SB 164-USED MOTOR VEHICLE SALES   CHAIR KOOKESH announced consideration of SB 164. 1:08:29M TREVOR FULTON, staff to Senator McGuire, sponsor of SB 164, said SB 164 rights a wrong in Alaska statutes removing language in subsection (c) that governs used motor vehicle sales. He said the language was obsolete and no longer of any benefit to dealers, consumers or the state, because it required a notice on all used vehicles for sale that it is not subject to Alaska's lemon laws, is not covered under a manufacturer's warranty, and is not manufactured for sale in Canada or another foreign country. All three of these conditions are unnecessary or redundant because Alaska's lemon laws apply only to new vehicles, the Federal Trade Commission already requires dealers to disclose that the vehicle is not covered under a manufacturer's warranty and AS 45.25.470 already mandates that dealers disclose in writing whether a motor vehicle was originally manufactured for sale in Canada or another country. 1:11:58 PM SENATOR COWDERY asked if the warranty follows the vehicle or the owner. MR. FULTON replied that this bill doesn't specifically address that but someone from the Alaska Automobile Owner's Association could probably address that. SENATOR COWDERY asked why it is necessary to have the bill retroactive. MR. FULTON replied that class-action lawsuits are being brought against car dealerships in the State of Alaska for unfair trade practices because for a couple of years they weren't stickering their used vehicles; making it retroactive would address those lawsuits. CHAIR KOOKESH asked Mr. Sniffen to address the retroactivity clause and how it relates to the present lawsuits. ED SNIFFEN, Assistant Attorney General, Department of Law, said the retroactivity provision was requested by the auto dealers. He said there is some question whether the bill could be retroactively applied to halt pending litigation. He didn't know what the result of that will be, but this bill would not interfere with those lawsuits if it was determined that the retroactive provision couldn't stop the litigation. Fundamentally, the reason the dealers are asking for retroactivity is because when this law was passed in 2004, it tried to address a problem with "current model used vehicles." This is a used vehicle, but one that is still was within the current model year of vehicles being produced and offered for sale by a manufacturer. He offered an example where a Fort Richardson soldier buys a new Chevy 1500 pickup truck and gets deployed to Iraq three months later and tries to bring the vehicle back to the dealer for sale or trade. That vehicle would be considered a current model vehicle because it is still within the current model year even though it already had one owner. Not only were some dealers selling them with very low mileage, others were buying them in Canada to take advantage of the exchange rate and selling them in Alaska with sometimes less than 20 miles. So they had the appearance of a new vehicle. To address that, additional disclosure were required so consumers would understand clearly these very low mileage vehicles were not new and they wouldn't have some of the protections they would have if they were. When the law passed, for some reason, the disclosure requirement was extended to all used vehicles not just the current model low-mileage ones. That wasn't the intent and dealers did not sticker all used vehicles. The retroactivity language was requested to make it clear it was never the intent that these disclosures be posted on all used cars, but rather just on current model used vehicles. 1:17:02 PM CHAIR KOOKESH said he wanted to make sure that was on the record because the committee does not want to interfere with current lawsuits. SENATOR OLSON questioned what will happen to the plaintiffs with class action lawsuits. MR. SNIFFEN replied it's hard to say. He said some dealers might see what kind of mileage they can get out of the retroactive provision. The law is very gray in this area regarding whether the lawsuits will be dropped or limited to current model vehicles. This will need to be an argument between plaintiffs' lawyers and the defendant dealers. SENATOR OLSON asked if something could be added to this bill to avoid more litigation. MR. SNIFFEN replied that current language will discourage lawsuits and he didn't know what else could be done. It is clear that legislators intend the law to apply retroactively to the extent that it can be, to protect dealers who in good faith were trying to comply with the law at the time. 1:18:58 PM SENATOR OLSON asked what kind of consumer protection buyers will have under this bill, since grievous action by used car dealers is commonly known. MR. SNIFFEN answered that currently a host of consumer protections under the Automobile Dealers Act in AS.45.25 includes disclosures to consumers regarding vehicles manufactured in another country so they can decide if the warranty will follow the vehicle. Alaska also requires used car dealers to obtain information about a vehicle's prior accident or repair history for prospective purchasers. In 2002 he along with legislators and industry came up with some good consumer protection legislation against offensive used car practices. The Federal Trade Commission (FTC) also requires disclosures already on used vehicles concerning warranty limitations and other rights a consumer may have. He said he thinks sufficient protections are in place that don't overburden dealers, but still provide good protection for Alaskan consumers. 1:20:59 PM MR. FULTON said the bill packet includes an "as is sticker" that explicitly states what is or is not covered under warranty. Alaska Statute 45.25.470 on sales of vehicles manufactured in a foreign country says that before a sale, a motor vehicle dealer shall disclose in writing whether a motor vehicle was originally manufactured for sale in Canada or another foreign country. SENATOR COWDERY asked how the dealer can comply with the retroactive provision if he has already sold the vehicle. 1:22:37 PM MR. SNIFFEN responded that if the vehicle has been sold without the disclosure, the violation has already occurred or hasn't occurred if this bill includes the retroactive provision, and there's nothing the dealer can do. Potentially some of the vehicle sales could be identified if the purchasers could be located. SENATOR COWDERY asked if owners can't be located means no other options are available. MR. SNIFFEN replied that is correct. He said that is a problem with the large transient population in Alaska especially with military bases. 1:24:02 PM JON COOK, Legislative Director, Alaska Auto Dealers Association (AADA), Anchorage, AK, said he supported SB 164. He said his association has been working with Mr. Sniffen trying to deal with the unintended consequences of the earlier legislation and the only party to benefit from this provision is class-action attorneys. Most dealerships in Alaska are small family-owned operations and litigation could put them out of business. The lemon law, the manufacturer's warranty, and where a vehicle was manufactured are already covered under existing statute or don't apply. He said the two sides, industry and the department, have come together in agreement to create balanced legislation. 1:27:15 PM HEIDI ANDERSON, owner of Quality Auto Sales, supported SB 164. She confirmed that the sticker is redundant and was originally designed for Canadian cars brought into the market. The language of AS 45.25.465, subsection (c) repeats what is addressed elsewhere or does not even deal with the used car market. She said the deleted language doesn't benefit anyone and is only being used to generate lawsuits against dealers. 1:29:19 PM SENATOR OLSON asked if anyone opposes this bill. MR. FULTON replied there has been no opposition. CHAIR KOOKESH set SB 164 aside until Senator Wielechowski and Senator Wilken could join the committee. SB 164-USED MOTOR VEHICLE SALES  1:54:33 PM CHAIR KOOKESH reconvened the meeting and announced the committee would again take up SB 164. Public testimony had been taken and there was no opposition. He thanked Senator Wielechowski and Senator Wilken for leaving another meeting to join the committee. 1:55:35 PM SENATOR OLSON moved to report SB 164 from committee with individual recommendations and attached fiscal note(s). There being no objection, the motion carried.