Legislature(1997 - 1998)

02/24/1998 01:42 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         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            
     - 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                 
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              
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             
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               
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                       
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,             
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              
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             
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            
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                  
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                 
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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