerce Committee. He said the sponsor will take into
consideration the expressed concerns.
Hearing no objection HB 403 was moved from the House Standing
Committee on Transportation.
ADJOURNMENT
There being no further business to come before the House Standing
Committee on Transportation, the meeting was adjourned at 3:04 p.m.
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