HB 74-CRIME COUNTERFEIT/NONFUNCTIONING AIRBAG  1:55:21 PM CHAIR GRAY announced that the final order of business would be HOUSE BILL NO. 74, "An Act establishing the crime of airbag fraud." 1:55:41 PM The committee took an at-ease from 1:55 p.m. to 1:56 p.m. 1:56:47 PM REPRESENTATIVE FRANK TOMASZEWSKI, Alaska State Legislature, as prime sponsor, presented HB 74. He paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: House Bill 74 establishes the crime of airbag fraud for knowingly selling, installing, or manufacturing a counterfeit or nonfunctioning airbag. Currently in Alaska, there is no law to prohibit the installation or reinstallation of airbags that do not meet federal safety standards. By establishing airbag fraud, House Bill 74 prohibits bad actors from knowingly selling, installing, or manufacturing these dangerous and improper devices. Similar legislation already exists in over 30 states. House Bill 74 establishes airbag fraud as a Class A misdemeanor or a Class C felony if death or serious injury to another person results. House Bill 74 protects owners and employees of motor vehicle dealerships if they are unaware of counterfeit parts in a vehicle. It does not create a duty for owners and employees to inspect a vehicle for counterfeit parts before selling it. It does not inhibit the sale of vehicles for parts or salvage, or as a transfer to or from an insurance company to fulfil an insurance claim. 1:59:39 PM DAVID GOFF, Staff, Representative Frank Tomaszewski, Alaska State Legislature, on behalf of Representative Tomaszewski, prime sponsor, presented sectional analysis for HB 74 [included in the committee packet], which read as follows [original punctuation provided]: Section 1 Amends the airbag fraud statute (AS 28.35.248) by establishing and defining airbag fraud as knowingly selling, offering for sale, installing, reinstalling, or manufacturing a counterfeit or nonfunctioning airbag or device that is intended to conceal a counterfeit or nonfunctioning airbag, or intentionally selling, leasing or trading a vehicle that the person knows has a counterfeit or nonfunctioning airbag. Establishes airbag fraud as a class A misdemeanor or a class C felony if death or serious physical injury to another person occurs as a result of the counterfeit or nonfunctioning airbag. Establishes that the liability of any party in a civil action is not precluded. Provides that this legislation does not create a duty to inspect a vehicle for a counterfeit or nonfunctioning airbag before its sale. This section excludes a person installing, reinstalling, or replacing an airbag on a vehicle used solely for police work; an owner or employee of a motor vehicle dealership or the owner of a vehicle who does not have knowledge that the vehicle's airbag is counterfeit or nonfunctioning; a person who transfers a vehicle title to an insurance company to satisfy an insurance claim; or an insurance company that sells or otherwise disposes of a vehicle as authorized by law or regulation. 2:01:34 PM CHAIR GRAY asked why insurance companies would be exempt from selling a vehicle with nonfunctioning or counterfeit parts. REPRESENTATIVE TOMASZEWSKI said generally, insurance companies are selling a vehicle that's been totaled with airbags deployed, thereby selling it as a "parts vehicle." He said the bill would acknowledge that and prevent the insurance company from being held liable. CHAIR GRAY questioned the intent of the language on page 2, line 19, which stated that the bill would not create a duty for the owner or employee of a motor vehicle dealership or the owner of the vehicle to determine whether the airbag is counterfeit or nonfunctioning. MR. GOFF deferred the question to the invited testifiers. 2:04:55 PM CHAIR GRAY opened invited testimony. 2:05:07 PM CRAIG ORLAN, Director of Local and State Government Retailers, American Honda Motor Company, stated that this problem has been plaguing the industry for over a decade. However, he assured the committee that it's not a problem with the legitimate automotive supply chain. When customers are involved in an accident, they sometimes replace their airbags at an independent repair facility, of which there are a handful of bad actors who knowingly replace those airbags with products that are not intended to provide protection, such as newspaper, rags, sawdust, or t-shirts. He shared examples to highlight the magnitude of the issue, reporting that the Wall Street Journal underwent an extensive investigation of the problem and identified several deaths and injuries all over the country that were directly related to these knockoffs. He said the primary goal is to prevent these counterfeits from being installed, adding that the vast majority of the products originate overseas. While there has been great support from federal law enforcement agencies, they have limited authority to act. By supplementing federal law with state law, state and federal cooperation would help prevent these airbags from entering the country and help address e-commerce retailers - who sell these products in a timely manner. He concluded that similar legislation had been enacted in 38 states with broad bipartisan support and no public opposition. 2:07:59 PM CHAIR GRAY,[referencing page 2, line 19], asked why the state would not want dealerships to determine whether an airbag is counterfeit or nonfunctioning. MR. ORLAN opined that it would be an undue burden to require vehicle owners or dealerships to physically remove the airbag to confirm that it is legitimate every time the vehicle diagnostic system reports an issue. CHAIR GRAY sought to confirm that it's impossible to check the functionality of an airbag without physically removing it. MR. ORLAN answered, "Correct." CHAIR GRAY asked for verification that this issue does not apply to a brand-new vehicle purchased from a dealership. MR. ORLAN confirmed that this is not a problem with the legitimate automotive manufacturing process; however, it could apply to a used vehicle from a dealership if it had repairs made in the aftermarket. CHAIR GRAY announced HB 74 would be held over.