Legislature(1997 - 1998)
02/24/1998 01:42 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
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SENATE LABOR AND COMMERCE COMMITTEE February 24, 1998 1:42 P.M. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Jerry Mackie, Vice Chairman Senator Tim Kelly Senator Lyman Hoffman MEMBERS ABSENT Senator Mike Miller COMMITTEE CALENDAR HOUSE BILL NO. 73 "An Act extending the termination dates of the salmon marketing programs of the Alaska Seafood Marketing Institute and the salmon marketing assessment; and providing for an effective date." - HEARD AND HELD SENATE BILL NO. 268 "An Act relating to the assignment to the Department of Labor of certain wage claims; and providing for an effective date." - MOVED SB 268 OUT OF COMMITTEE SENATE BILL NO. 283 "An Act relating to noneconomic damages resulting from an automobile accident." - HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION HB 73 - No previous action to consider SB 263 - See Transportation minutes dated 2/19/98. SB 283 - See Labor and Commerce minutes dated 2/19/98. WITNESS REGISTER Representative Bill Hudson State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Sponsor of HB 73. Ms. Barbara Belknap, Executive Director Alaska Seafood Marketing Institute 1111 N. Franklin St, #150 Juneau, AK 99801 POSITION STATEMENT: Supported HB 73. Ms. Liz Cabrera Petersburg Vessel Owners Association Petersburg, AK 99833 POSITION STATEMENT: Supported HB 73. Mr. Jerry McCune United Fisherman of Alaska 211 4th St. Ste. 112 Juneau, AK 99801 POSITION STATEMENT: Supported HB 73. Mr. Jeff Stephan United Fishermen's Marketing Association P.O. Box 1035 Kodiak, AK 99615 POSITION STATEMENT: Supported HB 73. Mr. Theo Matthews, Executive Director United Cook Inlet Driftnetters Association Kasilof, AK 99610 POSITION STATEMENT: Supported HB 73. Mr. Al Dwyer, Director Division of Labor Standards and Safety Department of Labor P.O. Box 107022 Anchorage, AK 99802-1149 POSITION STATEMENT: Supported SB 268. Mr. Dwight Perkins, Special Assistant Department of Labor P.O. Box 21149 Juneau, AK 99802-1149 POSITION STATEMENT: Commented on SB 268. Mr. John George National Association of Independent Insurers 3328 Fritz Cove Rd. Juneau, AK 99801 POSITION STATEMENT: Supported SB 283. Mr. Jeff Bush, Deputy Director Department of Commerce and Economic Development P.O. Box 110800 Juneau, AK 99811-0800 POSITION STATEMENT: Opposed SB 283. Mr. Mike Lessmeier State Farm Insurance 124 5th Street Juneau, AK 99801 POSITION STATEMENT: Supported SB 283. ACTION NARRATIVE TAPE 98-8, SIDE A Number 001 HB 73 - SALMON MARKETING ASSESSMENT & ASMI CHAIRMAN LEMAN called the Senate Labor and Commerce Committee meeting to order at 1:42 p.m. and announced HB 73 to be up for consideration. REPRESENTATIVE HUDSON, sponsor, testified that this bill would extend the current one percent domestic salmon marketing assessment when the law is scheduled to sunset on June 30, 1998. This assessment is essential to continue funding the needs of the Alaska Seafood Marketing Institute (ASMI) and its various programs. It is fishermen and women taxing themselves and trusting the legislature to appropriate it back to them, which it has always done. This fund accompanied with a self-assessment by the processors and a fund available through the federal overseas marketing program are the three funding essentials of the entire seafood industry for the State of Alaska. This has broad support from the harvesters in Alaska and ASMI. SENATOR HOFFMAN stated that one of the biggest contributors to the fund presently are the Bristol Bay fishermen and they feel that ASMI does little to assist them in their markets which are primarily Japanese. They feel that they are unduly taxed by this program. REPRESENTATIVE HUDSON responded that a majority of fishermen and women have indicated strong support for this legislation, but he understands the situation Senator Hoffman is talking about. Representative Hudson said, however, that it is absolutely imperative to have some funds to replace the farmed salmon products that are competing with Alaska salmon markets, particularly in the domestic marketplace. The Japanese market is largely handled by the federal assessment which manages for the sale and export of all Alaska salmon, including those from Bristol Bay. He said those people benefit indirectly by the fact that they are creating a "bigger pie" and a higher perception of value among competing protein sources. Number 127 MS. BARBARA BELKNAP, Executive Director, ASMI, responded to Senator Hoffman that she was sympathetic to his concerns. She was pleased with the Southwest Alaska Municipal Conference resolution to support funding of ASMI. She said they had struggled with this issue since the tax was enacted in 1993, but their problem is that they don't control the supply of product to market. Last year they were able to do a nationwide Safeway promotion for reds and most of the stores also put Bristol Bay salmon on the adds. If they are able to get the product, they do sockeye salmon promotions along with their canned salmon promotions. She noted that the sale of canned red salmon overseas has been boosted tremendously by ASMI's programs. CHAIRMAN LEMAN said he has seen results that he is pleased with while the organization hasn't been perfect from his perspective. He asked if the one percent was more than replaced by the good accomplished in the marketplace. MS. BELKNAP answered "unquestionably." She also noted that the Norwegians have recently doubled their marketing budget to $40 million and they have a very good product and control a great deal of the market. ASMI still felt that marketing was necessary and that it is important to expand. The feedback she is getting from fishermen and their organizations is that they see the necessity for an overall marketing program simply to keep Alaska salmon a viable product in the marketplace. CHAIRMAN LEMAN asked how the Fishermen-in-Stores program worked this past year. MS. BELKNAP said ASMI cut most of its programs except for the basic in-store demonstrations. Five fishermen went out in the spring and it went real well as it always does. It's a question of having the money, because it costs $1,100 - $1,600 a piece to send them out. CHAIRMAN LEMAN said some legislators have suggested that the marketing directors of ASMI shouldn't be located in Bellevue, but should reside in Alaska, although ASMI has done studies to show that the Bellevue location is more appropriate. MS. BELKNAP answered that it is a good business decision to have them in Bellevue. When the lease expires in August 1999, they are going to move to another area in Ballard. They have found that it would increase their costs 20 - 30 percent to move them to Alaska. Efficiency would be impaired. A very expensive study was done three years ago for Senator Donley in which the industry across the board said the best business decision was to keep it in Seattle. The Board is working with only industry money now and feel they have a fiduciary responsibility to spend that money as wisely as possible. SENATOR HOFFMAN asked what ASMI was planning on doing to assist the new facility in Anchorage in marketing. MS. BELKNAP said they would be producing value-added products and the facility would be another client for their marketing programs. MS. LIZ CABRERA, Petersburg Vessel Owners Association, supported HB 73. She said they recognize ASMI's work as essential in maintaining our share of the domestic salmon market. MR. JERRY MCCUNE, United Fishermen of Alaska, supported HB 73 to help keep our share of the domestic salmon market. He said that they don't agree with everything that's done in ASMI, but they were going to get together and work through some of the problems they see as fishermen, including Bristol Bay fishermen. MR. JEFF STEPHAN, United Fishermen's Marketing Association, supported HB 73. He said a large component of their membership are salmon seiners. ASMI has been very important to UFMA and to all the members (crab, halibut, salmon, whitefish, etc.). "As bad as our position in the salmon market is, we would be far worse off without the good efforts of ASMI over the years." He said that Alaska salmon needs to have a continual marketing program that hits retail, food service, consumer, food service magazines, T.V., promotions, etc. ASMI knows exactly where to put money, he said, and the only thing they need is money to put in. CHAIRMAN LEMAN asked if the salmon fishermen are assessing themselves one percent and the processors are assessing themselves 3/10 percent, would it be appropriate for the fishermen of other seafood products in Alaska to do a comparable assessment. MR. STEPHAN said at this time he wouldn't support adding on any direct taxes like the salmon marketing tax for any other species until there is a chance to discuss it as an industry. MR. THEO MATTHEWS, Executive Director, Cook Inlet Driftnetters Association, said his group is in the same situation as Bristol Bay. Eighty percent of their harvest is sockeye and 95 percent of their value of harvest is sockeye salmon which is sold directly to Japan. When his Board voted unanimously to support this tax, their primary concern was that the legislative funding has been cut so drastically and so rapidly to ASMI that without this tax, ASMI, itself, might be in jeopardy. That is not acceptable at all. There is a place for ASMI in both foreign and domestic marketing. CHAIRMAN LEMAN noted that he is a seller of salmon and has a potential conflict of interest. Number 373 SENATOR HOFFMAN said he didn't want to delay this bill, but he would like to hold it over and bring it up as soon as possible. He wanted to call his constituents first, although he knows they support the tax. SENATOR KELLY said he supported the bill. CHAIRMAN LEMAN said he would schedule the bill for next Tuesday. SB 268 - WAGE CLAIM ASSIGNMENTS TO DEPT. OF LABOR CHAIRMAN LEMAN announced SB 268 to be up for consideration. MR. AL DWYER, Director, Division of Labor Standards and Safety, said this legislation allows the Department of Labor to accept and pursue wage claims for straight wage and hour violations in small claims court up to the maximum jurisdiction of that court. Until last year, the Department prosecuted claims up to $5,000 in Small Claims Court. When the Small Claims jurisdiction increased to $7,500, a gap was created between the statutory limits of the small claims and the statutory limit for the claims assigned to the Department which is $5,000. This bill will correct the deficiency and will avoid similar problems in the future by tying the two jurisdictional limits together and setting the Department's jurisdictional limit at the Small Claims limit. SENATOR KELLY asked who represents the Department, attorneys? MR. DWYER answered that they are represented by the Wage and Hour section of the Department of Labor. SENATOR KELLY asked if Small Claims Court requires legal representation. MR. DWYER answered that a claimant would call Wage and Hour and if it's less than $5,000, the Division would fill out the paperwork, go to Small Claims Court and get the money for them. If it's over $5,000 he advised that they get an attorney. SENATOR KELLY remarked that we're back in the collection business, again. CHAIRMAN LEMAN asked what they charge for this service. MR. DWYER answered that it's free. CHAIRMAN LEMAN said he is surprised that there isn't a phrase similar to what's in the Permanent Fund that we recover, if not the actual cost, the incremental costs for collection. MR. DWYER said he would check into it. SENATOR KELLY asked how many incidents we have on an average. MR. DWYER answered that there are about 600 claims per year and out of those possibly 60 are over $5,000. SENATOR KELLY noted that if there was a fee, it wouldn't have to come from the workers. MR. DWYER responded that they usually don't have a problem in collections. It's just a matter of helping the employee fill out the form and bringing it down to Small Claims Court where they see that they get the money. There are penalties for employers who do this and they do pay them. SENATOR MACKIE said we have been doing this for a long time and the only reason it's being raised is because the cost of Small Claims has gone up. MR. DWYER said that is correct. SENATOR MACKIE asked if this was just allowing them to do the same thing they have always done. MR. DWYER said that is correct. MR. DWIGHT PERKINS, Special Assistant, Department of Labor, said this is seen as more of a housekeeping measure to keep up with what this legislature passed last year for Small Claims. SENATOR KELLY asked if information on the penalty fees could be forwarded to the Judiciary Committee. CHAIRMAN LEMAN indicated he would. SENATOR MACKIE moved to pass SB 268 out of Committee with individual recommendations and the accompanying fiscal note. There were no objections and it was so ordered. SB 283 - AUTOMOBILE CIVIL LIABILITY CHAIRMAN LEMAN announced SB 283 to be up for consideration. Mr. JOHN GEORGE, National Association of Independent Insurers, supported SB 283 because it represents public fairness. When he was the Director of the Division of Insurance, and before that, a lot of people would complain about uninsured drivers that have accidents and sue you, if you run into them; but if they run into you, you don't get anything. It's been a real problem, and this bill really addresses the personal responsibility issue. There is a law that says you must have insurance and this bill rewards those people who do have insurance. While there is a penalty for people without insurance, if they are involved in an accident where they are not at fault, they can still get their car fixed and their medical bills paid, but they won't have the opportunity to go after the noneconomic awards. The real crux of this bill should go to reduce the number of uninsured motorists with additional incentive to become insured. The Insurance Commissioner in the state of California, when California passed an initiative which did essentially the same thing, said they have had at least a five percent reduction in automobile insurance premiums since its passage. Some of the member companies in the NAII believe it's many times that. They see a significant reduction in uninsured motorists' claims being filed and it could be because there is no need to file a lawsuit, because the medical bills and the repairs to the car are fairly straight-forward costs. Pain and suffering, noneconomic awards, are more difficult to put a number on and, therefore, that's where most of the litigation would come from. SENATOR KELLY asked if this was ever part of tort reform packages in the past. MR. GEORGE answered that he wasn't the person to answer that, although it does have some aspects of tort reform. SENATOR KELLY asked if it was an initiative on its own in California or was it a package. MR. GEORGE said it was an initiative on its own. CHAIRMAN LEMAN said he thought it was linked with commission of a felony. MR. GEORGE agreed and added that they also had a retroactive provision which has been upheld on appeal in California, that says after 60 days, you could not bring suit. This bill would not do that. He noted that our tort reform package had already addressed people in commission of a felony. SENATOR KELLY said he is concerned that, as written, this might include any passengers involved in an accident through no knowledge of their own in an uninsured car. He proposed adding language to subsection (a) saying "does not apply to a person unless the person is an owner or operator of a vehicle involved in the accident," so that any innocent passengers would be able to have the same rights as the guilty person. MR. GEORGE said he thought as it's currently worded, only the driver or an owner of the vehicle who failed to buy the insurance would be affected. He thought the language Senator Kelly suggests further clarifies that. However, he understands this is not the case in California. If you are a passenger in an uninsured vehicle, you are not entitled to sue for noneconomic awards. Number 560 CHAIRMAN LEMAN asked if he was uninsured and driving a vehicle and his wife is riding with him and is a co-owner of the vehicle, he assumed that she, too, could not place that claim. But what if they have one of their children with them, can they as passengers bring that suit or would they be excluded as minor children of the owners. MR. GEORGE thought they should ask attorneys, but his opinion is if a child is not an owner of the vehicle, they would be entitled to recover. The spouse who is a co-owner would be excluded from recovery of noneconomic awards. The spouse would have the equal obligation to have insurance on an owned vehicle. SENATOR KELLY said he didn't see this as a case where they are rewarding the uninsured parent. Rather you're protecting the child whose not responsible for their parent who didn't have insurance. MR. JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic Development, said that the Administration has some concerns about this bill. Driving under the influence sections of this bill are inconsistent with the tort reform measure that was passed last year that says if you are drunk while operating a vehicle that is involved in an accident, if your state of inebriation was a significant cause to the accident, you are denied recovery. That was the way the discussions related to drunk driving went last year. This particular bill appears to not necessarily be in conflict with that, but to extend it one step further to the case where if you are operating a vehicle while drunk and are totally innocent in the accident, you would be denied a claim. You would already be denied, if being drunk had anything to do with the accident in the first place. TAPE 98-8, SIDE B His second point is that this proposal as it relates to the uninsured motorist may conflict with financial responsibility laws in AS 28.20. As explained to him by DMV, they are required to take administrative action against a license while that person cannot get compensated for noneconomic damages. The third point is that this is a tort reform bill and the Administration spent a lot of time last year dealing with tort reform. This particular proposal should have been brought to the table at that time. He said the Administration opposes any more tort reform and for that reason they oppose this bill. CHAIRMAN LEMAN said his first point was somewhat convincing, the second point has been resolved by Ms. Juanita Hensley, and the third point he finds unconvincing. SENATOR MACKIE said he would like to hear from the Administration about how they could make this work. MR. BUSH responded that the arguments are things they have heard over and over again. This bill will set up a system where a person who is perfectly innocent in an accident, although they may not be innocent in their private behavior in a sense that they are not insured or may be drunk and driving and those facts do not have any impact on the accident that results in their being injured, will be denied recovery because of that. The Administration believes that people who are innocent should not be denied recovery simply because of some other behavior they've engaged in. SENATOR MACKIE asked what happens to someone who is uninsured in that a situation like he just described. They may be innocent, but uninsured. MR. BUSH said he understands if someone is in that situation, they take administrative action against the license, even if the person is innocent in terms of the accident, itself. It comes to their attention that a State law is being violated. CHAIRMAN LEMAN said they would work with Mr. Bush and the drafters to address some of his concerns. MR. MICHAEL LESSMEIER, State Farm, supported SB 283. He thought that a quote from a Supreme Court Justice in California summarized his feeling, "Tax paying law abiding citizens will no longer need to support those who choose to break the law." He said people who do follow the law and buy liability insurance end up supporting those who choose not to. This bill, the intent of which is to decrease the number of uninsured drivers, is a good and fair bill. He didn't think it was anyone's intent that innocent passengers be precluded from recovering. He thought that should be clarified. There is a difference in how an intoxicated driver is treated in last year's discussions. Number 481 SENATOR KELLY commented that his concern remains about passengers. He wanted staff to find out the relationship between what they did last year and this bill on the noneconomic damages. He didn't want to go backwards from last year on tort reform legislation. MR. BUSH responded that this bill does not go back; it adds another step. If a person is intoxicated and substantially contributes to an accident, that person is denied recovery of any damages. This bill says in those cases where the intoxication did not substantially contribute to the accident, they can't recover noneconomic damages. They would be able to recover medical expenses and lost wages. SENATOR KELLY asked if drunk driving was one element and uninsured is the second element. MR. BUSH answered that is correct and this bill deals with both situations in the same way. SENATOR KELLY asked about a scenario where a couple of people go to a party, the owner drives and has three drinks, throws the keys to his buddy and says, "you be the driver." They take off and somebody hits them from behind and the owner of the vehicle, who's legally intoxicated, gets hurt. What's the status under this legislation? MR. BUSH answered, assuming the buddy was not legally drunk at the time and, therefore, driving legally, and assuming there was insurance for their vehicle, this legislation wouldn't affect the case at all. If the driver was legally drunk, this legislation would affect it or if the owner had not insured his vehicle, this legislation would affect it. SENATOR KELLY said the intoxication part might be a little too complicated. CHAIRMAN LEMAN said he would like to work on that issue, also. SENATOR KELLY said he thought they should use the word passenger somewhere as opposed to owner or operator. CHAIRMAN LEMAN said they would work further on the bill and adjourned the meeting at 3:05 p.m.
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