HOUSE JUDICIARY STANDING COMMITTEE January 24, 1994 1:15 p.m. MEMBERS PRESENT Rep. Jeannette James, Vice Chair Rep. Pete Kott Rep. Gail Phillips Rep. Joe Green Rep. Cliff Davidson Rep. Jim Nordlund MEMBERS ABSENT Rep. Brian Porter, Chairman COMMITTEE CALENDAR HB 75: "An Act relating to qualifications for permanent fund dividends; and providing for an effective date." CSHB 75 (JUD) PASSED OUT WITH INDIVIDUAL RECOMMENDATIONS *HB 315: "An Act relating to the unauthorized use of or unauthorized interference with transmission and delivery of subscription cable services; and amending the definition of the offense of theft of services and the penalties for its violation." HEARD AND HELD *HB 350: "An Act requiring that all official interviews with children who are alleged to have been abused or neglected be videotaped." NOT HEARD WITNESS REGISTER REP. ELDON MULDER Alaska State Legislature State Capitol, Room 116 Juneau, Alaska 99801-1182 Phone: 465-2647 POSITION STATEMENT: Prime Sponsor of HB 75 TOM WILLIAMS, Director Permanent Fund Dividend Division Department of Revenue P.O. Box 110460 Juneau, Alaska 99811-0460 Phone: 465-2323 POSITION STATEMENT: Answered questions ERIC MUSSER, Legislative Aide Representative Brian Porter Alaska State Legislature State Capitol, Room 118 Juneau, Alaska 99801-1182 Phone: 465-4930 POSITION STATEMENT: Rep. Porter Prime Sponsor of HB 315 GARY HAYNES Vice President of Operations Prime Cable of Alaska 5151 Fairbanks Street Anchorage, Alaska 99503 Phone: 786-9326 POSITION STATEMENT: Testified in favor of HB 315 MIKE ROBERGE, President Alaska Cable Television Association 5808 Lake Washington Boulevard, Suite 400 Kirkland, Washington 98033 Phone: (206) 822-0252 POSITION STATEMENT: Testified in favor of HB 315 DANIELLA LOPER House Judiciary Counsel Alaska State Legislature State Capitol, Room 118 Juneau, Alaska 99811 Phone: 465-6841 POSITION STATEMENT: Answered legal questions regarding HB 315 MARGO KNUTH Assistant Attorney General Criminal Division Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 Phone: 465-3428 POSITION STATEMENT: Testified on HB 315 MARY HUGHES, Attorney Hughes Thorsness Gantjz Powell & Brundin 509 W. Third Avenue Anchorage, Alaska 99501 Phone: 274-7522 POSITION STATEMENT: Answered questions regarding HB 315 PREVIOUS ACTION BILL: HB 75 SHORT TITLE: QUALIFICATIONS FOR PFD'S BY MILITARY SPONSOR(S): REPRESENTATIVE(S) MULDER,Martin JRN-DATE JRN-PG ACTION 01/20/93 114 (H) READ THE FIRST TIME/REFERRAL(S) 01/20/93 114 (H) MLV, JUDICIARY, FINANCE 02/25/93 (H) MLV AT 10:00 AM CAPITOL 17 03/03/93 (H) MLV AT 05:00 PM CAPITOL 17 03/03/93 (H) MINUTE(MLV) 03/05/93 545 (H) MLV RPT 2DP 3NR 03/05/93 545 (H) DP: MULDER, FOSTER 03/05/93 545 (H) NR: WILLIS, NAVARRE, KOTT 03/05/93 545 (H) -FISCAL NOTE (REV) 3/5/93 01/19/94 (H) JUD AT 01:15 PM CAPITOL 120 01/19/94 (H) MINUTE(JUD) 01/26/94 2149 (H) JUD RPT CS(JUD) NEW TITLE 2DP 2NR 2AM 01/26/94 2150 (H) DP: JAMES, NORDLUND 01/26/94 2150 (H) NR: DAVIDSON, PHILLIPS 01/26/94 2150 (H) AM: KOTT, GREEN 01/26/94 2150 (H) -ZERO FISCAL NOTE (REV) 1/26/94 01/26/94 2150 (H) REFERRED TO FINANCE BILL: HB 315 SHORT TITLE: THEFT OF SUBSCRIPTION TV SERVICES SPONSOR(S): REPRESENTATIVE(S) PORTER,Green,Toohey JRN-DATE JRN-PG ACTION 01/03/94 2009 (H) PREFILE RELEASED 01/10/94 2009 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2009 (H) JUDICIARY, FINANCE 01/24/94 (H) JUD AT 01:15 PM CAPITOL 120 01/24/94 2139 (H) COSPONSOR(S): GREEN, TOOHEY 01/31/94 (H) JUD AT 01:15 PM CAPITOL 120 BILL: HB 350 SHORT TITLE: VIDEOTAPE ALL INTERVIEWS OF ABUSED MINORS SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 01/07/94 2019 (H) PREFILE RELEASED 01/10/94 2019 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2019 (H) JUDICIARY, FINANCE 01/24/94 (H) JUD AT 01:15 PM CAPITOL 120 ACTION NARRATIVE TAPE 94-7, SIDE A Number 000 The House Standing Judiciary Committee was called to order at 1:22 p.m. on January 24, 1994. A quorum was present. Vice Chair James announced the committee would not be hearing HB 350 today and would address HB 75 first. HB 75 - QUALIFICATIONS FOR PFD'S BY MILITARY Number 020 REP. ELDON MULDER, Prime Sponsor of HB 75, testified that he believed the concerns raised at the last meeting had been worked out, and he presented the committee with a new work draft. He said the work draft codifies a lot of the regulations that were previously being implemented; however, HB 75 reenforces those actions in statute. Rep. Mulder continued by saying it also resolves some of the concerns reflected by committee members about treating everybody equal. REP. MULDER said the bill contains two issues now: resolving the piggyback question and answering the policy question. He stated that the state of Alaska should not be discriminatory towards spouses of non-resident military personnel if they are traveling out-of-state. Number 080 REP. DAVIDSON asked Rep. Mulder if he was fully satisfied that, as far as measuring intent, the Permanent Fund Dividend (PFD) program is adequately addressing through HB 75 the measure of intent to remain an "Alaskan resident." Number 098 REP. MULDER replied yes. Number 100 REP. DAVIDSON asked what the primary basis is for intent to be measured. Number 118 TOM WILLIAMS, Director, Permanent Fund Dividend Division, Department of Revenue, testified that they had reviewed the revised committee substitute and it contained provisions which addressed the piggyback problem. Mr. Williams said there was still language in Section 2 that the department had substantial concerns about which would allow a resident to remain eligible while accompanying a non-resident military member out-of-state. Mr. Williams provided statistics to the committee regarding the amount of money going out-of-state to PFD recipients. He concluded by saying the department still raises concerns about the intent of the program to individuals who maintain their residents here, and Section 3 precludes the department from even considering the residency of a spouse in trying to determine their intent to remain permanently in the state. Number 190 REP. DAVIDSON discussed a scenario whereby a non-resident marries a resident, becomes eligible for the PFD, moves, divorces, and the resident returns. He asked what happens to the non-resident's eligibility. Number 231 MR. WILLIAMS replied that he believes the scenario described was already covered in statute where the individual can remain eligible as long as he or she meets the criteria. He explained the department's concern was over a non-resident marrying a resident, and the family leaves the state. He said currently this would be a nonallowable absence, but under HB 75 it would be allowed. The bigger concern, however, was two non-residents moving into the state and one declaring residency, obtaining eligibility for self and children, and then the whole family leaves the state. Mr. Williams said at that juncture, under HB 75, the individual and children would retain their eligibility for dividends. Number 277 REP. DAVIDSON asked for the department's recommendations for plugging the leak. Number 281 MR. WILLIAMS said he didn't know if there was a way to do so under HB 75. He concluded that the solution would be for both individuals to declare residency, and then under the current laws and regulations they could remain eligible while out-of-state. Number 296 REP. PHILLIPS stated that the department could charge people with fraud if they take the money and are gone with absolutely no intent to return. Number 308 MR. WILLIAMS told the committee that Rep. Phillips was right except the department can only determine intent by an individual's external actions, and HB 75 was directing the department to ignore certain external signs of intent. Number 318 REP. PHILLIPS said it was a matter of weighing the balance: are more people going to be positively affected doing it this way versus the state having to file lawsuits for fraud. Number 323 MR. WILLIAMS said as a practical matter the department wouldn't be filing fraud if an individual leaves with a non- resident because intent could change at any time. He explained that's why the department thinks HB 75 is inconsistent, because there is a likelihood that many of these people say they have the intent to return to Alaska, but they are leaving with a spouse who also doesn't have the intent to return. Number 345 REP. PHILLIPS stated that at the end of a two-year period, if the family has been gone with no external action on their part to return, wouldn't that be a strong determining factor for a fraud suit? Number 350 MR. WILLIAMS replied that intent can change at any time and that the individuals would lose their eligibility if they didn't come home to Alaska in that two-year period. Number 359 REP. GREEN asked if the department required proof that individuals return at the end of two years. Number 366 MR. WILLIAMS replied yes. Number 380 REP. NORDLUND stated that the new list of allowable absences is greatly embellished from what it is now, and asked where the language came from. Number 396 MR. WILLIAMS responded that the allowable absences in HB 75 are currently in regulations, and this moves them into the bill. Number 409 REP. NORDLUND questioned Number 14, which says an individual actively participating in a U.S. athletic team as a nonprofessional is eligible, and he doesn't see that authority in statute. Number 414 MR. WILLIAMS replied that there is a provision in current statutory language that the commissioner may establish eligibility for other reasons by regulations. He said this provision is deleted in HB 75, and the department supports the move. Number 441 REP. KOTT discussed the requirement to return to the state every two years to retain eligibility, and asked if an individual could come back for the sole purpose of retaining the eligibility to receive the PFD, and if so, how long would they have to stay. Number 479 MR. WILLIAMS replied that an individual can come back solely to retain eligibility for PFD, and there is no time length; and it often happens that an individual just comes back, touches Alaska, and leaves. Number 485 REP. PHILLIPS asked at what point in time does it become uneconomical to do that, and do Alaska resident children have to accompany the individual? Number 495 MR. WILLIAMS responded that the children do have to accompany the adult to qualify, but if just the parent comes, that parent is qualified. Number 496 REP. PHILLIPS discussed a situation where an Alaskan gets an appointment to a joint state/federal task force and ends up spending more time in Washington, D.C., than in Alaska. He said there is no provision for the individual to qualify for a PFD and wondered why. She also asked if that had ever come up or a request been made on the matter. Number 506 MR. WILLIAMS replied that there is no provision unless they are a state employee. Number 515 Discussion ensued on the two-year rule. Number 535 REP. DAVIDSON remarked that it would solve a lot of problems if the definition of a resident was a person physically in Alaska without exception. MR. WILLIAMS agreed that it would be easier for the department to administer. Number 562 REP. MULDER remarked that military personnel are serving Alaskans and it would be a punishment to deny them PFD's. The committee discussed eligibility and residency relating to military personnel. REP. PHILLIPS moved for passage of the Committee Substitute for HB 75, the version dated January 21, 1994. There were no objections. REP. PHILLIPS moved or passage of CSHB 75(JUD) with individual recommendations. VICE CHAIR JAMES called for a roll call vote, as follows: Rep. Davidson yes Rep. Green yes Rep. Kott yes Rep. Nordlund yes Rep. Phillips yes Rep. James yes VICE CHAIR JAMES declared CSHB 75(JUD) was moved from committee with individual recommendations. She then brought HB 315 to the table. HB 315 - THEFT OF SUBSCRIPTION TV SERVICES Number 710 ERIC MUSSER, Legislative Aide to Rep. Brian Porter, Prime Sponsor of HB 315, testified that HB 315 was introduced primarily to put in statute penalties for wrongful use or misuse or theft of subscription cable services. He described Section 1, which amends the definition of the crime of theft to add theft of subscription cable service to the statute. He said Section 2 amends the definition of the crime of theft in the third degree to add theft of cable services under the statute; Section 3 proposes dealing with actions taken knowingly in order to obtain the authorized interception receipt or use of a program or other service provided by a subscription service, and would also prohibit the unauthorized manufacturing and distribution or sale of like acts; and Section 4 essentially sets out the definitions used in the bill. MR. MUSSER stated that two questions have come up regarding HB 315. One is whether the term inductively was a term of art or actual necessity. He explained that it is an industry term. The second question regards redundancy in the language of the bill. Number 756 REP. PHILLIPS expressed surprise that legislation of this sort was necessary in Alaska, and said the sponsor statement refers to $1 million in theft a year. He asked how that figure was justified. Number 772 MR. MUSSER explained that the value of the theft was determined by looking at the availability of pay per view, premium channel-type movies to a subscriber. He cited figures that potentially cover the magnitude of the problem. Number 792 REP. PHILLIPS asked if the bill was consistent with legislation in other states. Number 795 MR. MUSSER replied yes, and said that Alaska is one of only three states without this type of statute. REP. DAVIDSON questioned the need for the legislation. He asked what the problem was with the enforcement gap, and what people are stealing. Number 820 MR. MUSSER replied that Alaska's current statute is very broad and too vague, and is unenforceable as currently written. He said HB 315 would lay out the crime and penalties for theft of subscription services. Number 849 REP. KOTT asked if this legislation would prevent someone from using their own descrambler. TAPE 94-7, SIDE B Number 000 GARY HAYNES, Vice President of Operations, Prime Cable of Alaska, displayed for the committee copies of electronic magazines he bought in Anchorage with articles showing how to unscramble and descramble cable. He detailed the problem and cost to cable companies caused by theft of services. Mr. Haynes said the National Cable Television Association has published their best guest on cost of theft as $4.7 billion nationally. Number 130 VICE CHAIR JAMES said she thought a cable system was connected to a cable and asked how the box gets the information off of the cable if you are not connected to the cable. Number 143 MR. HAYNES described various ways of hooking into the cable, including subscribers that have a basic package and then hook into the other channels, and others hooking directly into the cable. Number 163 VICE CHAIR JAMES wondered if the law should go after the sellers of boxes rather than the user. Number 170 MR. HAYNES explained that they are trying to do that through the FBI, but the FBI has told them if they can't prove anything $25,000 or higher they have to go to local enforcement. He said current statute doesn't make it illegal for people to have the boxes, just to use them. Mr. Haynes said HB 315 adds possession language so they can discourage consumer theft and shut down the source of customers for commercial users that are trying to sell the boxes, which is the intent. Number 197 REP. PHILLIPS told Mr. Haynes that she serves on a federal telecommunications commission committee dealing with federal legislation, and this is one of the biggest communications problems in the United States. She indicated that there is legislation pending or has just been passed in Congress that affects this kind of control, and asked if Mr. Haynes could bring the committee up-to-date on that. Rep. Phillips said she thought the federal legislation would put people at very high risk for jail sentences. Number 214 MR. HAYNES said the Cable Regulation Act increased the fines, but the fed's are depending on local statutes to cover this type of theft. Mr. Haynes then showed the committee a number of modified boxes being used in Anchorage and how they are used for cable theft. Number 335 REP. PHILLIPS asked Mr. Haynes if he thought HB 315 would solve the problem. Number 340 MR. HAYNES replied that it would, and to solve the problem of getting rid of the boxes, he is working with the police department to have an amnesty program to turn them in. Number 357 VICE CHAIR JAMES asked, if the legislation passes, how would the cable company find the people who have illegal boxes? She also asked if the cable company could just knock on a person's door and ask to have a look at their box. Number 214 MR. HAYNES said a number of people are turned in by legitimate customers; and yes, their service agreement states they have reasonable access if they suspect there is a problem with their equipment, and they can at a reasonable hour knock on the door and ask to take a look. Number 407 MIKE ROBERGE, President, Alaska Cable Television Association, testified via teleconference from Kirkland, Washington. He focused his comments on small system applications, such as small, rural or bush communities, and explained a number of ways for individuals to obtain cable services illegally. Number 573 REP. GREEN asked who does the enforcement in other states that have enacted this legislation. Number 597 DANIELLA LOPER, House Judiciary Committee Counsel, answered that it would be enforced by the police because it is a criminal offense. Number 591 REP. GREEN asked about the zero fiscal note. Number 602 MS. LOPER answered that there is already enforcement in this area, but that is being directed more to the area of sellers of boxes and this statute just makes it more explicit. Number 613 MARGO KNUTH, Assistant Attorney General, Criminal Division, Department of Law, testified that one of the greatest things HB 315 does is define theft of cable services as theft in the second degree without regard to the value of the services, because previously they had to prove a value of $500 or more to prosecute. Ms. Knuth said she had two technical questions on page 3 of the bill where part of subsection 1 is repetitious of subsection 2, and the drafter, Mr. Chenoweth, has proposed a rewrite that takes out the replication. Her other question was, what is an inductive connection? Number 663 MARY HUGHES, an Anchorage attorney, referred the second question to Gary Haynes. Regarding the first question, Ms. Hughes asked if Ms. Knuth would agree that this problem would be resolved if we took out (undecipherable) on line 19 and continuing on line 20, thereby not duplicating those words. Number 704 MS. KNUTH said she understands now what Ms. Hughes' point is, and she would appreciate an opportunity to review Ms. Hughes' language and Mr. Chenoweth's language. She said she understands the legislation wants to reach both the person who has the box and separately wants to reach whoever is a party to setting it up in the first place. Number 712 REP. PHILLIPS asked that "inductively" be defined. Number 717 MS. KNUTH said that depending on what the answer to the question actually is, it may not be a matter that requires statutory definition if it's a common scientific principle. MS. KNUTH said she would also like to address the concern regarding fiscal impact, and the Department of Law anticipates handling a few of these prosecutions, and they expect that once the word is out, that will act as a deterrence to other people. Number 734 VICE CHAIR JAMES said she still has a problem with the person that sells it. Is he or she in any kind of violation by this law? And if so, how would that enforcement be handled? Number 738 MS. KNUTH replied that 4(b) criminalizes the conduct. Number 752 REP. GREEN asked if the hammer would drop harder on the user than the seller. Number 757 MS. KNUTH replied no, the courts are forever making distinctions between, for example, furnishing alcohol to a minor versus minor consuming. Number 762 REP. PHILLIPS discussed Section 11.46.200, the whole statute on theft of services, where the last Section (c) in the existing law states that a person may not be prosecuted under this section for theft of cable, microwave, subscription, etc. Rep. Phillips said she thought it was in that section that changes would have to be made to the existing statute. In addition, she asked if the committee needed to add at the end of this on Section 200, or what we are going to do here, and if that was going to be covered. Number 782 MS. KNUTH responded that she believes that 200 (c) will continue to be on the books, and as long as it's a part of the same statute, it should be o.k. She indicated she would look at that section also. Number 786 MS. LOPER asked Ms. Knuth if the felonies are different, because any violation of this statute is a class C felony. Number 794 MS. KNUTH said what she was discussing was the probable sentence that would be imposed by the judge, and a judge in sentencing somebody on a class C felony will look at whether the person was a consumer or user, or seller, or distributor; and will judge more harshly within the judge's sentencing discretion the distributor rather than the consumer. Number 800 Discussion ensued on how to interpret HB 315 relating to second and third degree felonies. Rep. Phillips asked for a clear definition in the new draft. TAPE 94-8, SIDE A Number 000 VICE CHAIR JAMES said it was her intention to carry the bill over. ADJOURNMENT VICE CHAIR JAMES adjourned the meeting at 3:02 p.m.