Legislature(2009 - 2010)BELTZ 105 (TSBldg)

03/02/2010 01:30 PM Senate LABOR & COMMERCE

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 279 Out of Committee
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSSB 117(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 2, 2010                                                                                          
                           1:36 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Joe Paskvan, Chair                                                                                                      
Senator Bettye Davis                                                                                                            
Senator Kevin Meyer                                                                                                             
MEMBERS ABSENT                                                                                                                
Senator Joe Thomas, Vice Chair                                                                                                  
Senator Con Bunde                                                                                                               
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 117                                                                                                             
"An Act  requiring the  Department of Revenue  to set  the minimum                                                              
price for  cigarettes for sale  by wholesalers and  retailers; and                                                              
prohibiting  a wholesaler  or retailer from  selling at  wholesale                                                              
or retail cigarettes  at a lower  price than the price  set by the                                                              
Department of Revenue."                                                                                                         
     - MOVED CSSB 117(L&C) OUT OF COMMITTEE                                                                                     
SENATE BILL NO. 279                                                                                                             
"An Act  relating to regulation  of residential mortgage  lending,                                                              
including  the licensing  of mortgage  lenders, mortgage  brokers,                                                              
and  mortgage  loan  originators,   and  compliance  with  certain                                                              
federal  laws  relating  to  residential   mortgage  lending;  and                                                              
providing for an effective date."                                                                                               
     - MOVED SB 279 OUT OF COMMITTEE                                                                                            
SENATE BILL NO. 258                                                                                                             
"An  Act prohibiting  health  care  insurers that  provide  dental                                                              
care  coverage from  setting a  minimum age  for receiving  dental                                                              
care coverage,  allowing those insurers  to set a maximum  age for                                                              
receiving  dental care coverage  as a  dependent, and  prohibiting                                                              
those insurers  from setting  fees that a  dentist may  charge for                                                              
dental services not covered under the insurer's policy."                                                                        
     - HEARD AND HELD                                                                                                           
SENATE BILL NO. 129                                                                                                             
"An Act relating to state and municipal building code                                                                           
requirements for fire sprinkler systems in certain residential                                                                  
     - HEARD AND HELD                                                                                                           
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 117                                                                                                                  
SHORT TITLE: PRICE OF CIGARETTES                                                                                                
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
02/20/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/09       (S)       L&C, FIN                                                                                               
02/09/10       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
02/09/10       (S)       Heard & Held                                                                                           
02/09/10       (S)       MINUTE(L&C)                                                                                            
BILL: SB 279                                                                                                                  
SHORT TITLE: MORTGAGE LENDING                                                                                                   
SPONSOR(s): SENATOR(s) PASKVAN                                                                                                  
02/15/10       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/15/10       (S)       L&C, FIN                                                                                               
02/25/10       (S)       L&C AT 2:00 PM BELTZ 105 (TSBldg)                                                                      
02/25/10       (S)       <Bill Hearing Canceled>                                                                                
03/02/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 258                                                                                                                  
SHORT TITLE: DENTAL CARE INSURANCE                                                                                              
SPONSOR(s): SENATOR(s) HUGGINS                                                                                                  
02/05/10       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/05/10       (S)       HSS, L&C                                                                                               
02/15/10       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
02/15/10       (S)       Moved SB 258 Out of Committee                                                                          
02/15/10       (S)       MINUTE(HSS)                                                                                            
02/17/10       (S)       HSS RPT   3DP 1NR                                                                                      
02/17/10       (S)       DP: DAVIS, ELLIS, THOMAS                                                                               
02/17/10       (S)       NR: PASKVAN                                                                                            
03/02/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 129                                                                                                                  
SHORT TITLE: RESIDENTIAL SPRINKLER SYSTEMS                                                                                      
SPONSOR(s): SENATOR(s) MENARD                                                                                                   
02/27/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/27/09       (S)       CRA, STA, L&C                                                                                          
03/17/09       (S)       CRA AT 3:30 PM BELTZ 211                                                                               
03/17/09       (S)       Heard & Held                                                                                           
03/17/09       (S)       MINUTE(CRA)                                                                                            
03/19/09       (S)       CRA AT 3:30 PM BELTZ 211                                                                               
03/19/09       (S)       Moved SB 129 Out of Committee                                                                          
03/19/09       (S)       MINUTE(CRA)                                                                                            
03/20/09       (S)       CRA RPT  1DP 2NR                                                                                       
03/20/09       (S)       DP: MENARD                                                                                             
03/20/09       (S)       NR: OLSON, THOMAS                                                                                      
03/24/09       (S)       STA AT 9:00 AM BELTZ 211                                                                               
03/24/09       (S)       Moved SB 129 Out of Committee                                                                          
03/24/09       (S)       MINUTE(STA)                                                                                            
03/25/09       (S)       STA RPT   1DP 2NR 2AM                                                                                  
03/25/09       (S)       DP: MENARD                                                                                             
03/25/09       (S)       NR: MEYER, KOOKESH                                                                                     
03/25/09       (S)       AM: FRENCH, PASKVAN                                                                                    
03/02/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
ESTHER CHA                                                                                                                      
Staff to Senator McGuire                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 117 for the sponsor.                                                                      
MIKE ELERDING, representing himself                                                                                             
Ketchikan, AK                                                                                                                   
POSITION STATEMENT: Supported SB 117.                                                                                         
LORIE HOVANEC, Director                                                                                                         
Division of Banking and Securities                                                                                              
Department of Commerce, Community & Economic Development (DCCED)                                                                
POSITION STATEMENT: Answered questions on SB 279.                                                                             
SHARON LONG                                                                                                                     
Staff to Senator Huggins                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Presented SB 258 for the sponsor.                                                                         
JACK MCRAE, Sr. Vice President                                                                                                  
Premera-Blue Cross-Blue Shield of Alaska                                                                                        
POSITION STATEMENT: Opposed SB 258.                                                                                           
DAVID LOGAN, DDS                                                                                                                
Alaska Dental Society                                                                                                           
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 258.                                                                                         
CHRIS HENRY                                                                                                                     
Alaska Dental Society                                                                                                           
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported SB 258.                                                                                         
LINDA HALL, Director                                                                                                            
Division of Insurance                                                                                                           
Department of Commerce, Community and Economic Development                                                                      
POSITION STATEMENT: Available to answer questions on SB 258.                                                                  
SENATOR LINDA MENARD                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 129.                                                                                        
JEFF TUCKER, President                                                                                                          
Alaska Fire Chiefs Association                                                                                                  
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Opposed SB 129.                                                                                           
WALLY SMITH, President                                                                                                          
Alaska State Homebuilders Association                                                                                           
POSITION STATEMENT: Supported SB 129.                                                                                         
DAVE MILLER, President                                                                                                          
Interior Alaska Homebuilders Association                                                                                        
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported SB 129.                                                                                       
ERIC MOHRMANN, Fire Chief                                                                                                       
Capital City Fire/Rescue                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Opposed SB 129.                                                                                           
JAMES HILL, Fire Chief                                                                                                          
Ketchikan, AK                                                                                                                   
POSITION STATEMENT: Opposed SB 129.                                                                                           
DAVID SQUIRES, Fire Chief                                                                                                       
City of Seward                                                                                                                  
Seward, AK                                                                                                                      
POSITION STATEMENT: Opposed SB 129.                                                                                           
JEFF FEID, Loss Mitigation Administrator                                                                                        
State Farm Insurance                                                                                                            
POSITION STATEMENT: Opposed SB 129 and its CS.                                                                                
MICHAEL REVITO                                                                                                                  
Staff to Senator Menard                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 129 and its CS.                                                                           
ACTION NARRATIVE                                                                                                              
1:36:24 PM                                                                                                                    
CHAIR JOE  PASKVAN called the  Senate Labor and  Commerce Standing                                                            
Committee meeting  to order  at 1:36 p.m.  Present at the  call to                                                              
order were  Senators Davis,  Meyer, and  Paskvan. Senators  Thomas                                                              
and Bunde were excused.                                                                                                         
                   SB 117-PRICE OF CIGARETTES                                                                               
1:37:42 PM                                                                                                                    
CHAIR  PASKVAN announced  SB 117  to be up  for consideration.  He                                                              
noted that Senator  Bunde had submitted a letter in  support of SB
117.  He  moved  to  bring  CSSB  117(),  version  E,  before  the                                                              
committee. There were no objections and it was so ordered.                                                                      
ESTHER CHA, staff  to Senator McGuire, sponsor of  SB 117, related                                                              
that  the department  said the  committee  substitute (CS)  lowers                                                              
the percentage that  was in the original bill and  a few off-brand                                                              
cigarettes  may experience  a decrease in  their current  pricing;                                                              
however, the majority of brands will experience an increase.                                                                    
SENATOR MEYER  said the last  time this  bill was heard  they were                                                              
led to believe it  would raise the price of cigarettes  and he was                                                              
curious  why the  American Lung  Society and  the American  Cancer                                                              
Society  weren't supporting  it. He  thought it  might be  because                                                              
even  though some  of the  major brands  would probably  go up  in                                                              
price the  off brands  for the most  part will  go down.  The fact                                                              
that this  bill prevents businesses  from selling tobacco  as loss                                                              
leaders is good.                                                                                                                
1:42:05 PM                                                                                                                    
MIKE  ELERDING, representing  himself,  Ketchikan,  said he  would                                                              
answer  questions.  He  said  he  has  supported  the  concept  of                                                              
regulating  the  price  of  tobacco products  since  2004  and  he                                                              
offered to provide  historical context for how they  had gotten to                                                              
where they are now if anyone wanted it.                                                                                         
CHAIR  PASKVAN,  finding  no  further   questions,  closed  public                                                              
SENATOR  MEYER  moved  to  report  CSSB  117(),  version  E,  from                                                              
committee  with  individual  recommendations   and  attached  zero                                                              
fiscal note. There were no objections and it was so ordered.                                                                    
1:44:08 PM                                                                                                                    
CHAIR PASKVAN announced an at ease at 1:44.                                                                                     
1:45:28 PM                                                                                                                    
CHAIR PASKVAN called the meeting back to order at 1:45.                                                                         
                    SB 279-MORTGAGE LENDING                                                                                 
1:45:51 PM                                                                                                                    
CHAIR  PASKVAN announced  SB 279  to be up  for consideration.  He                                                              
related   that  this   committee   had  been   working  with   the                                                              
administration  for over one  year and this  bill is now  good for                                                              
LORIE  HOVANEC,  Director,  Division of  Banking  and  Securities,                                                              
Department   of  Commerce,   Community   &  Economic   Development                                                              
(DCCED),  said  her  division  administers   the  Alaska  Mortgage                                                              
Lending Regulation  Act. She said  the abuses in  mortgage lending                                                              
and securities led  to much of the financial crises  the US is now                                                              
experiencing. To  address some of  these problems, both  state and                                                              
federal  regulators  came up  with  regulatory  reform  and a  new                                                              
system  to license  both mortgage  loan  originators and  mortgage                                                              
lenders and  brokers. In 2003,  the state regulators,  through the                                                              
Conference   of  State   Banks   Supervisors   and  the   American                                                              
Association  of  Residential Mortgage  Regulators  (ARMOR),  began                                                              
developing a uniform  licensing registry similar to  what had been                                                              
done by  state agencies in  the securities and investment  advisor                                                              
She  said this  regulatory  system  for mortgage  loan  originator                                                              
licensing  is known as  the Nationwide  Mortgage Licensing  System                                                              
and  Registry; it  was  launched  in 2008  and  since then  nearly                                                              
every  state is  a  participant.  This system  increases  consumer                                                              
protection, enhances  state regulators' ability to  supervise, and                                                              
streamlines the licensing process.                                                                                              
MS.  HOVANEC continued  that  in  2008 the  federal  SAFE Act  was                                                              
passed   which   requires   states  to   license   mortgage   loan                                                              
originators  through this  nationwide registry.  It also  requires                                                              
states  to  amend their  mortgage  lending  laws to  meet  certain                                                              
minimum standards,  which they can exceed if they  want to. Alaska                                                              
began licensing  mortgage loan  originators through  this registry                                                              
on  August 1,  2009  and is,  therefore,  in  compliance with  the                                                              
first  part of  the federal  law. SB  279 will  bring Alaska  into                                                              
compliance with  the second part of  the SAFE Act by  amending its                                                              
statutes to meet the federal minimum standards.                                                                                 
She  said the  objectives  of  these  amendments are  to  increase                                                              
accountability  in  education  and tracking  of  mortgage  lending                                                              
professions  to  reduce fraud  in  the residential  mortgage  loan                                                              
origination  process  and  to  provide  consumers  with  free  and                                                              
easily accessible information through the national database.                                                                    
She explained  that if Alaska does  not comply with  these minimum                                                              
federal  licensing requirements  through  passage of  SB 279,  the                                                              
SAFE Act  requires  that the US  Department of  Housing and  Urban                                                              
Development begin  enforcing the standards. The effective  date of                                                              
this bill  is July 1,  2010 - also  to meet the state's  extension                                                              
1:50:55 PM                                                                                                                    
MS.  HOVANEC  said  she  would next  address  some  of  the  major                                                              
changes  to  Alaska's law.  Technical  changes  included  changing                                                              
"originator" to "mortgage loan originator" wherever it was used.                                                                
MS. HOVANEC  said the  first substantive change  was to  section 9                                                              
on  page  6,  line  8, where  license  renewal  was  changed  from                                                              
biennial to annual on the calendar year, December 31.                                                                           
1:53:34 PM                                                                                                                    
She said  section 85 on  page 41, line  20, repealed  AS 06.60.017                                                              
that exempts  small mortgage lenders  from licensing,  because the                                                              
SAFE  Act  does  not  allow exemptions  of  this  sort.  She  said                                                              
references to the  "small mortgage lender" exemption  were deleted                                                              
1:55:08 PM                                                                                                                    
MS.  HOVANEC said  the SAFE  Act requires  that fingerprint  cards                                                              
for criminal  background checks  be sent to  the registry  as well                                                              
as the Department  of Public Safety (DPS). Under  current statutes                                                              
fingerprint  cards must  be submitted  just to  the Department  of                                                              
Public Safety (DPS).                                                                                                            
Section 11 on page  6, line 23, says permit fees are  to be set in                                                              
regulation  for flexibility.  Currently they  are set in  statute.                                                              
They anticipate  potentially decreasing the fee for  mortgage loan                                                              
originators so that  originators and companies are  paying similar                                                              
renewal fees rather than originators paying a larger fee.                                                                       
Section  12  on  page  6, line  28,  requires  20  hours  of  pre-                                                              
licensing education  as per the  SAFE Act; three hours  in federal                                                              
statutes   and   regulations  to   mortgage   origination,   fraud                                                              
prevention,  consumer protection,  three hours  in ethics  and two                                                              
hours related  to lending  standards for non-traditional  mortgage                                                              
products  and  the  additional  hours  to  be  of  the  licensee's                                                              
choosing. Current law has no education requirements.                                                                            
Section 18 on page  10, line 21, authorizes the  division to issue                                                              
a  provisional  license  if the  fingerprint  card  processing  is                                                              
excessively  delayed  but  all other  requirements  for  licensing                                                              
have been  met. This  is to  prevent holding  up commerce  when it                                                              
appears a person is qualified.                                                                                                  
In section  22 on page 12, line  21, the references to  paper were                                                              
eliminated.  Because  the  national   database  is  accessible  to                                                              
consumers on the Internet, they will be going paperless.                                                                        
Section  29 on  page  14,  line 9,  is  a new  section  permitting                                                              
branch  office  registration,  something   the  national  database                                                              
requires, and  the department wants  the ability to track  all the                                                              
branches that mortgage lenders and originators are opening.                                                                     
Section  35 on  page  15, line  25, modifies  Alaska's  continuing                                                              
education  requirements from  24 hours  every 2  years to  8 hours                                                              
SENATOR  MEYER asked  if the US  Department of  Housing and  Urban                                                              
Development would take over without action on this bill.                                                                        
MR. HOVANEC  replied yes,  but they don't  really take  over. They                                                              
would  set  up their  own  licensing  system  in addition  to  the                                                              
state's system. So  industry would be required to  comply with two                                                              
regulatory schemes.                                                                                                             
SENATOR  DAVIS asked  if  the state  would  be a  penalized if  it                                                              
didn't meet the deadline.                                                                                                       
MS. HOVANEC replied not to her knowledge.                                                                                       
2:02:06 PM                                                                                                                    
CHAIR  PASKVAN said  they had  been working  on this  for a  whole                                                              
year and he is  comfortable with language in the  bill, but he has                                                              
been close to it for a while.                                                                                                   
MS. HOVANEC explained  that the fiscal note adds  $65,000/year for                                                              
a new  occupational licensing  position and  $3,000 for  materials                                                              
required for the  position. The amount of work  being generated by                                                              
participation  in the  national registry  is more  than their  one                                                              
occupational  licensing person  is  able to  handle, because  they                                                              
also  handle  their money  service  business  regulations.  Travel                                                              
would increase by  $20,000/yr. They have approximately  72 out-of-                                                              
state  lenders  and are  able  to  do some  examinations  of  them                                                              
through  a  joint  exam  with the  states  in  which  the  primary                                                              
location  of the  lender  is located,  but  they  are expected  to                                                              
participate in a  certain number of exams - as part  of this joint                                                              
protocol  they  have  joined.  This budget  would  allow  them  to                                                              
participate  in  approximately   three  to  four  exams  per  year                                                              
depending on  where they  are located. It  also adds  a membership                                                              
fee to  the National Mortgage  Regulatory Association  and funding                                                              
for the  division to "upfront" the  state background fee  which is                                                              
about $50-150/yr.                                                                                                               
They  expect  that  revenue will  increase  substantially  due  to                                                              
expansion  of the  definition of  "licensee" to  include the  loan                                                              
modification and  servicing companies as  well as changing  from a                                                              
biennial renewal to an annual renewal.                                                                                          
CHAIR  PASKVAN explained  that the  expenditures  for fiscal  year                                                              
(FY)  2011 are  about  $131,000,  but the  income  would be  about                                                              
$384,000.  So it has a positive impact on the state's treasury.                                                                 
MS. HOVANEC agreed.                                                                                                             
SENATOR DAVIS said  that she appreciated Ms. Hovanec's  review and                                                              
that she saved her a lot of work by visiting the office.                                                                        
2:06:07 PM                                                                                                                    
CHAIR PASKVAN closed public testimony.                                                                                          
SENATOR  MEYER  moved  to  report   SB  279  from  committee  with                                                              
individual  recommendations  and  attached fiscal  note(s).  There                                                              
were no objections and it was so ordered.                                                                                       
2:08:29 PM                                                                                                                    
At ease                                                                                                                         
2:11:16 PM                                                                                                                    
CHAIR PASKVAN called the meeting back to order at 2:11.                                                                         
                  SB 258-DENTAL CARE INSURANCE                                                                              
2:11:45 PM                                                                                                                    
CHAIR PASKVAN announced SB 258 to be up for consideration.                                                                      
SHARON LONG,  staff to  Senator Huggins, sponsor  of SB  258, said                                                              
it was at the  request of the Alaska Dental Society.  It prohibits                                                              
insurance  companies from  establishing age  limitations on  young                                                              
children receiving  dental care. Currently a fear  is emerging, as                                                              
evidenced by  20 other states  introducing this legislation,  that                                                              
insurers are  moving towards restricting  children four  years and                                                              
older from dental care coverage.                                                                                                
She  said that  establishing a  minimum age  requirement leaves  a                                                              
significant  segment of our  population already  identified  as at                                                              
risk without  dental insurance. It does  allow a company  to set a                                                              
maximum age  for a person to  receive coverage for dental  care as                                                              
a dependent child.                                                                                                              
MS.  LONG said  that  even though  this  restriction not  covering                                                              
those  under  four is  currently  in  effect  in only  one  state,                                                              
Maine, the  fear is not unfounded.  A non-covered  services clause                                                              
was inserted  in provider  contracts first  in the northeast,  and                                                              
within one  short year  it had  spread south  and west  to finally                                                              
include all  states -  bringing her  to the  next provision  of SB
258: It  will prohibit insurance  companies from fee  capping non-                                                              
covered  services  in Alaska.  That  is  the current  practice  of                                                              
insurance  companies -  dictating what  a dentist  can charge  for                                                              
services the insured does not even cover in a plan.                                                                             
She said that  Senator Huggins became aware of  trends surrounding                                                              
coverage   restrictions   and  age   limitations   elsewhere   and                                                              
introduced  this bill  in order  to start the  discussion  and get                                                              
ahead  of   the  issues  before   they  became  a   problem  here.                                                              
Understanding  that  insurance  can  raise  complex  issues  among                                                              
stakeholders, not  the least of  which includes federal  restraint                                                              
of  trade restrictions  and  waivers,  Senator Huggins  asked  for                                                              
some experts to be available for the committee this afternoon.                                                                  
MS. LONG  said that  Senator Paskvan had  raised a question  about                                                              
mutuality  of obligations  under contract  and Dennis Bailey  from                                                              
Legal  Services  was  on  line  and  that  Linda  Hall,  Director,                                                              
Division  of   Insurance,  was   available,  as  was   Pat  Shier,                                                              
Director, Division of Retirement and Benefits.                                                                                  
2:16:20 PM                                                                                                                    
CHAIR PASKVAN announced public testimony.                                                                                       
2:16:32 PM                                                                                                                    
JACK  MCRAE, Sr.  Vice President,  Premera-Blue Cross-Blue  Shield                                                              
of Alaska,  said SB  258 raises  several major constitutional  and                                                              
public  policy  issues.  It  would  require  health  insurers  who                                                              
provide  coverage  to  change their  contracts  with  dentists  by                                                              
modifying  basic terms. The  key language  regarding the  proposed                                                              
change  is  found  on page  2,  lines  3  and 4  where  it  raises                                                              
constitutional  issues as  Article 1,  Section 15,  of the  Alaska                                                              
Constitution states:                                                                                                            
      No law impairing the obligation of contracts and no                                                                       
     law making any irrevocable grants of special privilege                                                                     
     or immunities shall be passed.                                                                                             
Although Alaska  courts have interpreted  this language  to permit                                                              
passing  laws  which  have changed  future  contracts,  Mr.  McRae                                                              
said, it  would appear  that these  provisions in legislation  run                                                              
contrary to the public policy intent.                                                                                           
In addition, Mr.  McRae said, language in SB 258  raises a related                                                              
and  serious  public policy  question  of  whether  it is  in  the                                                              
state's  interest  to  pass  legislation  that  basically  changes                                                              
health  insurance  contracts which  benefit  one  select group  of                                                              
health  care  providers.  As  an   alternative,  he  suggested  an                                                              
amendment  that would  avoid the  constitutional  problem that  SB
258 raises  and still  respond to the  concerns that  the dentists                                                              
have raised.                                                                                                                    
He added  that Premera-Blue  Cross-Blue Shield  of Alaska  doesn't                                                              
have age restrictions  in any of their dental  contracts in Alaska                                                              
and haven't for a long period of time.                                                                                          
CHAIR PASKVAN  asked if they do  not have age  restrictions within                                                              
their  contracts  now,  how  he   could  raise  an  impairment  of                                                              
contract issue.                                                                                                                 
MR. MCRAE answered  the issue that is of most concern  for them is                                                              
when they have a  contract with, for example, a  benefit that pays                                                              
a  maximum  of $2500  year  for  crowns.  As their  contracts  are                                                              
presently  written, once  the  cap is  reached  the dentist  would                                                              
still have  to give the discounted  rate which had been  agreed to                                                              
in  the contract  to  the  member. This  would  move  them in  the                                                              
direction  of giving  the  dentist the  ability,  once a  contract                                                              
limit is  reached, to  charge whatever he  wanted to.  Other items                                                              
outside  of  the  contract,  such  as  teeth  whitening,  have  no                                                              
restrictions  on  what  can  be   charged.  They  would  want  the                                                              
provider  to still  allow the  discounted rate  to their  enrollee                                                              
once the cap is reached.                                                                                                        
2:20:35 PM                                                                                                                    
CHAIR  PASKVAN  said he  didn't  understand  the argument  he  was                                                              
advancing within the impairment of contract context.                                                                            
MR. MCRAE stated  that the amendment would say  "offers but cannot                                                              
require a  provision in the  contract that would  allow discounted                                                              
fees for non-covered  services." That would allow  for dentists to                                                              
still  give  the  discounted  rate  to  the  Alaskan  dental  plan                                                              
enrollee once  the cap had been  reached.  Without  that, dentists                                                              
could charge whatever they want.                                                                                                
CHAIR PASKVAN  asked if that  would be  for both covered  and non-                                                              
covered services.                                                                                                               
MR. MCRAE answered  yes, but generally speaking, it  would be more                                                              
in the direction  of covered services. Their main  concern is that                                                              
the enrollee could  still get the discounted rate once  the cap is                                                              
reached,  because  that is  where  most  of the  expensive  dental                                                              
charges are.                                                                                                                    
CHAIR  PASKVAN  asked   if  he  recognized  the   ability  of  the                                                              
legislature  to   adopt  public  policy  that   prohibits  private                                                              
parties  from going  beyond  the  boundaries established  in  that                                                              
public policy.                                                                                                                  
MR. MCRAE answered that he did recognize that.                                                                                  
CHAIR PASKVAN  asked if the  state would  or wouldn't be  sued for                                                              
impairment of contract.                                                                                                         
MR.  MCRAE  responded, "No,  I  don't  believe  we would  sue  the                                                              
legislature for impairment of contract, Mr. Chairman."                                                                          
CHAIR PASKVAN commented,  "I was just wondering why  it was raised                                                              
2:22:55 PM                                                                                                                    
DAVID  LOGAN, DDS,  Alaska Dental  Society,  said he  is a  Juneau                                                              
dentist. He said  that SB 258 seeks to correct a  couple of things                                                              
that are  negatively impacting  consumers. It  sets fee  limits on                                                              
services  that dental  insurance plans  do not  pay a benefit  for                                                              
and it prohibits  setting minimum age requirements  for dependents                                                              
to  receive  dental  benefits. The  protection  for  consumers  by                                                              
prohibiting  an age  restriction is  obvious he  said, and  Alaska                                                              
still leads the nation in baby bottle tooth decay.                                                                              
They  are also  interested  in preserving  the  progress that  has                                                              
been made in conjunction  with the dental board over  the last few                                                              
years insuring  that medical  providers can receive  reimbursement                                                              
for dental  benefits for  delivering dental  services during  well                                                              
baby checks  for applying fluoride.  Frequently children  are seen                                                              
at  that age  by medical  providers  but have  yet  to see  dental                                                              
providers.  Unfortunately  for  young  children  who  have  severe                                                              
cavities at those  ages, rehabilitation can cost a  lot as well as                                                              
be  difficult. Sometimes  the ability  of the  parents to  receive                                                              
coverage  under  dental  managed  care plans  can  be  a  deciding                                                              
factor in the decision to seek care or not.                                                                                     
MR.  LOGAN explained  that the  act of  setting the  fees on  non-                                                              
covered services  is a fairly recent  change and started  a couple                                                              
of  years ago,  sweeping  quickly across  the  nation. One  state,                                                              
Rhode  Island,  prohibits  it, and  that  is  one of  the  initial                                                              
states  that  started   the  practice.  The  net   effect  on  the                                                              
remaining  states  has  been  for   dentists  to  reexamine  their                                                              
participation in these  plans both for a service  that they're not                                                              
providing  the  benefit  for  and the  economic  impact  on  their                                                              
practices. The  effect is  that dentists drop  out of  these plans                                                              
and then consumers  have fewer providers to choose  from. Many are                                                              
being forced  to leave their dental  home if they want  to receive                                                              
full,  costly or even  partial use  of their  dental benefits.  He                                                              
said the overall  affect is reduced access, and  this impact would                                                              
sadly  be  borne  disproportionately  in  rural  communities  with                                                              
fewer providers to choose from.                                                                                                 
He said the basic  question of fairness needs to  be asked. If the                                                              
insurance  companies are  interested in  helping dental  consumers                                                              
receive  dental  care  and  lowering  overall  dental  costs,  the                                                              
dentists'  preference  would  be   that  the  insurance  companies                                                              
provide the benefit; then at least they are in it together.                                                                     
MR.  LOGAN  said  his  concern has  been  that  as  the  insurance                                                              
companies are  taking this approach,  they are requiring  dentists                                                              
to make  a sacrifice that  is at no  cost to themselves,  but they                                                              
enjoy the benefit  of marketing the savings. He  said dentists are                                                              
sensitive  to  the  cost  of  health   care,  but  they  are  also                                                              
unfortunately unable  to deal with insurance companies  on a level                                                              
playing  field  as they  are  exempt  from anti-trust  laws  while                                                              
dentists are  not. The best  a small trade  group of  dentists can                                                              
do is  approach these  matters legislatively,  because they  don't                                                              
have the ability to negotiate with the insurers.                                                                                
CHAIR  PASKVAN  said he  was  trying to  figure  out  if a  policy                                                              
provided  a covered  service for  teeth cleaning  once a year  and                                                              
someone  wanted it  a second time  because they  were very  health                                                              
conscious,  what  the  dentists'  ability  would be  to  charge  a                                                              
different rate  for the second teeth  cleaning as compared  to the                                                              
charge that might have been allowed under the first cleaning.                                                                   
MR.  LOGAN replied  that  some fee  differential  would likely  be                                                              
involved.  Under managed  care plans,  the dentist  submits a  fee                                                              
schedule to the  dental insurance company and he  agrees to charge                                                              
a lesser  amount for  services that are  covered by  the insurance                                                              
company, but  on services that aren't  covered he agrees  to abide                                                              
by their normal fee schedule.                                                                                                   
2:29:13 PM                                                                                                                    
CHAIR  PASKVAN  asked what  a  person  would  be charged  for  his                                                              
second teeth  cleaning if  the first  one was  insured and  set at                                                              
$80 ($50 paid by  insurance and $30 paid by the  insured), but the                                                              
second one wasn't covered.                                                                                                      
MR. LOGAN  answered the dentist  would probably charge  his normal                                                              
fee of $100.                                                                                                                    
CHAIR  PASKVAN asked  if he  perceived the  national movement  was                                                              
trying  to  restrict him  in  charging  his  office rate  for  non                                                              
covered services.                                                                                                               
MR. LOGAN answered that was his understanding.                                                                                  
2:31:59 PM                                                                                                                    
CHRIS HENRY,  Alaska Dental  Society, said  he is an  orthodontist                                                              
in Fairbanks,  Alaska. He  explained that one  of the  concerns is                                                              
about the  fairness of the plan  and likened a dental  practice to                                                              
a hotel  business that  signed up  for a  program to reduce  their                                                              
hotel  rates  so  that  tourists  would come  in,  but  they  also                                                              
provide meals.  They are hoping  to bring more patrons  into their                                                              
hotel. Then  they find out  that plan they  signed up  for limited                                                              
them on what they  could charge for the meal that  was not part of                                                              
the plan.  He said dental practices  need to be  profitable enough                                                              
to support  staff and provide for  their benefits such  as medical                                                              
insurance and  retirement plans. He said  it goes back  to what it                                                              
takes  to run  a small  business whether  it is  dentistry or  any                                                              
other kind of medicine.                                                                                                         
2:35:34 PM                                                                                                                    
LINDA  HALL,  Director,  Division   of  Insurance,  Department  of                                                              
Commerce,  Community and  Economic Development  (DCCED), said  she                                                              
was available to answer questions on SB 258.                                                                                    
CHAIR PASKVAN "suspended" public testimony.                                                                                     
MS.  LONG  remarked that  the  bill's  sponsor  did not  view  the                                                              
amendment favorably  and urged finding  common ground  with regard                                                              
to the contracts.                                                                                                               
2:36:58 PM                                                                                                                    
SB 258 was heard and held.                                                                                                      
2:37:27 PM                                                                                                                    
CHAIR PASKVAN announced an at ease.                                                                                             
2:41:29 PM                                                                                                                    
CHAIR PASKVAN called the meeting back to order at 2:41.                                                                         
              SB 129-RESIDENTIAL SPRINKLER SYSTEMS                                                                          
2:41:45 PM                                                                                                                    
CHAIR  PASKVAN announced  SB 129  to be up  for consideration.  He                                                              
said a  lot of work  was done on  this bill  in the past  year. He                                                              
moved  to bring  CSSB  129(),  version  M, before  the  committee.                                                              
There were no objections and it was so ordered.                                                                                 
2:42:58 PM                                                                                                                    
SENATOR  LINDA  MENARD, sponsor  of  SB  129, said  the  committee                                                              
substitute (CS)  was a result  of listening  to the pros  and cons                                                              
of  this  issue while  adhering  to  what  she believed  needs  to                                                              
happen. She  said the  CS is a  compromise. She  said that  she is                                                              
not  opposed to  sprinkler systems  being required  in homes,  but                                                              
she does  believe that  requiring residents  to install  sprinkler                                                              
systems in the building code needs a more robust hearing.                                                                       
SENATOR MENARD  said the CS removes  all references to  the state,                                                              
state  agencies, and  state corporations,  because  Alaska has  no                                                              
statewide  building  code.  The  CS retains  local  control  while                                                              
setting  in  statute  an  elongated  public  process.  Along  with                                                              
preparing  a cost  benefit  analysis, this  bill  calls for  local                                                              
governments to  post notice  at least 30  days before  their first                                                              
public  hearing, schedule  at  least three  public  hearings on  a                                                              
proposed  ordinance  or  amendment  to  be held  within  a  60-day                                                              
period and  not consider the  proposed ordinance or  amendment for                                                              
adoption  sooner  than  60  days after  conclusion  of  the  first                                                              
public meeting.                                                                                                                 
It is  no surprise  that the  firefighters would  be against  this                                                              
bill. Respectfully, she  said, it is their job to  do all they can                                                              
to  protect the  life and  property  of Alaskans,  but she  argued                                                              
that  the  CS  retains local  control  and  gives  local  decision                                                              
makers the option of mandating sprinklers.                                                                                      
SENATOR MENARD  argued that  those opposed to  the bill  would say                                                              
this bill puts  an unfunded mandate on cities  and municipalities,                                                              
but the unfunded  mandate is really being put  on homeowners. Plus                                                              
a local  government can choose  to spend as  little or as  much as                                                              
it wants to on the required cost benefit analysis.                                                                              
SENATOR MENARD  said the  cost benefit  analysis language  in this                                                              
bill is very  broad simply requiring local governments  to prepare                                                              
a  cost benefit  analysis as  to  how expensive  or inexpensive  a                                                              
proposal may be.                                                                                                                
2:46:11 PM                                                                                                                    
She  said the  reason  for the  expanded  public  process is  that                                                              
adopting a  code requiring fire  sprinkler systems for one  to two                                                              
family dwellings  is not a "run-of-the-mill"  code item. It  is an                                                              
expensive system  that has proven impacts  on the cost  of a home.                                                              
It is  especially costly for those  on well systems,  which almost                                                              
a  third of  Alaskans are  on. Anchorage  Mayor  Sullivan said  he                                                              
thinks  the   extra  public  process   is  appropriate   for  fire                                                              
sprinklers  in one  or  two  family dwellings  because  installing                                                              
them in Alaska's cold climate is complex.                                                                                       
SENATOR  MENARD said  she didn't  dispute the  potential life  and                                                              
property savings  quality of sprinkler  system and  realized there                                                              
are  situations where  mandating sprinklers  in a  new home  would                                                              
seem  to make  sense,  but her  point  with the  CS  was that  the                                                              
public who will be  the one to pay for the system  will have ample                                                              
time  for  testimony,  discussion   and  education  if  the  issue                                                              
arises.  She said SB 129 has a zero fiscal note.                                                                                
2:49:04 PM                                                                                                                    
JEFF   TUCKER,   President,  Alaska   Fire   Chiefs   Association,                                                              
Fairbanks,  said a  public process  is already  in place that  has                                                              
worked well for  all public code procedures. There  is no need for                                                              
a special process for just one issue.                                                                                           
2:51:18 PM                                                                                                                    
WALLY  SMITH, President,  Alaska  State Homebuilders  Association,                                                              
deferred   his  testimony   to   the  Interior   Alaska   Building                                                              
2:52:00 PM                                                                                                                    
DAVE    MILLER,   President,    Interior    Alaska    Homebuilders                                                              
Association,  Fairbanks,  said  this  bill  is  a  reasonable  and                                                              
intelligent  compromise  that  provides time  for  local  building                                                              
officials,  legislators and  voters to  consider the  consequences                                                              
of  mandating sprinklers  in  single family  homes  in Alaska.  He                                                              
encouraged the committee to pass SB 129.                                                                                        
SENATOR MEYER  asked what it costs  to install a  sprinkler system                                                              
in an average size house.                                                                                                       
MR. MILLER answered anywhere from $2-8 square foot.                                                                             
SENATOR MEYER  took the middle, $5,  and said an average  house is                                                              
1500-2000 square  feet; so this  would add substantial cost  on to                                                              
a  new  home  and  the  builder  would just  pass  it  on  to  the                                                              
MR. MILLER  responded that consumers  right now are having  a hard                                                              
time  buying homes  without having  an additional  $7500 added  to                                                              
their cost.  Appraisers aren't even  "getting value" for  that, so                                                              
consumers would have to pay for this cost out of pocket.                                                                        
Also,  he said,  it's almost  impossible to  say how  much a  real                                                              
functioning  system  in homes  with  well  systems would  cost  to                                                              
install. Their job  as builders is to provide  safe and affordable                                                              
housing for  Alaskans and mandating  sprinklers would put  a large                                                              
number of people  where they couldn't afford to build  a home. The                                                              
Homebuilders  encourage life  safety things  like smoke  detectors                                                              
that are a better value for homebuyers.                                                                                         
SENATOR MEYER asked  if sprinklers are susceptible  to freezing up                                                              
in the winter.                                                                                                                  
MR. MILLER  replied that it  would depend  on the type  of system,                                                              
but  water  systems are  susceptible  to  freezing in  Alaska  and                                                              
Minnesota.  He had  even read a  report that  said some  insurance                                                              
companies were  not providing  a discount  for having  a sprinkler                                                              
system because of  some water loss issues with  systems going off.                                                              
Maintenance of these systems is another issue.                                                                                  
SENATOR  MEYER  asked  how  often sprinkler  systems  need  to  be                                                              
MR.  MILLER   replied  that   most  would   recommend  an   annual                                                              
2:59:43 PM                                                                                                                    
ERIC  MOHRMANN,  Fire Chief,  Capital  City Fire  Rescue,  Juneau,                                                              
said  the  City  and  Borough  of  Juneau  (CBJ),  like  17  other                                                              
jurisdictions  across   the  state   of  Alaska,  is   a  deferred                                                              
jurisdiction.  This means  that the State  Fire Marshall's  Office                                                              
has looked at  their code adoption process and  their capabilities                                                              
and has  decided that they not  only meet the  minimum enforcement                                                              
requirements of the  state fire and building codes,  but that they                                                              
exceed them.  He said  the local jurisdictions  had spent  quite a                                                              
bit  of money  to provide  citizens  with good  quality code  plan                                                              
review, enforcement and adoption.                                                                                               
3:01:25 PM                                                                                                                    
He explained  that the City and  Borough of Juneau has  a rigorous                                                              
process for  adopting codes; the  Assembly appoints  a five-person                                                              
committee  to review  the codes  in detail,  line-by-line, over  a                                                              
two-and-a-half  year  period.  In Juneau's  case,  this  committee                                                              
consists  of  an  architect,  an   electrical  engineer,  a  civil                                                              
engineer,  a  mechanical  engineer  and a  contractor.  They  meet                                                              
regularly  in public  meetings which  are publicized  over a  two-                                                              
and-a-half  year  period  and  look  at  the  building,  fire  and                                                              
residential  codes   (the  one   in  question  here).   They  make                                                              
amendments  and modifications  to those  codes to  meet the  local                                                              
jurisdictional  needs. By  law,  they are  not allowed  to make  a                                                              
code requirement  or  a code change  that is  less stringent  than                                                              
the  state's, but  they are  allowed to  have ones  that are  more                                                              
stringent. After  numerous public  meetings, which are  publicized                                                              
and open to the  public, their recommendations are  turned over to                                                              
the Assembly  Public Works Committee.  This committee  reviews the                                                              
recommendations in  detail in publicized open public  meetings and                                                              
then  forms a  recommendation that  is  forwarded on  to the  full                                                              
Assembly. The full  Assembly, in public open  publicized meetings,                                                              
presents these  recommendations through two public  hearings which                                                              
span one month.                                                                                                                 
He said the  state of Alaska does  not enforce nor has  it adopted                                                              
the  2009  International  Residential  Code,  the  code  that  has                                                              
specifications for  residential sprinklers for one  and two-family                                                              
dwellings.  The   state  doesn't  even  address   it.  Only  local                                                              
deferred  jurisdictions  and home  rule  communities  can look  at                                                              
this  code and  decide  on their  own whether  they  are going  to                                                              
adopt the  provisions or not.  He said  that the City  and Borough                                                              
of  Juneau had  adopted  the  International Residential  Code  for                                                              
2003 and  modified the  2006 version  that requires sprinklers  in                                                              
one  and   two-family  dwellings,   because  that  would   not  be                                                              
appropriate at this time.                                                                                                       
MR.  MOHRMANN explained  that when  the  2009 codes  comes up  for                                                              
review, the committee,  the Assembly Committee, the  Assembly, and                                                              
the public  can all have  their say and  decide whether  they want                                                              
that option or not.                                                                                                             
3:04:28 PM                                                                                                                    
MR.  MOHRMANN   said  this  bill   addresses  one  issue   only  -                                                              
residential sprinklers - and emphasized:                                                                                        
     There is no  more effective way to protect  our citizens                                                                   
     from   fire   than  one   and   two-family   residential                                                                   
     sprinklers.  Seventy-eight  percent  of fires  occur  in                                                                   
     one  and two-family  dwellings.  Eighty  percent of  the                                                                   
     civilian fire  deaths, 84 percent  of the civilian  fire                                                                   
     injuries  occur in one  and two-family dwellings.  Where                                                                   
     should we  be addressing our  fire resources  to solving                                                                   
     the problem? It seems to make sense to me.                                                                                 
But regardless of  that, he said, the code review  committees look                                                              
at  a variety  of things  - how  many  toilets a  building has  to                                                              
have,   how  many   egress   windows,  electrical   ground   fault                                                              
interrupter circuits,  and smoke  detectors - thousands  of items.                                                              
They all have financial  impacts, so why single out  this one item                                                              
to go through a different process?                                                                                              
MR. MOHRMANN stated  that right now a triplex  or four-plex within                                                              
Juneau is  required by the  code to have  a sprinkler  system, but                                                              
the State  of Alaska has not  made that requirement until  one has                                                              
more than 16 residential units.                                                                                                 
MR. MOHRMANN said  that it was mentioned that  sprinklers will not                                                              
work  off  of a  well,  but  he has  installed  three  residential                                                              
sprinkler systems in  his own homes, one by contractor  and two by                                                              
himself.  His cost  was $1200-$1500  per system,  and two  of them                                                              
were off of wells  and they do work. You need a  water tank and an                                                              
electric pump.  "It's not rocket  science." They didn't  freeze up                                                              
and these  were all  done in Fairbanks.  These systems  were given                                                              
breaks by  insurance companies; he said  state law says  you get a                                                              
2  percent   reduction  in  your   local  taxes  if  you   have  a                                                              
residential  sprinkler  system installed.  It  won't  pay for  the                                                              
whole thing, but  it helps, and insurance companies  recognize the                                                              
value. The  history behind residential  sprinkler systems  is that                                                              
they  have been  phenomenally effective,  he  concluded, and  they                                                              
cost  about 3  percent  of new  construction  using the  excessive                                                              
estimate  of $5 sq.  ft. Bottom  line, though,  these systems  are                                                              
very effective at saving lives                                                                                                  
3:08:53 PM                                                                                                                    
SENATOR MEYER asked  if the sprinkler heads are  sensitive to kids                                                              
throwing balls, for instance.                                                                                                   
CHIEF MOHRMANN replied  that he had three kids in  each one of his                                                              
houses with the  same type of heads, but the ball  never hit them.                                                              
Mechanically  they are very  reliable and don't  have a  record of                                                              
having  many   accidental  activations  from  getting   struck  by                                                              
something.  Statistics  show  that  sprinkler  head  spontaneously                                                              
fail less than one in a million.                                                                                                
SENATOR MEYER asked what annual maintenance is required.                                                                        
MR.  MOHRMANN  answered  that  an   NFPA  13-R  system,  which  is                                                              
designed  for triplexes  and larger  and commercial  applications,                                                              
requires  an annual inspection  in the  form of  a report  that is                                                              
turned  into the local  fire department.  The  fire code does  not                                                              
apply  in  the case  of  one  and two-family  dwellings,  but  the                                                              
International Residential  Code does. He  didn't believe it  had a                                                              
requirement for annual inspections.                                                                                             
SENATOR  MEYER  remarked that  he  is  not  required to  have  his                                                              
furnace  checked  annually,  but  he  wants to  do  it.  He  would                                                              
probably want to do that with a sprinkler system.                                                                               
MR.  MOHRMANN   answered  yes;   most  residential   systems  (wet                                                              
systems)  are  filled with  water  all  the  time. They  are  very                                                              
simple. It  will come off the  meter, have an indicating  valve, a                                                              
little backflow preventer  valve, and a pressure  gauge. You check                                                              
to see if the  valve is open and if it has  pressure. That's about                                                              
it. The  fire department  is more than  happy to answer  questions                                                              
about them.                                                                                                                     
3:12:07 PM                                                                                                                    
SENATOR DAVIS asked  if he was speaking to the CS  or the original                                                              
MR.  MOHRMANN responded  that he  was trying  to demonstrate  that                                                              
the  established local  process is  already very  vigorous and  is                                                              
used for  thousands and thousands  of other items;  injecting this                                                              
requirement  for one  and two-family  dwellings  is excessive  and                                                              
not necessary.  He opposed  the CS for  the same reason  - because                                                              
what it requires is already being done.                                                                                         
SENATOR  DAVIS asked  why  he opposed  the  bill  since it  didn't                                                              
mandate sprinkler systems.                                                                                                      
MR.  MOHRMANN  answered that  a  triplex  is regulated  under  the                                                              
International  Building Code;  a  one and  two-family dwelling  is                                                              
regulated  under  the  International  Residential  Code.  Both  of                                                              
those are  scrutinized under the  local code adoption  process for                                                              
that  deferred  jurisdiction.  It   is  already  a  very  rigorous                                                              
process, and  the reason for his  opposition to the CS  is that it                                                              
injects additional steps that are unnecessary.                                                                                  
SENATOR  DAVIS asked  if something  could be  changed in the  bill                                                              
that would allow him to support it.                                                                                             
MR.  MOHRMANN replied,  "To be  honest  with you,  at this  point,                                                              
there  is already  under  - I  believe it's  AS  29.25 -  specific                                                              
directions  in  regards  to  how   meetings  are  supposed  to  be                                                              
held...and   code  adoption   falls   within   that."  The   local                                                              
jurisdictions have  to follow those by  law, so that makes  the CS                                                              
superfluous. It's  merely an effort  to make adopting  residential                                                              
sprinklers more onerous, he concluded.                                                                                          
CHAIR  PASKVAN said  he was  particularly focused  on whether  the                                                              
percentage  of structure  fires  and  the percentage  of  civilian                                                              
fire   deaths  occurring   in  residential   structures  were   in                                                              
triplexes or more as compared to duplexes or less.                                                                              
MR. MOHRMANN  responded that this  information came  directly from                                                              
the National  Fire Protection  Association and  he would  be happy                                                              
to provide  copies of that  document to  the committee. It  was in                                                              
reference to one and two-family dwellings.                                                                                      
3:16:56 PM                                                                                                                    
JAMES  HILL, Fire  Chief, Ketchikan,  Alaska,  said the  Ketchikan                                                              
Fire Department  and the City  of Ketchikan both  strongly opposed                                                              
SB  129   because  everyone  knows   the  benefits  of   having  a                                                              
residential sprinkler  system. He said  back in the 60s  and early                                                              
70s, 15,000  people a year were  killed in fires; today  it's less                                                              
than 4,000. The  codes were changed because people  died. The most                                                              
recently  deferred  jurisdictions  in Alaska  all  have  different                                                              
fire and  building code  issues to  deal with.  He asked  that the                                                              
legislature leave  fire and building code enforcement  issues on a                                                              
local  level  and  not  have  state  mandates  that  impede  their                                                              
ability to protect their communities.                                                                                           
MR. HILL said  that Ketchikan already has the  Ketchikan Municipal                                                              
Code that  goes through the same  process that Juneau  does. Their                                                              
process provides  them the ability  to work with people  on issues                                                              
that have  been around  since Ketchikan was  formed. To  take that                                                              
away to  have some kind of  leverage with contractors,  homeowners                                                              
and professionals  is wrong, he emphatically stated.  For example,                                                              
a  local single  family  dwelling  in Ketchikan  sits  atop a  26-                                                              
percent  grade  that  for  all practical  purposes  he  could  not                                                              
protect - at  least with a fire  truck to the front  door. He also                                                              
wasn't able to  provide emergency medical services  without having                                                              
to  walk there.  It's in  a "dandy  spot" with  probably the  best                                                              
view in town and  was approved a couple of years  ago. Now someone                                                              
wants to  build a neighboring house  in the same vicinity,  and he                                                              
now has  some leverage with  those folks  to have a  standpipe put                                                              
in between  the homes instead of  requiring a sprinkler  system to                                                              
go in  the second  house. It  is a  fixed fire  system that  would                                                              
allow him  to provide  effective fire protection  for both  of the                                                              
CHAIR PASKVAN  said he  believed the  CS is  a local option  bill,                                                              
and  he   asked  him  what  portion   of  the  procedure   is  not                                                              
MR.  HILL replied  that he  didn't believe  it was  inappropriate;                                                              
it's just  already  being done on  a local  level and  communities                                                              
have different fire and building code issues to deal with.                                                                      
3:21:46 PM                                                                                                                    
CHAIR PASKVAN asked  him to provide the statistics  from 1970 that                                                              
he referenced to the committee.                                                                                                 
MR. HILL responded that wouldn't be a problem.                                                                                  
3:21:59 PM                                                                                                                    
DAVID SQUIRES,  Fire Chief, Seward,  Alaska, read a  letter signed                                                              
by the  city manager opposing  SB 129. It  said as written  SB 129                                                              
would infringe  upon their  rights as a  home rule city  and would                                                              
limit  the rights of  their citizens  to consider  ways to  reduce                                                              
the cost of government.                                                                                                         
MR.  SQUIRES  said   SB  129  would  limit  the   ability  of  the                                                              
municipality  to  consider  options   when  planning  forest  fire                                                              
protection.  It also  increases their  administrative workload  by                                                              
increasing the number  of public hearings for  ordinance adoption.                                                              
This  bill   does  not   consider  what   process  each   deferred                                                              
jurisdiction already  has in place for adopting  building, fire or                                                              
mechanical codes.  This bill would  severely impact  the community                                                              
of Seward because  of existing ordinances  concerning improvements                                                              
for construction  where they have used a sprinkler  requirement as                                                              
a way to reduce costs to developers.                                                                                            
If this bill  is passed, Mr. Squires  said, it would drive  up the                                                              
cost  for  fire  protection  in  Seward because  of  the  need  to                                                              
require  vehicles or  a vehicle  that  would have  the ability  to                                                              
truck  in water,  supplies and  the cost  of a  building to  house                                                              
those vehicles.                                                                                                                 
MR.  SQUIRES pointed  out that  the state  fire marshal  indicated                                                              
this  bill would  have no  fiscal  impact on  the department,  and                                                              
that is true  because the State  of Alaska does not  regulate this                                                              
issue, but having  certain items in place prior to  adoption of an                                                              
ordinance on  sprinklers for residential  structures would  put an                                                              
enormous financial impact on their community.                                                                                   
He  thanked  Senator  Menard  for allowing  time  for  the  public                                                              
process,  but as  a deferred  jurisdiction  that passes  building,                                                              
fire,  mechanical,  electrical  codes  and more,  he  said  Seward                                                              
already has  that process  in order  and he  had not received  one                                                              
complaint  from any  of  the contractors  or  residents that  have                                                              
built houses  within the City of  Seward that their  timelines for                                                              
adopting new codes  or making additions to codes is  too short. He                                                              
would like to hear  if the proponents of this bill  think they are                                                              
not getting a  fair hearing at any of the  deferred jurisdictions,                                                              
so they could fix those items.                                                                                                  
MR. SQUIRES  commented on  Mayor Sullivan's  letter where  he said                                                              
this could  be done on a case-by-case  basis - this bill  does not                                                              
allow  case-by-case; it  would be  a blanket  ordinance. It  would                                                              
not be good for  two houses that have different  requirements 2000                                                              
feet apart; it could lead to a fairly large lawsuit.                                                                            
3:26:44 PM                                                                                                                    
JEFF FEID,  Loss Mitigation  Administrator, State Farm  Insurance,                                                              
opposed  SB 129 as  well as  the CS.  He said  the total lives  in                                                              
cost of  residential  fires is enormous,  and  on behalf of  their                                                              
policy  holders, State  Farm  must take  all  reasonable steps  to                                                              
reduce  the  3000 national  yearly  deaths  caused by  them.  It's                                                              
beyond  dispute  that when  properly  installed,  sprinklers  save                                                              
lives, protect property, and reduce the risk to firefighters.                                                                   
He  said that  State  Farm  provides  premium discount  for  homes                                                              
protected   with  fire   sprinkler   systems  meeting   nationally                                                              
recognized  standards.  They  have considered  many  studies  that                                                              
show the  benefits of  having fire sprinklers.  One example  is in                                                              
Scottsdale,  Arizona,  that  has  had an  ordinance  for  over  20                                                              
years. In  the first  15 years  the ordinance  was in  place, they                                                              
had  598 home  fires. Of  those fires,  49 were  in single  family                                                              
homes  with  sprinkler systems  and  no  deaths occurred.  In  the                                                              
homes  that  had  fires  without   sprinkler  systems,  13  people                                                              
perished. Likewise,  another 13 people who would  have likely died                                                              
without sprinklers were saved.                                                                                                  
The average fire  loss for sprinklered incidents  in Scottsdale is                                                              
$2,166 in  property damage compared  to $45,000 for  unsprinklered                                                              
incidents.  Significantly  reduced  water  damage was  also  found                                                              
because fires were  suppressed with 341 gallons of  water per fire                                                              
in those  homes with  sprinkler systems  versus the  unsprinklered                                                              
homes that used almost 3,000 gallons per home.                                                                                  
MR. FEID  related that  the average  cost to  install a  system in                                                              
Scottsdale was 80  cents sq. ft. and the National  Fire Protection                                                              
Research Foundation  has shown on a national  average installation                                                              
cost  of $1.61  sq.  ft.  He noted  that  part of  the  Foundation                                                              
project included  participation from  the National Association  of                                                              
Homebuilders as well as State Farm.                                                                                             
CHAIR PASKVAN asked him to submit the data he relied upon.                                                                      
SENATOR  MENARD  reiterated  that  she is  not  against  sprinkler                                                              
systems, but she is for a more public process and opportunity.                                                                  
MICHAEL  REVITO, aide  to Senator  Menard, additionally  commented                                                              
that a  lot of  speakers didn't  address the  actual CS  which was                                                              
about having a more  robust public process. Some of  the folks who                                                              
spoke said a public  process was already in place,  and while that                                                              
is  true, statute  says  that local  governments  are required  to                                                              
notice  only five  days before  public hearings  begin. Since  all                                                              
the previous  speakers seemed to  support involving the  public as                                                              
much as  possible,  giving the public  even more  time to  educate                                                              
themselves and come forth with their opinions seemed reasonable.                                                                
SB 129 was held in committee.                                                                                                   
3:33:24 PM                                                                                                                    
CHAIR PASKVAN thanked  everyone for their testimony  and adjourned                                                              
the meeting at 3:33 p.m.                                                                                                        

Document Name Date/Time Subjects
CS SB 129 Bill Packet.pdf SL&C 3/2/2010 1:30:00 PM
SL&C 3/9/2010 1:30:00 PM
SB 129
SB 279 Bill Packet.pdf SL&C 3/2/2010 1:30:00 PM
SB 279
SB 258 Bill Packet.pdf SL&C 3/2/2010 1:30:00 PM
SB 258