HB 274-UNFAIR TRADE PRACTICES  2:14:15 PM CHAIR FRENCH announced the consideration of HB 274, "An Act relating to the exemption of certain acts and transactions from the provisions dealing with unfair methods of competition and unfair or deceptive acts or practices." 2:14:43 PM REPRESENTATIVE LINDSEY HOLMES, sponsor of HB 274, stated that the bill clears up a potential ambiguity in the Alaska Consumer Protection Act (CPA). It clarifies that the state can step in to protect Alaskan consumers when the federal government is not doing so. The bill makes it clear that the state and its citizens are not without remedy due to a misapplication of the safe harbor provision in the CPA. 2:15:42 PM JAMES R. WALDO, staff, Representative Lindsey Holmes, confirmed that there is an ambiguity about where the Alaska Consumer Protection Act can apply when federal laws prohibit or regulate the same conduct, but don't explicitly preempt state law. CHAIR FRENCH asked if that was in paragraph (1). MR. WALDO said yes; the safe harbor provision says the CPA does not apply to conduct that is regulated and prohibited by state or federal law. The bill removes the exemption for conduct regulated and prohibited by federal law. He said it's a good idea to preserve the exemption for state law. For example, if a consumer finds troubling conduct from an insurance company, the Division of Insurance (DOI) can solve the problem using state insurance laws, not the Consumer Protection Act. Additionally, if the state decides that enforcement is too much or too little, it can change those laws as it sees fit. The state is preempted when state law and federal law regulates or prohibits the same conduct. However, there are gray areas when there is shared jurisdiction or when the federal government has laws or regulations it doesn't intend to enforce or intends the state to so its own enforcement. In those cases, the CPA arguably would not apply. This was at issue in a case involving two pharmaceutical companies. He noted that the judicial order from Judge Beistline was included in the packet. This bill would make it very clear that the state has the power to enforce the CPA in cases where the federal government is not going to take action and the state sees need to protect Alaskan consumers. SENATOR FRENCH asked on what page in the order Judge Beistline discusses the issues that impinge on the bill. MR. WALDO directed attention to page 18. 2:19:41 PM CLYDE "ED" SNIFFEN JR., Assistant Attorney General, Commercial/Fair Business Section, Civil Division, Department of Law (DOL), said his responsibilities include enforcement of Alaska's consumer protection and antitrust laws. He confirmed that there have been situations where a federal court or agency announced shared state/federal jurisdiction over certain areas like drug labeling. The state believes it should be able to take action against companies that violate the CPA on those issues. Because of the ambiguity in statute, if a federal law or regulation covers that conduct, whether it's enforced or not, defendants are using that as a shield against the state's enforcement activity. HB 274 removes the federal exemption from the CPA and allows the state to take action if need be. He agreed with Mr. Waldo said that the state could not take action if the federal government preempts an area, but that wasn't really the issue. He said there are cases where the federal government has specifically found there is no preemption and the state still can't take action because the conduct is still regulated or prohibited. The state takes the position that the statutory language is strong enough that it can take action if the federal government isn't enforcing the law. That's what the state is arguing in the case referenced above, but this amendment makes it very clear. CHAIR FRENCH asked if the bill would make it easier to protect Alaskan consumers. MR. SNIFFEN said yes, particularly in cases of shared jurisdiction where the federal government is not taking any action. CHAIR FRENCH announced he would hold HB 274 in committee. 2:22:03 PM There being no further business to come before the committee, Chair French adjourned the meeting at 2:22 p.m.