HOUSE BILL NO. 378 An Act relating to the Alaska Food, Drug, and Cosmetic Act, including sales, advertising, certain devices, food donors, and food banks; making certain violations of organic food provisions and of the Alaska Food, Drug, and Cosmetic Act unfair methods of competition and unfair or deceptive acts or practices under certain of the state's unfair trade practices and consumer protection laws; and providing for an effective date. REPRESENTATIVE BILL WILLIAMS explained that the legislation was introduced as a result of complaints his office had received regarding food inspections throughout Alaska. Last year, he noted that he had requested Department of Environmental Conservation to determine a plan and through collaborative effort between the Department and his office, HB 378 was created. GERALDINE MCINTOSH, STAFF, REPRESENTATIVE BILL WILLIAMS, explained that HB 378 would amend provisions in Title 17 relating to the powers of the Commissioner of the Department of Environmental Conservation relating to food offered or sold to the public. The bill would make it possible for the Department to require food-handling operators to become trained, certified and assess fines. Both of those capacities are needed as part of the new food safety paradigm, Active Managerial Control. Also, the bill defines labeling or advertising violations of the unfair trade and consumer protection provisions. Currently, AS 17.20.005 allows the Commissioner to issue orders, regulations, permits, embargoes and quarantines. That includes inspection, sanitation standards, food handling methods and labeling. Under the proposed bill, the Commissioner would have additional authority to ensure knowledge of food safety and sanitation by individuals who handle or prepare food for the public and persons who supervise or employ those individuals. The bill authorizes the Department to impose a civil fine for a violation of the Alaska Food, Drug and Cosmetic Act. Ms. McIntosh added that HB 378 clarifies that a violation of provision, AS 17.20, or a violation of the representation requirement in AS 17.06, as unfair or deceptive trade practices under Alaska Statutes. The legislation would allow the Attorney General's office to investigate labeling violations that are not food safety or sanitation concerns. Representative Stoltze inquired if the legislation would supercede programs that the municipalities could have in place. KRISTIN RYAN, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, responded that the Food Safety and Sanitation program has the ability to delegate the program to local municipalities and has done so in Anchorage. The changes would not impact those municipalities. Representative Croft asked how "active managerial control" would differ from the current system. Ms. Ryan explained currently, the State relies on inspections by government employees to insure food safety. The legislation proposes to transfer some responsibility to the managers and owners of the retail food establishments. That would mean, "more control in their hands" to insure that food is safe by requiring that food handlers and managers are trained and certified. Active managerial control indicates that the control is moving into the hands of the food handlers. Inspections will continue, but the past rate was not sufficient. In the highest facilities, the Department was able to send one inspector a year, 60% of the time. She added that there are approximately 5,000 establishments with only eighteen inspectors. Representative Croft questioned if "self inspection" would really work when a company is violating food safety regulations. Ms. Ryan stated that the Department's inspections will not decrease, however, in addition, they will be requiring self-inspections as well as placing certified operators in each establishment. Representative Croft was skeptical that it would be "realistic to think that a business would report their own violations". Ms. Ryan responded that this was a common model in the environmental field and that companies are responsible for insuring themselves. It is the government's obligation to check to make sure that information is accurate. It may seem that they would not want to report their own violations, however, what it does is set up a mechanism for them to check their establishment. When the reports are submitted, if they are shown to be false or wrong, that establishment would be charged with breaking the law. Representative Croft stated that it would be a "passive model" on the part of the State. Ms. Ryan countered that the Department's obligation would not be decreasing but it would be shared responsibility with businesses. She noted that this is a common problem throughout the United States and that no state has enough resources to do all the inspections. There are 5,000 establishments. Every state is attempting to come up with a model to help address needs and financial concerns. In the past, the only enforcing authority was the inspector's authority to issue a "Notice of Violation" or to close the facility. Representative Croft inquired the history of the number of inspections over the past decade. Ms. Ryan advised that number has stayed steady. The average of what an inspector is capable of has stayed the same; however, the number of inspectors doing the work, over the years, has been reduced. She pointed out that last year there was a reduction of six inspectors. That current system does not work. Ms. Ryan reiterated that the number does fluctuate and usually 40% - 60% of the establishments are inspected. The goal is 80% and it has never been reached. Representative Stoltze understood that the certification program would establish guidelines. Ms. Ryan acknowledged that was the intent of the legislation. It will guarantee that a food safety worker, working in a remote community will have the same training as someone in a community on a road system. Representative Croft referenced Sections 2 & 3, which adds sub paragraph #5, the aquatic farms. Ms. Ryan advised that there are changes in the bill that are corrections or additions to enforcement statutory authority and labeling violations. The reference referred to by Representative Croft, outlines the relationship of who will be responsible for each section statute. Co-Chair Harris asked about the $210.0 thousand dollar operating fiscal note submitted by the Department, noting the decline in FY06. Ms. Ryan explained that relates primarily to the purchase of the training and certification on-line equipment needed. It would be a one-time cost of approximately $70 thousand dollars for the database. Co-Chair Harris inquired how the Division anticipates receiving their receipt money. Ms. Ryan indicated that the Department proposed charging a $10 dollar fee for the food handler certification. The fee and certification would last for three years. It is similar to a model used by other states. She stressed that the fee was reasonable and would help maintain that aspect of the program. Co-Chair Harris pointed out two new employees. He noted the $80 thousand dollars anticipated in new revenue for FY05 and asked if it would come from receipt support services. Ms. Ryan acknowledged that at this time in that component, the Department does over collect. Co-Chair Harris asked if the Department anticipates collecting $290 thousand dollars. Ms. Ryan explained the fluctuation in revenue sources resulting from changes in the three-year cycle for the renewal of the permit and the slow inception of the requirement. She noted the intent of implanting the program slowly. The Department does not anticipate a large number of people coming forward the first year, as it will not be required until FY06. This would be a tri-annual fee. Co-Chair Williams asked if fees would be decreasing. Ms. Ryan responded that the Department has proposed drafting a regulation to decrease permit fees. Representative Stoltze requested an example of violation to the organic food provision. Ms. Ryan could not provide that. She pointed out that would be the responsibility of the Division of Agriculture. She understood that the impact would address misbranding and labeling problems. Representative Stoltze noted that he did have an interest in the labeling for organic foods and asked that Ms. Ryan follow-up on that concern. ELISE HSIEH, (TESTIFIED VIA TELECONFERENCE), ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, ANCHORAGE, offered to answer questions of the Committee. Representative Foster asked if schools in the bush would be exempt from the proposed regulation. Ms. Ryan stated that they would not be exempt, however, the Department has been working closely to determine ways to easily implement it in those areas. Co-Chair Harris asked if the proposed legislation would be a "burden" to rural Alaska. Representative Foster suggested that the costs could be absorbed by a school district, however, he wondered how it would affect workers in locations outside the big cities. Ms. Ryan acknowledged that had been a concern for the Division and that it was not the intent to create a program that would not work for rural Alaska. That is why the Division is proposing the interactive website, as a way for training and certification to happen. In communities that are unable to take the tests in that way, there will be proctor exams set up by the inspectors in those locations. She reiterated that it is the Department's intent to make the test as accessible as possible. Co-Chair Harris voiced concern with the unintended consequences of passing the legislation. He noted that he did support the bill but asked to hear about on-going efforts in rural Alaska. He did not want to see violations in those areas. Ms. Ryan acknowledged that was a priority and that the Division wants the system to be effective no matter where the person is located in the State. Representative Foster MOVED to report HB 378 out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. HB 378 was reported out of Committee with a "no recommendation" and with zero note #1 by the Department of Law and fiscal note #2 by the Department of Environmental Conservation.