01/24/2006 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB222 | |
| SB207 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 222 | TELECONFERENCED | |
| *+ | SB 207 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
January 24, 2006
1:35 p.m.
MEMBERS PRESENT
Senator Con Bunde, Chair
Senator Ralph Seekins, Vice Chair
Senator Ben Stevens
Senator Johnny Ellis
Senator Bettye Davis
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 222
"An Act relating to breaches of security involving personal
information, consumer report security freezes, consumer credit
monitoring, credit accuracy, protection of social security
numbers, disposal of records, factual declarations of innocence
after identity theft, filing police reports regarding identity
theft, and furnishing consumer credit header information; and
amending Rule 60, Alaska Rules of Civil Procedure."
HEARD AND HELD
SENATE BILL NO. 207
"An Act relating to the membership on the board of directors of
the Alaska Aerospace Development Corporation."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 222
SHORT TITLE: PROTECTION OF PERSONAL INFORMATION
SPONSOR(s): SENATOR(s) THERRIAULT, GUESS
01/09/06 (S) PREFILE RELEASED 12/30/05
01/09/06 (S) READ THE FIRST TIME - REFERRALS
01/09/06 (S) L&C, JUD
01/24/06 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 207
SHORT TITLE: AK AEROSPACE DEVEL. CORP BD MEMBERSHIP
SPONSOR(s): SENATOR(s) STEVENS G
01/09/06 (S) PREFILE RELEASED 12/30/05
01/09/06 (S) READ THE FIRST TIME - REFERRALS
01/09/06 (S) L&C, FIN
01/24/06 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
SENATOR GRETCHEN GUESS
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Co-sponsor of SB 222.
SENATOR GENE THERRIAULT
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Co-sponsor of SB 222.
JOHN GEORGE
American Council of Life Insurers
Juneau AK 99801
POSITION STATEMENT: Had concerns with SB 222.
LISA CORRIGAN
Alaska Bankers Association
2094 Jordan Ave.
Juneau AK 99801
POSITION STATEMENT: Supported SB 222 with changes.
RON JORDAN
Anchorage AK
POSITION STATEMENT: Supported SB 222 with stronger penalties.
ED SNIFFEN Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Commented on SB 222.
SENATOR GARY STEVENS
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 207.
MIKE MILLIGAN
Kodiak AK
POSITION STATEMENT: Supported SB 207.
NORM WOOTEN, Executive Director
Kodiak Chamber of Commerce
Kodiak AK
POSITION STATEMENT: Supported SB 207.
LINDA FREED, Manager
City of Kodiak
Kodiak AK
POSITION STATEMENT: Supported SB 207.
DOUG LETCH
Staff to Senator Gary Stevens
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 207 for the sponsor.
ACTION NARRATIVE
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 1:35:19 PM. Present were Senators
Ben Stevens, Ralph Seekins, Bettye Davis and Chair Con Bunde.
SB 222-PROTECTION OF PERSONAL INFORMATION
CHAIR CON BUNDE announced SB 222 to be up for consideration.
SENATOR GRETCHEN GUESS, co-sponsor of SB 222, recapped the
purpose of the bill saying that the problem of identify theft is
worse this year than last.
1:38:00 PM
SENATOR GENE THERRIAULT, co-sponsor of SB 222, said he read an
article that said 1,600 cases of fraud and identify theft were
reported in 2004; of those, 400 were identity theft. He
explained that it is very difficult to get control of one's
economic and personal data once it has been stolen. Recognizing
that consumers benefit from rapid data availability, he realized
that simply freezing data wouldn't allow stores quick access to
information on customers who are applying for a credit card, for
instance, to take advantage of a special sale; and he still
wanted to give consumers the option of being able to freeze
access to their data.
1:43:41 PM
CHAIR BUNDE asked if he also envisioned an instant "opt out"
option so that a credit report could be quickly obtained by a
business that has had a person apply for one of their credit
cards. He also asked how quickly a person could apply the remedy
if his information had been stolen and used.
SENATOR THERRIAULT responded that that is what he hoped
testimony would cover today.
1:44:50 PM
SENATOR RALPH SEEKINS asked what interstate implications this
bill would have, since it would be Alaska law and most credit
bureaus that are accessed for personal information are
headquartered outside of Alaska.
SENATOR THERRIAULT responded that the state has the authority to
regulate those companies, because they are responding to
inquiries of businesses within the state of Alaska.
SENATOR SEEKINS asked what if a customer was in Seattle and
there's a big sale at Nordstrom's and he had frozen his account
in Alaska, would there be a statutory requirement for the
enquiry to be frozen.
SENATOR THERRIAULT replied, "I don't think that's the way the
system works." He surmised that for someone who had acquired his
data and pretended to be him, the law would be meaningless in
every one of the other states.
1:48:23 PM
SENATOR SEEKINS asked where the definition of information
collector is located.
SENATOR GUESS replied that that definition is on page 4, lines 6
- 8 and an information collector is a person who owns or uses
personal information in any form... on a state resident.
SENATOR SEEKINS asked if a person who wrote down his zip code
was, by definition, an information collector.
SENATOR GUESS replied no and that the personal information
definition is on page 4, lines 9 - 28 and talks about what
personal information is and, therefore, what it is not.
SENATOR SEEKINS stated he thought that definition needed to be
clarified.
1:51:44 PM
SENATOR GUESS asked if Senator Seekins was referring to an
Alaskan resident who may be in Washington who either wants to
freeze or unfreeze his credit report.
SENATOR SEEKINS rephrased his question stating that the law
would apply to all businesses working in Alaska, but if the
headquarters of ABC Rating Company, for instance, is in Kansas
City (that recognizes our state law) and the enquiry is coming
from the Nordstrom Store in downtown Seattle, does the ABC
Reporting Company have any statutory requirement not to provide
that - even though the customer froze his report in Alaska.
SENATOR THERRIAULT replied that the State of Alaska has the
power to regulate a business entity that is housed outside of
the state if it has agreed and wants to transact business in the
state of Alaska.
1:54:05 PM
CHAIR BUNDE posed his Bahamas question. An Alaskan resident
freezes his credit information; he wins the lottery and moves to
the Bahamas and he hasn't taken the freeze off. Does the freeze
stay there until he removes it - no matter where he resides.
SENATOR THERRIAULT indicated yes.
SENATOR SEEKINS asked for a report on that situation's
enforceability by the time this bill came to the Judiciary
Committee.
SENATOR THERRIAULT noted that the bill breaks down the controls
an individual consumer can exert over his information and what
duties the companies collecting the information have to him, if
there is a breach of their internal security.
1:56:01 PM
SENATOR SEEKINS asked about credit accuracy on page 14. He asked
if a person disputes the credit information, does he have a
responsibility to report it immediately to the information
collector.
SENATOR THERRIAULT replied that the business has the duty to
stop making reports.
1:58:05 PM
SENATOR JOHNNY ELLIS arrived.
1:58:52 PM
SENATOR GUESS responded that language on page 14, line 25, says
that it applies to those companies that are actually
distributing the information, not someone who is using the
information.
SENATOR SEEKINS remarked that he didn't want to end up with an
affirmative responsibility on the part of the merchant who is
trying to gain information to make a credit decision.
2:00:24 PM
JOHN GEORGE, American Council of Life Insurers, said that some
of his concerns had been addressed, but he still had issues. He
didn't think a company should be required to do business with a
person if he refuses to give it his social security number. In
the life insurance business, he said:
We need to make sure that we're paying the right
beneficiary. We need to know that that's absolutely
the right guy and a social security number is a
personal identifier; it's a number that's generally
collected....
He further explained that if a person uses another name, like
their pet cat's name, Fluffy, the person who filled out the
application knows that, but their heirs who are the ones who are
going to be collecting on the policy may not know that. He
explained:
We really need an identifier that is consistent, that
can be verified and for someone to refuse to give that
type of information may make it difficult for us to
identify who the real deceased is and, therefore, who
the legal beneficiaries are.
He also had problems with the notification requirement that
would force them to notify every policyholder in the state that
they had a breach of security if someone accidentally got the
wrong letter in the mail and sent it back.
2:04:01 PM
CHAIR BUNDE asked if banks could still refuse to cash checks
without a person showing his social security number first.
MR. GEORGE replied that he didn't know if cashing a check could
be considered "doing business" and that's the language that is
used. Selling a life insurance policy to someone is really
"doing business" with him.
CHAIR BUNDE instructed him to work with the bill's sponsors on
resolving his issues.
2:05:52 PM
LISA CORRIGAN, President, Alaska Bankers Association, said she
is also Executive Vice President and Chief Operating Officer of
Alaska Pacific Bank. She stated the Alaska Bankers Association
supported the intent of this legislation saying, "Our very
integrity depends upon our ability to safeguard customer
information, not just their money, but any of their sensitive
information."
Her comments pertained to three points of clarification. The
first issue was language in Section 1 concerning disclosure of
breach of security. It appears to state that a bank would have
to notify affected persons regardless of whether sensitive
customer information had actually been accessed for unauthorized
purposes and that language goes too far.
She explained that banks are already operating under numerous
regulatory rules and guidelines from the federal regulatory
authorities governing all banks that was developed as a
requirement in the Gramm-Leach-Blighly Act regarding privacy.
Banks are required to look at how likely it is that such a
breach would occur and how vulnerable their data would be in
that event and they have to come up with a program of response.
Regulation language says:
If the bank determines through this risk assessment
process in their analysis of the breach itself that
such misuse has occurred or it is reasonably possible
that misuse will occur, then notification of affected
customers is required as soon as possible.
Secondly, she recommended different language regarding
notification to law enforcement, again from the banking
interagency guidance. Instead of stating that just the
Department of Law needs to be consulted to see if there is an
on-going investigation, the association wanted to make sure that
all appropriate law enforcement agencies would be referenced.
Thirdly, the protection of social security number language on
page 15 talks about having a waiver for a refusal to do business
with an individual if a business is required to submit a social
security number to the federal government. She pointed out that
there are cases in which a bank is required to obtain a social
security number, as under the Patriot Act, so that an individual
who wants to open an account can be definitively identified. If
that person is not a primary signer on the account, that social
security number will probably not be reported to the IRS and is
held in the bank's records as a form of identification. To
resolve this, she asked the committee to delete "submit" and
insert "obtain" on line 30.
CHAIR BUNDE asked if she thought this legislation prevented her
from requiring a social security number from a person who was
cashing a check at her bank.
MS. CORRIGAN replied that she didn't see that as a problem as
long as the bank is allowed to obtain it without having to
submit it to the federal government.
2:13:58 PM
RON JORDAN, Anchorage, said he was testifying for himself and
his deceased brother-in-law's behalf, having dealt with his
identity theft. His brother-in-law had a housemate who was
renting from him who stole his identification. While Mr. Jordan
supported SB 222, he didn't think the penalties in it were
strong enough. Mandatory jail time and/or restitution should be
involved.
2:16:13 PM
ED SNIFFEN, Assistant Attorney General, said he specializes in
consumer law and supported the overall intent of the sponsors,
but he had some concerns about the way SB 222 would impact a
variety of state agencies that collect personal information as
defined in this bill. He was working to amend some provisions to
provide the protections for state agencies that are trying to
conduct state business without fear of having to absorb enormous
expenses to notify state residents for some incidental and
perhaps unintentional exchange of information.
On Senator Seekins' question about applicability of this law if
one was to cross state lines and if an Alaskan resident calls a
credit bureau in Minneapolis to put a freeze on this credit
report, he stated that that credit reporting agency would be
required to honor that freeze regardless of who called.
2:18:40 PM
CHAIR BUNDE asked if the person who wishes that service has to
identify himself as an Alaskan resident to access protection
under Alaska law.
MR. SNIFFEN replied yes, the bill requires the resident to
provide sufficient identification to the bureau. It has to honor
his request if it wants to continue to do business in Alaska.
Half the states have the same requirement.
CHAIR BUNDE thanked people for their comments and said the bill
would be held for further work.
SB 207-AK AEROSPACE DEVEL. CORP BD MEMBERSHIP
CHAIR CON BUNDE announced SB 207 to be up for consideration.
2:21:48 PM recess 2:22:52 PM
SENATOR GARY STEVENS, sponsor of SB 207, explained that it would
expand membership on the board of directors of the Alaska
Aerospace Development Corporation to include two members from
Kodiak. It presently has nine members. Currently, only one
member of the board is from Kodiak and it has historically had
two members. This island is where all the activities occur and
the launch pad has substantial impacts on the community. The
Department of Commerce, Community & Economic Development (DCCED)
estimates that the two added members would cost about $9,700 per
year (from the rocket launch budget).
2:25:28 PM
CHAIR BUNDE asked if the same thing could be accomplished by
designating that two of the existing members be from Kodiak.
SENATOR GARY STEVENS replied yes, but he explained there were
two members from Kodiak and one resigned. The replacement was
not from Kodiak and that brought up this issue.
2:26:30 PM
SENATOR SEEKINS asked why Kodiak lost one position in the first
place.
SENATOR GARY STEVENS replied that Ron Acarregui resigned or
reached the end of his term and his replacement was not from
Kodiak.
2:27:43 PM
SENATOR JOHNNY ELLIS asked what kind of decisions the board
members actually make.
SENATOR GARY STEVENS responded that the board sits in an
advisory capacity and doesn't impact the number of launches,
safety or things like that. One of the main issues it deals with
is access to Fossil Beach, a popular area for people to visit,
that is closed when there is a launch.
2:30:22 PM
MIKE MILLIGAN, Kodiak resident, favored SB 207. He related that
Kodiak did not have a lot of homesteading that other communities
had primarily because its opportunities were on the water. So,
private land is greatly restricted there and the commons are
looked at differently. The launch facility is on state land.
Kodiak has an active (Not In My Back Yard) NIMBY force due to
fear over the military launches. Some of that could be
alleviated with another person from Kodiak being on the board.
He thought the state would be better served by an 11-member
board as opposed to a nine-member board.
2:33:42 PM
SENATOR BEN STEVENS pointed out that language in Section 1 says
the board goes from three to five members with two from Kodiak,
but one is left undesignated.
CHAIR BUNDE clarified that all five have to be state residents
that have a significant level of experience in the private
business sector and two of them have to be from Kodiak, the
other three can be from across the state.
2:36:16 PM
SENATOR SEEKINS asked if there are any requirements of the
people from Kodiak other than being from Kodiak.
CHAIR BUNDE replied that he understood that all members must
have the experience in private business, but also be from
Kodiak.
2:37:35 PM
NORM WOOTEN, Kodiak Chamber of Commerce, said the chamber passed
a resolution in support of this idea. It is committed to the
success of the launch complex under the ownership of AADC and of
any other industry that would broaden the economic base in
Kodiak. He explained that currently the corporate offices of
AADC are off of Kodiak Island and considering the huge impact
that the launch facility has on it, members from Kodiak on the
board would go a long way in allaying the mistrust that might be
present.
DAVE WOODRUFF, AADC Board of Directors, explained they serve in
a capacity that is greater than just advisory. They monitor
budgets, make decisions on equipment purchases and oversee what
is happening at the launch site.
2:41:51 PM
SENATOR BEN STEVENS mused that the board is going from three
state residents to five and before when there was three, two
were from Kodiak (although not in statute), but now they are
going to three from outside Kodiak. It seemed that if they
wanted representation from the community that is most impacted
from the operations, they would want to have three members from
Kodiak and two from other business interests in the state.
CHAIR BUNDE commented that he thought if you have two designated
out of nine, there would be more impact than having two out of
11 members.
SENATOR BEN STEVENS asked Mr. Woodruff if he would want three
instead of two out of five.
MR. WOODRUFF responded that it would be nice to have three from
Kodiak, but the bigger the board, the more ungainly it is to get
people to it. The board has operated fine with nine members with
two being from Kodiak. If the board goes to 11 members, he
thought it would be nice to have three from Kodiak.
2:44:23 PM
LINDA FREED, Manager, City of Kodiak, said a city council
resolution supported SB 207, but didn't address increasing the
size of the board as long as there are two members from Kodiak.
She has worked hard to make sure that the facility works with
the community.
2:46:20 PM
CHAIR BUNDE asked if there is any opposition to the numbers on
the board.
SENATOR GARY STEVENS replied he hadn't heard of any opposition.
It just seemed cleaner to increase the size of the board; and to
keep the current number, someone would have to be taken off.
SENATOR SEEKINS asked if the board terms are staggered and if
the main reason for increasing the size is so that someone does
not have to be removed.
DOUG LETCH, aide to Senator Gary Stevens, explained that page 2,
section 2, sets forth the members' terms.
SENATOR SEEKINS said it appears that there is one member from
Kodiak now and asked when his term expires and if that
expediency why two more members were added as opposed to just
waiting for natural attrition.
MR. LETCH replied that his term expires in June and that they
were looking for the best way to not have to kick someone off
the board.
2:51:13 PM
CHAIR BUNDE announced he would hold the bill for further hearing
and adjourned the meeting at 2:51:39 PM.
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