01/28/2016 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB121 | |
| HB12 | |
| HB155 | |
| SB111 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 155 | TELECONFERENCED | |
| += | HB 12 | TELECONFERENCED | |
| *+ | SB 111 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 121 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
January 28, 2016
1:32 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Cathy Giessel, Vice Chair
Senator Kevin Meyer
Senator Johnny Ellis
MEMBERS ABSENT
Senator Gary Stevens
COMMITTEE CALENDAR
SENATE BILL NO. 121
"An Act relating to a security freeze on the consumer credit
report of a minor."
- MOVED SB 121 OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 12(L&C)
"An Act relating to mortgage lending, mortgage loan originators,
and depository institutions; and providing for an effective
date."
- HEARD AND HELD
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 155(FIN)
"An Act repealing an exploration incentive credit; amending the
calculation of adjusted gross income for purposes of the tax on
gambling activities aboard large passenger vessels; repealing
the amount that may be deducted from the motor fuel tax to cover
the expense of accounting and filing for the monthly tax return;
repealing a provision allowing an investigation expense under
the Alaska Small Loans Act to be in place of a fee required
under the Alaska Business License Act; repealing the amount that
may be deducted from the tobacco excise tax to cover the expense
of accounting and filing for the monthly tax return; repealing
the discount on cigarette tax stamps provided as compensation
for affixing the stamps to packages; and providing for an
effective date."
- HEARD AND HELD
SENATE BILL NO. 111
"An Act relating to flame retardants and to the manufacture,
distribution, and sale of products containing flame retardants;
and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 121
SHORT TITLE: SECURITY FREEZE ON MINOR'S CREDIT REPORT
SPONSOR(s): SENATOR(s) MEYER
01/19/16 (S) PREFILE RELEASED 1/8/16
01/19/16 (S) READ THE FIRST TIME - REFERRALS
01/19/16 (S) L&C, JUD
01/26/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
01/26/16 (S) Heard & Held
01/26/16 (S) MINUTE (L&C)
01/28/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 12
SHORT TITLE: MORTGAGE LENDING AND LOAN ORIGINATORS
SPONSOR(s): REPRESENTATIVE(s) HUGHES
01/21/15 (H) PREFILE RELEASED 1/9/15
01/21/15 (H) READ THE FIRST TIME - REFERRALS
01/21/15 (H) L&C
04/13/15 (H) L&C AT 3:15 PM BARNES 124
04/13/15 (H) Heard & Held
04/13/15 (H) MINUTE (L&C)
04/15/15 (H) L&C AT 3:15 PM BARNES 124
04/15/15 (H) Moved CSHB 12(L&C) Out of Committee
04/15/15 (H) MINUTE (L&C)
04/16/15 (H) L&C RPT CS (L&C) NT 3DP 3NR
04/16/15 (H) DP: TILTON, HUGHES, OLSON
04/16/15 (H) NR: LEDOUX, KITO, JOSEPHSON
04/16/15 (H) TRANSMITTED TO (S)
04/16/15 (H) VERSION: CSHB 12(L&C)
04/16/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/16/15 (S) Scheduled but Not Heard
04/17/15 (S) READ THE FIRST TIME - REFERRALS
04/17/15 (S) L&C
01/28/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 155
SHORT TITLE: FEES; WAIVERS; CREDITS; DEDUCTIONS; TAXES
SPONSOR(s): REPRESENTATIVE(s) THOMPSON
03/20/15 (H) READ THE FIRST TIME - REFERRALS
03/20/15 (H) FIN
04/02/15 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/02/15 (H) -- MEETING CANCELED --
04/03/15 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/03/15 (H) <Bill Hearing Canceled>
04/06/15 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/06/15 (H) Heard & Held
04/06/15 (H) MINUTE (FIN)
04/09/15 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/09/15 (H) Scheduled but Not Heard
04/13/15 (H) FIN RPT CS (FIN) NT 6DP 2NR
04/13/15 (H) DP: EDGMON, GATTIS, WILSON, PRUITT,
SADDLER, THOMPSON
04/13/15 (H) NR: MUNOZ, GUTTENBERG
04/13/15 (H) FIN AT 9:00 AM HOUSE FINANCE 519
04/13/15 (H) Moved CSHB 155(FIN) Out of Committee
04/13/15 (H) MINUTE (FIN)
04/16/15 (H) TRANSMITTED TO (S)
04/16/15 (H) VERSION: CSHB 155(FIN)
04/17/15 (S) READ THE FIRST TIME - REFERRALS
04/17/15 (S) L&C, FIN
01/28/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 111
SHORT TITLE: LIMIT FLAME RETARDANT ITEMS/FURNITURE
SPONSOR(s): SENATOR(s) WIELECHOWSKI
04/16/15 (S) READ THE FIRST TIME - REFERRALS
04/16/15 (S) L&C, JUD
01/28/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
EDRA MORLEDGE, Staff
Senator Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SB 121 on
behalf of the sponsor.
REPRESENTATIVE SHELLEY HUGHES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 12.
GINGER BLAISDELL, Staff
Representative Shelley Hughes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Delivered a sectional analysis for HB 12 on
behalf of the sponsor.
KEVIN ANSELM, Director
Division of Banking and Securities
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered fiscal questions related to HB 12.
TRACY RENO, Financial Institutions Examiner
Division of Banking and Securities
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered fiscal questions related to HB 12.
KRISTIE BABCOCK
Independent State Farm Agent
Kenai, Alaska
POSITION STATEMENT: Testified in support of HB 12.
ROGER BAINBRIDGE, In House Counsel
State Farm Bank (FSB)
Bloomington, Illinois
POSITION STATEMENT: Spoke in support of HB 12.
STEVE P. ASHMAN, Division Manager
Public Health Initiatives and Partnerships (PHIP)
Health and Human Services Department
Municipality of Anchorage
POSITION STATEMENT: Testified on HB 12 in support of the
exemption for government agencies.
REPRESENTATIVE STEVE THOMPSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 155
BRODIE ANDERSON, Staff
Representative Steve Thompson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 155 on behalf of the sponsor.
BRANDON SPANOS, Deputy Director
Tax Division, Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Discussed the fiscal note for HB 155.
DANIEL STICKEL, Assistant Chief Economist
Tax Division
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Discussed the fiscal note for HB 155.
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 111.
THOMAS "TJ" PRESLEY, Staff
Senator Bill Wielechowski
POSITION STATEMENT: Provided an overview of SB 111 on behalf of
the sponsor.
MAUREEN SWANSON, Director
Learning Disabilities Association of America (LDA)
Pittsburg, Pennsylvania
POSITION STATEMENT: Testified in strong support of SB 111.
JENNIFER GIBBONS, Senior Director
State Government Affairs
Toy Industry Association Inc.
POSITION STATEMENT: Expressed concerns with the SB 111.
DAVID LEVINE, Co-founder and CEO
American Sustainable Business Council
Washington, D.C.
POSITION STATEMENT: Testified in support of SB 111.
CURTIS THAYER, President and CEO
Alaska State Chamber of Commerce
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 111.
TIM SHESTEK
American Chemistry Council
POSITION STATEMENT: Testified in opposition to SB 111.
ACTION NARRATIVE
1:32:39 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:32 p.m. Present at the call to
order were Senators Ellis, Giessel, Meyer, and Chair Costello.
SB 121-SECURITY FREEZE ON MINOR'S CREDIT REPORT
1:34:21 PM
CHAIR COSTELLO announced the consideration of SB 121. [This is
the second hearing and public testimony is closed.]
1:34:45 PM
EDRA MORLEDGE, staff to Senator Kevin Meyer, sponsor of SB 121,
stated that she provided a supplemental packet based on the
questions that were asked during the previous meeting. She
recapped the following questions and answers:
Q. Senator Stevens inquired as to the meaning of "has
not had the disabilities of a minor removed...: and
asked if there might be a better way to state that.
A. The specific wording on lines 9-10 of the bill
directly references Alaska Statute 09.55.590, and
refers to minors that have been emancipated. As the
bill sponsor, I do not object to different terminology
if it allows for a clearer reading and understanding
of the legislation, if the drafters are able to do so
within their drafting guidelines.
Q. Senator Ellis inquired as to where the idea for the
legislation came from.
A. A constituent of Senate District M, Laura Hughes,
brought the idea for the legislation to my office last
summer. Since that time, we've discovered a number of
states with similar laws on the books or in the
process of passing similar legislation. SB 121 is
modeled after legislation as researched through the
National Council of State Government.
Q. Senator Ellis asked if Alaska would be the fifth
state to adopt this legislation.
A. The most current data available from the NCSL
website lists:
· 27 states allow "any consumer" to request a
security freeze on their credit report,
· 4 states use the terminology "any consumer that
is a resident,"
· 4 states allow a parent or guardian of a minor
under 18 to request a freeze,
· 20 states specifically allow a parent or guardian
of a minor under age 16 to request a freeze,
· 19 states specifically allow a parent or guardian
of a "protected" or an "incapacitated" person to
request a freeze,
· 5 states specify the individual for whom the
freeze is requested has been a victim of identity
theft, and
· 2 states allow for a credit freeze only in the
case of identity theft (Mississippi and South
Dakota).
Aside from the states that only specify "a consumer,"
or "a victim of identity theft," the rest are a
mixture of the remaining criteria listed above.
Q. Senator Stevens inquired as to the process for
lifting a credit freeze.
A. The specific section of Alaska's Personal
Information Protection Act that governs removal of
security freeze is AS 45.48.140. This section states
that the consumer can request the removal of the
freeze by contacting the agency by mail or in
accordance with other established procedures
(electronic means), and provide information required
to establish identity. At that point, the consumer
credit reporting agency has 3 business days to remove
the freeze.
Q. Senator Costello asked what the national average is
for child identity theft.
A. The national figure for child identity theft varies
depending on the source, but generally it is reported
at between 10-11 %.
MS. MORLEDGE noted that the packets also contain communications
from the Department of Law (DOL) indicating that they do not
have an issue with the current wording of the bill.
CHAIR COSTELLO asked the sponsor if he had any comments.
1:37:52 PM
SENATOR MEYER said he is pleased that the constituent brought
the issue forward and his staff summarized the bill nicely.
1:38:09 PM
SENATOR GIESSEL motioned to report SB 121, labeled 29-LS1129\A,
from committee with individual recommendations and attached
fiscal note(s).
CHAIR COSTELLO announced that without objection, SB 121 is
reported from the Senate Labor and Commerce Standing Committee.
1:38:27 PM
At ease
HB 12-MORTGAGE LENDING AND LOAN ORIGINATORS
1:39:50 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of HB 12. [This is the first hearing and CSHB
12(L&C) is before the committee.]
1:40:03 PM
REPRESENTATIVE SHELLEY HUGHES, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 12, introduced the legislation speaking to
the following sponsor statement:
House Bill 12 improves the mortgage lending industry
by equalizing the licensing requirements for mortgage
loan originators and mortgage loan brokers according
to the kind of work conducted rather than a business
structure or anomaly in current statute. Licensing the
level of professional duties and the level of
liability in the lending process helps create a more
equitable and friendly statutory environment for
business in Alaska.
The bill would also exempt Alaska Housing Finance
Corporation and any government agency participating in
the Federal HUD (Housing and Urban Development)
program from the State mortgage lender/broker
licensure requirement. The government agencies would
be responsible to ensure that their mortgage loan
originators meet standards equivalent to the federal
SAFE Act requirements.
HB 12 helps create a more level playing field in the
mortgage lending industry by eliminating unnecessary
layers of licensure and reduces the administrative
burden and costs to these businesses.
1:43:38 PM
SENATOR COSTELLO asked Ms. Blaisdell to walk through the
sectional for the bill.
1:43:56 PM
GINGER BLAISDELL, Staff to Representative Shelley Hughes,
sponsor of HB 12, provided the following sectional analysis for
HB 12:
Section 1: Allows for an individual to be licensed as
a mortgage loan originator if he/she works under "an
exclusive contract for a registered depository
institution" or "be sponsored by a registered
depository institution under AS 06.60.014." Sponsored
means to conduct business under the supervision of a
mortgage licensee or registered depository.
This section creates a supervisor to employee-type of
relationship with contractors.
Section 2: Adds a new section that outlines the
requirements for a depository institution to be
eligible to sponsor a mortgage loan originator.
Section 3: Adds exemptions for "a federal, state, or
local government agency, including an agency that
arranges or provides financing for mortgage loans." In
doing this the state of Alaska recognizes these
agencies under the final rulings of the SAFE Act
effective 8/30/2011. Agencies that will be affected
are AHFC that offers HUD loans and the Anchorage HUD
Program.
MS. BLAISDELL stated that the section exempting non-profits from
certain licensing requirements, but that section was removed
because some non-profits are venturing into a competitive market
place so oversight is warranted.
1:46:46 PM
SENATOR COSTELLO pointed out that the fiscal note needed to be
updated because it mentions an exemption for non-profits.
MS. BLAISDELL continued the sectional analysis.
Section 4 adds registered depository institutions to
the banks that must have a surety bond.
Section 5 adds registered depository institutions that
cover more than one location are not required to file
more than one bond.
Section 6 adds registered depository institutions to
the banks that must bond for three years.
Section 7 adds registered depository institutions to
the banks for which the department can determine that
the bond is unsatisfactory.
Section 8 requires a registered depository institution
to follow the same reporting requirements as a
mortgage licensee and be subject to the same penalties
if the report is not filed as required.
Sections 9-13 add registered depository institutions
in the requirements for managing mortgage records.
Section 14 references the availability of out-of-state
records for registered depository institutions. If a
bank is located outside Alaska, the Division of
Banking and Securities can go to that other state to
conduct an audit or review.
Section 15 allows the department investigation and
examination authority for registered depository
institutions.
Section 16 adds a new subsection that defines a
"person" as a contractor who is working for the
registered depository institution.
Section 17 allows the department the authorization to
censure, suspend or bar a depository institution in
the same manner as a mortgage licensee.
Section 18 adds the applicability of administrative
procedures to hold administrative hearings and issue
disciplinary orders on RDIs for registered depository
institutions.
Section 19 adds a new definition of a registered
depository institution. That is a bank located outside
the state of Alaska registering as the supervisor of
these independent contractors.
MS. BLAISDELL said the effective date will be corrected to
reflect January 1, 2017.
1:50:29 PM
SENATOR GIESSEL asked if the bill would affect any business
other than State Farm Bank.
MS. BLAISDELL replied State Farm Bank and its contractors are
the primary businesses that would be affected, but there may be
others with a similar business model.
SENATOR GIESSEL asked if conducting fewer audits will have a
positive fiscal impact on the division.
MS. BLAISDELL said the fiscal note is zero and she didn't
believe that the Division of Banking and Securities anticipated
additional costs. The state will see efficiencies if it only
audits State Farm Bank as opposed to the 19 audits it conducts
now.
1:53:29 PM
KEVIN ANSELM, Director, Division of Banking and Securities,
Department of Commerce, Community and Economic Development
(DCCED), Anchorage, Alaska, introduced herself.
CHAIR COSTELLO asked if the administration has a positon on the
bill.
MS. ANSELM reported that the administration is neutral on HB 12.
CHAIR COSTELLO asked if she wanted to comment on the potential
efficiencies or any of Senator Giessel's questions.
MS. ANSELM offered that the bill would have a zero fiscal impact
to the division because they will conduct one larger examination
of the employing depository as opposed to individual agents.
CHAIR COSTELLO asked if there are any consumer protection issues
related to the bill.
1:54:52 PM
TRACY RENO, Financial Institutions Examiner, Division of Banking
and Securities, Department of Commerce, Community and Economic
Development (DCCED), Anchorage, Alaska, said the division will
be able to discuss enforcement or supervisory issues with State
Farm Bank directly. The division does not have access to those
reports right now because they deal with the individual agents.
1:55:28 PM
CHAIR COSTELLO opened public testimony for HB 12.
1:55:44 PM
KRISTIE BABCOCK, Independent State Farm Agent, Kenai, Alaska,
stated that she is an independent contractor State Farm agent.
She has been an agent and small business owner in Kenai for the
past 16 years and has eight employees. She markets insurance and
bank products to Alaskans exclusively on behalf of State Farm
Insurance companies and State Farm Bank.
She stated that as an originator, she processes initial
applications and is required to be licensed and follow all the
regulations for mortgage loan originators (MLO). HB 12 doesn't
change or reduce that requirement, but it will change the
requirement for her to carry a mortgage broker license and serve
as her own sponsor and supervisor. Instead, State Farm Bank will
be able to step in and register with the State of Alaska as her
sponsor and supervisor. The bank assumes all the liabilities,
responsibilities and oversight of a mortgage broker. This makes
sense because the bank is the lender and she is an originator.
It also avoids the circumstance of sponsoring and supervising
herself.
MS. BABCOCK reported that 26 other states have passed
legislation similar to HB 12 and several other states are
considering it. She closed emphasizing that HB 12 does not
result in any less regulation for MLOs.
2:00:01 PM
SENATOR MEYER commented that is sounds as though other states
have had this problem and passed similar laws to address the
problem.
MS. BABCOCK agreed.
2:01:11 PM
ROGER BAINBRIDGE, In House Counsel, State Farm Bank (FSB),
Bloomington, Illinois, spoke in support of HB 12. He said Ms.
Babcock summarized the issues nicely and anything he added would
be redundant. Addressing the question of whether this pertained
only to State Farm Bank, he clarified that the bill addresses
independent contractors who work exclusively in mortgage
origination on behalf of a federally chartered bank. Thus, it
would apply to anybody that has the same business model as State
Farm Bank and meets the definitions that have been added to this
legislation.
2:02:20 PM
STEVE P. ASHMAN, Division Manager, Public Health Initiatives and
Partnerships (PHIP), Health and Human Services Department,
Municipality of Anchorage, stated that PHIP manages pass-through
programs from the federal government such as Housing and Urban
Development (HUD) and falls under both the federal and state
SAFE acts. Due to 2011 clarifications of the SAFE Act, HUD
determined that state employees are not required to obtain state
licenses and registration for any loan origination under a
government housing assistant program. As currently written, HB
12 will mirror the federal law and the department is in support
of the exemption for government agencies, he said.
2:05:18 PM
CHAIR COSTELLO closed public testimony and held HB 12 in
committee awaiting updates to the fiscal note and effective
date.
HB 155-FEES; WAIVERS; CREDITS; DEDUCTIONS; TAXES
2:05:51 PM
CHAIR COSTELLO announced the consideration of HB 155. [This is
the first hearing and CSHB 155(FIN) is before the committee.]
2:06:05 PM
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 155, introduced the legislation stating
the following:
In the 28th Legislature, legislation was passed that
defined indirect expenditures as foregone revenue. The
legislation also set forth a requirement that certain
reports identify potential loss of foregone revenue by
the department. The Legislative Finance Indirect
Expenditure Report reviewed the departments of
Commerce, Community and Economic Development, Fish and
Game, Health and Social Services and Revenue. The
report identified certain credits, fees, discounts,
and deductions that should be terminated. House Bill
155 repealed some of these expenditures with an
estimated increase of revenue of approximately
$450,000.
He requested that his staff walk through the bill.
2:07:02 PM
BRODIE ANDERSON, Staff, Representative Steve Thompson, Alaska
State Legislature, sponsor of HB 155, stated that the bill is
the next step in addressing the foregone revenue to the state
identified in the 2015 Indirect Expenditure Report. HB 155 will
repeal the following indirect expenditures:
· Small Loan Company Business License Exemption
· The Exploration Incentive Credit
· Tobacco Product Tax Deduction for Timely Filing
· Cigarette Tax Stamp Discount
· Motor Fuel Tax Timely Filing
· Large Passenger Vessel Gambling Tax Deduction
MR. ANDERSON explained that the bill repeals the exemptions,
credits, deductions and discounts in Section 10. The remainder
of the sections provide cleanup language to the portions of
statute that reference those statutory repeals. He provided the
following sectional analysis:
Sections 1-2 repeal references to the Exploration
Incentive Credit from AS 41.09.010(a) and (b).
Section 3 removes references from the Exploration
Incentive Credit from AS 43.20.043(g).
Section 4 amends AS 43.55.210 to disallow the
deduction for federal taxes for the purposes of
calculating the state tax on large passenger cruise
ship gambling activity.
Section 5 amends AS 43.40.010(c) by removing language
that allowed motor fuel dealers to retain a portion of
the motor fuel tax due to cover expenses for filing
motor fuel tax return.
Section 6 removes references to the Cigarette Tax
Stamps from AS 43.50.590(a).
Sections 7, 8 and 9 remove references from the
Exploration Incentive Credit from AS 43.55.011(m),
43.55.020(a) and 43.55.023(l).
Section 10 repeals AS 06.20.030(c) The Small Loan
Company License; AS 38.05.180(i) The Exploration
Incentive Credit; AS 41.09.030 The Exploration
Incentive Credit; AS 43.50.330(b) The Excise Tax on
Tobacco Products;, 43.50.540(c) The Cigarette Tax
Stamps; and 43.50.540(h) the discount for the stamps.
Section 11 provides transition language relating to
the Exploration Incentive Credit.
Section 12 contains the effective date of January 1,
2016 for the gambling tax activities.
Section 13 provides an effective date of July 1, 2015
for the other sections in order to comply with the
State of Alaska fiscal calendar year and all other
related fees, discounts and deductions that are
calculated monthly.
2:10:47 PM
CHAIR COSTELLO questioned the reason for the indeterminate
fiscal note when the anticipated additional revenue is
approximately $450,000.
MR. ANDERSON deferred the question to Brandon Spanos.
2:11:29 PM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue (DOR), Anchorage, Alaska, explained that DOR doesn't
collect information needed to estimate the impact of all the
provisions of the bill. The estimated increased revenue of
approximately $450,000 is based on the money forgone for
affixing stamps to cigarette packs and other tobacco products,
the motor fuel credit and large passenger gaming. "Those are
numbers we can quantify and that's where that $450,000 comes
from," he said.
2:12:59 PM
DANIEL STICKEL, Assistant Chief Economist, Tax Division,
Department of Revenue (DOR), Juneau, Alaska, added that DOR
currently does not collect information about the deduction for
federal taxes so there may be some revenue impact from the Large
Passenger Vessel Gambling Tax but the amount of benefit is
unclear. "The $450,000 is probably the floor. The actual revenue
benefit might be higher than that but it is the lack of
information on the gambling taxes is the reason we put an
indeterminate on the revenue."
CHAIR COSTELLO asked if this money would go into the general
fund.
MR. SPANOS indicated that was correct.
CHAIR COSTELLO noted that the sponsor was nodding his head in
the affirmative.
REPRESENTATIVE THOMPSON offered that these credits are taken
against corporate taxes so the business would pay more tax to
the state, which he assumes would go to the general fund.
CHAIR COSTELLO noted that the fiscal note says the regulations
would go into effect the last day of 2016. She asked if that
will cause a problem.
MR. ANDERSON said he spoke with her staff about the need for a
committee substitute to reflect new dates. "The 2016 date would
be 2017 and the 2015 dates would turn into 16."
CHAIR COSTELLO asked if there has been discussion about
emergency regulations to maintain the current timeline.
MR. ANDERSON answered no, but it is a conversation the sponsor
could have with the department.
2:16:21 PM
SENATOR MEYER expressed appreciation for the legislation.
2:16:33 PM
CHAIR COSTELLO opened public testimony. Finding none, she closed
public testimony and held HB 155 in committee.
2:17:47 PM
At ease
SB 111-LIMIT FLAME RETARDANT ITEMS/FURNITURE
2:19:39 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 111. [This is the first hearing.]
2:19:48 PM
SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 111, said he has been working on this
issue for eight years for these reasons:
Imagine that the cribs that your baby slept in are
full of toxic chemicals. They are.
Imagine if the high chairs your kids sat in are full
of toxic chemicals. They are.
Imagine if the furniture in your home was full of
toxic chemicals. It is.
The seats, toys, kids clothing is all full of toxic
chemicals. A toxic cocktail that is in our mattresses,
that is in our furniture, not measured by ounces but
by pounds in many cases. These chemicals cause
neurological deficits, prenatal damage,
hypothyroidism, [and] breast cancer. [They are]
chemicals that bio accumulate in animals and fish and
are poisoning Alaskans, especially those that live a
subsistence lifestyle. [They are] chemicals that are
poisoning firefighters who fight fires and breath in
these toxic substances.
Do you believe we should take some sort of action to
protect Alaskans from these chemicals?
Now imagine if we had safer alternatives that are
already being widely used.
Imagine that some states in the United States have
already banned or enacted restrictions against these
toxic chemicals. They have.
Imagine if the European Union has banned these
chemicals. They have.
Should we continue to sit back and do nothing? Do we
not have an obligation to our constituents and to the
people of Alaska to do something? I believe we do.
The Alaska Constitution tells us what our obligation
is. Article VII, Section 4 says very clearly, "The
legislature shall provide for the promotion and
protection of public welfare." That is exactly what we
are doing with this bill, protecting the public
health.
I've heard all the industry arguments against this
bill over the years. They come from the chemical
industry and the phony Astroturf organizations they've
set up over the years to defeat bills just like this,
and bills like this all over the country. They've
spent hundreds of thousands of dollars just in Alaska
and millions of dollars across the country defeating
bills like this. Those are some harsh statements but I
believe they're 100 percent warranted.
Let me tell you just how far these organizations in
the chemical industry has gone over the years to
defeat bills like this. To defeat this bill, in fact.
Many members will remember hearings on this bill back
in 2010 and 2012. We heard from a Dr. David Heimbach
who testified three times in front of the legislature.
He presented himself as an eminently qualified doctor.
In fact, he was the former head of the Harborview
Medical Center burn unit in Seattle.
He told the tragic story of a six-week old baby girl
whose life would have been saved had flame retardants
been used in her crib. He shared pictures of burn
victims. Legislators were concerned. The bill passed
the Senate but it was defeated in the House.
Several months later it turned out that nearly all of
Dr. Heimbach's testimony was a lie. In a six-day front
page spread, the Chicago Tribune dug into the stories
and claims of Dr. Heimbach and found the claims and
patients he had testified about across the country
were, in fact, non-existent. The Alaska Dispatch News,
which was then the Anchorage Daily News, did stories
on the fraud Dr. Heimbach and these organizations
committed against the legislature. This one dated
March 19, 2014, "Washington Physician Accused of
Deception Testified Three Times on Alaska Bills." This
one, "Seattle Burn Doctor Accused of Dishonesty in
Legislative Testimony Surrenders License."
The opponents of this bill will bring up the same old
tired complaints and arguments against this bill. That
the EPA should regulate it. Since when does Alaska
want to turn over authority to the EPA to regulate
this? The EPA has had 25 years to do something on
this. They've done nothing. That the presence of
chemicals in furniture in and of itself is not
dangerous. Hundreds of academic and scientific studies
say otherwise. We've provided you with copies of
numerous studies; we're happy to get you more.
The chemical industry will argue that Congress is
working on some legislation dealing with this. They've
had decades to do this. Nothing. Further, in the
legislation that is currently being proposed, states
retain the right under that proposed federal
legislation to continue to regulate harmful substances
in their own states. Please don't buy it this time.
They have a vested financial interest in killing this
bill. These are dangerous chemicals that have no place
in our homes. There are safer alternatives that are
just as inexpensive that are available.
CHAIR COSTELLO asked if this is the same bill that he introduced
previously.
MR. WIELECHOWSKI replied it is virtually the same.
2:25:24 PM
THOMAS "TJ" PRESLEY, Staff, Senator Bill Wielechowski, sponsor
of SB 111, informed the committee that he would provide a brief
overview of the bill, its history, and the growing amount of
literature on the danger of polybrominated diphenyl ethers
(PBDEs) to human and animal health. Finally, he would review the
substantive contents of the packet.
He stated that SB 111 does two things. First, the bill prohibits
the manufacture, sale, or distribution of upholstered furniture
and children's items that contain more than 100 parts per
million of certain harmful flame retardants. Second, it requires
manufacturers to alert consumers to the presence of these
chemical flame retardants by labeling the products. The bill
provides civil penalties for violating this law that start small
and are capped for each company in one calendar year. SB 111
also contains a definition section and exemptions for people who
may sell these products from one person to another, such as on
Craigslist.
MR. PRESLEY reported that the sponsor has requested a committee
substitute (CS), based on advice from the Department of Labor
and Workforce Development (DOLWD), to move the penalties
provision from Chapter 18 to the Consumer Protection Division
within the Department of Law. Chapter 18 only directs DOLWD to
inspect schools that have evidence of asbestos.
MR. PRESLEY reminded the members that in 2012, Dr. Heinbach's
tragic story and pictures he shared with members stopped the
bill in its tracks. A few months later evidence proved that his
stories were untrue and Washington State prosecuted him for
fraud. As a result, he willingly surrendered his medical
license. Subsequent investigative reporting established a
connection between Citizens for Fire Safety that spent $230,000
to defeat the bill in 2012, Dr. Heinbach and the American
Chemical Council that opposes this bill today. The former
executive director for the now defunct Citizens for Fire Safety
and a former employee for the American Chemical Council, Grant
David Gillam, made headlines for breaking ranks after learning
about payments to Dr. Heinbach. Mr. Gillam eventually testified
in support of a full flame retardant ban in California that
passed in 2014.
MR. PRESLEY stated that Dr. Vytenis Babrauskas was the first
person in the world to be awarded a Ph.D. in fire protection
engineering. When he learned that his work was being used to
defend the use of flame retardants, he wrote a paper titled
"Flame Retardants in Furniture Foam: Benefits and Risks." The
conclusion is summarized as follows:
Since 1975, hundreds of millions of kilograms of
pentaBDE and its replacements have been used to meet
California TB117. A fire safety benefit has not been
established. Research suggests that this standard
should be reevaluated in light of the fire science and
health information discussed above. Prior to
implementing new flammability standards, decision
makers should evaluate the potential fire safety
benefit as well as the health and environmental
impacts of the chemicals, materials, or technologies
likely to be used. Special scrutiny should be given to
small open-flame standards that are likely to be met
by adding organohalogen flame retardants to foam or
plastic in consumer products.
MR. PRESLEY directed attention to the packets that contain more
literature on the effects of PBDEs on human and animal health
and offered to provide more if any members desired. "But suffice
to say, the dangers to human health include risks of neuro
developmental processes in young children being slowed or
changed, passage of the dangerous chemical through the umbilical
cord from mother to child, cancer, infertility, attention
deficit disorders among others," he said.
He said SB 111 is the start of a process to purge PBDEs from the
food supply because studies have established that these
chemicals are in the blood of many fish stocks. High levels of
these chemicals are beginning to show in the autopsies of birds
and animals that feed on these stocks. The entrance of PBDEs
into the food supply is a great concern for Alaskans generally
and those living a subsistence lifestyle and in rural
communities in particular.
2:32:20 PM
CHAIR COSTELLO asked if he wanted to comment on the short title
being broader than what is in the bill.
MR. PRESLEY replied the sponsor's intent is for the bill to be
limited to upholstered furniture and children's items. He added
that he could speak to the drafter to ensure that is reflected
in the short title.
CHAIR COSTELLO said she had two questions about the labeling
statement on page 2, line 24. First, is the label itself an
admission that the manufacturer is breaking the law? Second, how
do you differentiate between a flame retardant that's listed in
the bill and one that is not harmful?
2:34:10 PM
MR. PRESLEY clarified that the bill does not ban PBDEs; it
limits their use in upholstered furniture and children's items
to less than 100 parts per million. Responding to the second
question, he said evidence shows that there are safer
alternatives for flame retardants that are not related to the
chemical compound addressed in the bill. He added that a number
of large Fortune 500 companies including Ashley Furniture,
Walmart, Macys, Pier I Imports, and Ikea have pledged not to buy
office furniture with these flame retardants and have begun to
produce flame retardant fabrics that do not have the harmful
chemicals listed in the bill. He provided information about the
chemicals they are using, which are widely available in other
states.
CHAIR COSTELLO asked if that is why the effective date is July
2017.
MR. PRESLEY explained that the delayed effective date is an
attempt to give industry time to understand the bill and take
action accordingly.
CHAIR COSTELLO asked how the bill will affect Alaska businesses
that may have affected inventory.
MR. PRESLEY said he did not have that information, but would
work to find out.
CHAIR COSTELLO asked where the list of chemicals in Section 1
came from.
MR. PRESLEY replied it was compiled in consultation with a
number of scientific groups like Alaska Community Actions on
Toxics.
SENATOR MEYER asked if limiting the use of these chemicals
through federal law had been pursued.
MR. PRESLEY replied the inaction by the EPA and the federal
government over the past 25 years is what prompted states to
take action. He added that the U.S. Senate currently is working
on the Toxic Substances Act, which allows states to apply for a
waiver to enact more restrictive standards than the federal
minimum. The proposed Act also allows a state to take action on
a chemical while it is under study by the EPA.
SENATOR MEYER asked if there have been lawsuits against the
manufacturers of PBDEs.
MR. PRESLEY offered to follow up with an answer.
SENATOR MEYER asked if Washington State has passed a similar
law.
MR. PRESLEY replied a bill was introduced this session but he
didn't know if it had passed.
2:39:15 PM
CHAIR COSTELLO opened public testimony on SB 111.
2:39:43 PM
MAUREEN SWANSON, Director, Healthy Children's Project, Learning
Disabilities Association of America (LDA), Pittsburg,
Pennsylvania, testified in support of SB 111 reading from
prepared testimony.
LDA is the oldest and largest national volunteer
organization advocating for children and adults with
learning disabilities. We have chapters and members
throughout the country, including in Alaska. We are
witnessing an alarming increase in neuro developmental
disorders that cannot be fully explained by changes in
awareness or diagnosis. One in six children in the
United States has a reported developmental disability
including autism, attention deficit hyperactivity
disorder and other learning and developmental delays.
The National Academy of Sciences has stated that
environmental factors, including exposure to toxic
chemicals, in combination with genetics contribute to
at least one-quarter of all neuro developmental
disabilities in the United States. During fetal
development and early childhood the brain is
especially at risk from toxic chemicals, even at
extremely low exposure levels. Scientific evidence
clearly demonstrates that babies and young children
are regularly exposed to halogenated flame retardant
chemicals including the flame retardants named in SB
111. These exposures pose an elevated risk of serious
and lasting problems with learning and behavior,
including ADHD and autism.
These flame retardants cross the placenta to the fetus
and are detected in umbilical cord blood and in breast
mild. Because of their size and weight, rapid rate of
growth and development, metabolism and behaviors,
babies and children are likely to experience higher
chronic exposures to flame retardants than adults.
These chemicals migrate from furniture and children's
products into dust and then are ingested by young
children. A 2011 study of baby products found that 80
percent of the items tested contained flame retardant
chemicals while a 2014 study of 40 daycares and
preschools found toxic flame retardants in 100 percent
of dust samples at the facilities. What do these
constant exposures to toxic flame retardant chemicals
mean to the fetus and young children? In the last five
years, three public studies of hundreds of pregnant
women and children have resulted in strikingly similar
findings. Children more highly exposed to PBDE flame
retardants prenatally, have lower IQ scores, cognitive
delays, and attention problems. The decrements in IQ
persist throughout the children's school years.
The flame retardant chemicals named in SB 111 are
structurally similar to thyroid hormones, which are
essential for healthy brain development. In 2015,
scientists with the Endocrine Society concluded that
PBDE exposures interfere with thyroid. Recent studies
of flame retardants that have replaced PBDEs show
these chemicals can also disrupt thyroid hormones and
pose serious risks to brain development.
In plain English, the chemicals named in SB 11 change
babies brains. I'd like to highlight briefly several
specific examples. The chlorinated tris flame
retardant chemicals are notorious. In the late 1970s,
TDCPP was one of several tris flame retardants banned
from use in children's pajamas because of grave risks
to children's health. Instead of halting production
and use of TDCPP, manufacturers instead added this
toxic chemical to other children's products and to
furniture. A recent study found that TDCPP was the
most commonly detected flame retardant in baby
products containing polyurethane foam. In 2011,
scientists found that TDCPP as well as other tris
flame retardants may affect brain development with
similar or even greater potency than chemicals already
known to be neurotoxic. Fire Master 550 is the second
most commonly detected flame retardant in polyurethane
foam. It's used in furniture and baby products
including nursing pillows and changing pads. Two of
Fire Master 550's main components, TBD and TBPH are
brominated compounds that migrate from products into
dust. In 2012, research implicated Fire Master 550 as
an endocrine disrupting chemical with adverse effects
at levels much lower than the no observable adverse
effect level reported by the manufacturer. The study
suggests that Fire Master 550 disrupts thyroid
hormones and harms the developing brain.
In conclusion, the toxic flame retardants that are
named in the Toxic Free Children Act migrate from
furniture and children's products into dust and are
ingested by young children. They cross the placenta,
build up in the body, and in breast milk. These flame
retardants are structurally similar to PCB and also to
thyroid hormones. These chemicals put Alaska's
children at greater risk of learning and development
disorders including ADHD and autism. The Learning
Disabilities Association of America urges that the
Senate pass the Toxic Free Children's Act to protect
children's minds and bodies from these toxic flame
retardants.
2:45:47 PM
JENNIFER GIBBONS, Senior Director of State Government Affairs,
Toy Industry Association Inc., stated that while TIA shares the
sponsor's desire to ensure the safety of children, they do have
concerns with the bill as drafted. TIA's preference is to have
regulation at the federal level because unique state regulations
are challenging for manufacturers that sell in multiple states.
She said the network of existing federal regulations could
address these issues. In fact, the Consumer Product Safety
Commission is evaluating the use of flame retardants in
children's products and whether new restrictions are warranted.
She stated that toy manufacturers typically do not add flame
retardants to toys, but their internal components and electronic
circuit boards may contain trace amounts of flame retardants.
While these components would be inaccessible to a child, she
said they are critical to the safety of the product.
2:48:32 PM
DAVID LEVINE, Co-founder and CEO, American Sustainable Business
Council (ASBC), Washington, D.C. testified in support of SB 111.
This is a growing network of business organizations and
companies that work to grow businesses, create new jobs, provide
benefits to communities, and protect their health. He also
represents companies that are committed to advancing safer
chemicals in products. He said we believe it is important to
pass the Toxic Free Children's Act because scientific research
continues to find connections between toxic chemicals and
childhood diseases. This is eroding consumer confidence and
motivating companies to identify safer alternatives to these
toxic chemicals. He continued:
We believe it is time to take action on these
products," he said. ASBC commissioned a study that
found that safer chemicals are proving to be more
important to growing the economy than traditional
chemicals. Polling shows that 73 percent of small
business owners overwhelmingly support reform and
strengthening chemical legislation. Now is the time to
have a predictable, consistent set of regulations that
will enable business to innovate and drive growth and
job creation. "As business leaders we're saying we can
work together with public and private sector, create
the economy of tomorrow today...in which all parents
can rest assured that the only choice is a healthy
one.
2:52:28 PM
CURTIS THAYER, President and CEO, Alaska State Chamber of
Commerce, Anchorage, Alaska, stated opposition to SB 111, but
support for protecting public health and the environment. Given
the interdependence of commerce in the U.S., regulatory
certainty across the states is necessary, he said. While the
bill is well-intended, it needlessly threatens the availability
of goods and the viability of business. He pointed out that the
EPA currently is assessing several flame retardants included in
the bill. "At a minimum, Alaska should be informed of those
scientific assessments before they pass [this] bill."
2:53:57 PM
TIM SHESTEK, American Chemistry Council (ACC), testified in
opposition to SB 111. He stated that ACC supports the attempt to
develop a uniform regulatory system. The EPA is conducting
assessments of all the flame retardants included in SB 111, as
well as others, and he would encourage the committee to be
informed by that information before moving to restrict any
chemical compound under this legislation. He pointed out that
this debate is not about whether there are organizations that do
or do not support safe chemicals. "Our companies have a
responsibility to produce safe products. We certainly understand
that and we're a part of the effort to ensure that the products
we make and their intended use are safe for consumers." He said
ACC is providing as much information as possible to the EPA to
help with their assessments. He noted that ACC submitted
detailed testimony that touches on some of the science issues
identified in the bill.
CHAIR COSTELLO held SB 111 in committee with public testimony
open.
2:56:29 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:56 p.m.