HOUSE LABOR AND COMMERCE STANDING COMMITTEE January 26, 1993 3:00 p.m. MEMBERS PRESENT Rep. Bill Hudson, Chairman Rep. Joe Green, Vice Chairman Rep. Eldon Mulder Rep. Brian Porter Rep. Bill Williams Rep. Joe Sitton Rep. Jerry Mackie MEMBERS ABSENT None COMMITTEE CALENDAR *HB 41: "An Act relating to civil liability for skiing accidents, operation of ski areas, and duties of ski area operators and skiers; and providing for an effective date." HEARD AND HELD IN COMMITTEE EO 82: Transferring administration of the charitable gaming program from the Department of Commerce and Economic Development to the Department of Revenue. MOVED OUT OF COMMITTEE * First public hearing. WITNESS REGISTER Rep. Gail Phillips Alaska State Legislature State Capitol, Room 216 Juneau, Alaska 99801-1182 Position Statement: Prime Sponsor of HB 41 Bruce Rizer 5530 Rabbit Creek Rd. Anchorage, Alaska 99516 (907)345-1743 Position Statement: Opposed HB 41 (Spoke via teleconference) Leroy Cabana 6100 Andover Circle Anchorage, Alaska 99516 345-5827 Position Statement: Opposed HB 41 (Spoke via teleconference) Rhonda Scott 3866 Helvetia Drive Anchorage, Alaska 99508 561-4959 Position Statement: Opposed HB 41 (Spoke via teleconference) Marc Bond, Legal Counsel Alyeska Ski Resort 1007 W. 3rd Ave., #400 Anchorage, Alaska 99501 279-3581 Position Statement: Supported HB 41 (Spoke via teleconference) Bill Elander Anchorage Convention & Visitors Association 1600 A Street Anchorage, Alaska 99501 276-4118 Position Statement: Supported HB 41 (Spoke via teleconference) Steve Rumme, President Alaska Ski Areas Assoc. 7015 Abbott Road Anchorage, Alaska 99516 346-1446 Position Statement: Supported HB 41 (Spoke via teleconference) Ralph Nogal, President Alaska Hotel/Motel Association 500 W Third Ave. Anchorage, Alaska 99501 265-7118 Position Statement: Supported HB 41 (Spoke via teleconference) Thomas McCann, Owner Cleary Summit 1218 10th Ave. Fairbanks, Alaska 99701 452-3709 Position Statement: Supported HB 41 on behalf of the Alaska Ski Areas Association (Spoke via teleconference) Dave Lowe 6320 Switzerland Drive Anchorage, Alaska 99516 345-6854 Position Statement: Opposed HB 41 (Spoke via teleconference) Susan Lowe 6320 Switzerland Drive Anchorage, Alaska 99516 345-6854 Position Statement: Opposed HB 41 (Spoke via teleconference) Lex Patten Alyeska Ski Club 449 Dailey #17 Anchorage, Alaska 99515 344-0532 Position Statement: Supported HB 41 (Spoke via teleconference) Mike Grandinetti Risk Manager & Safety Director Alyeska Ski Resort P.O. Box 249 Girdwood, Alaska 99587 783-1091 Position Statement: Commented on the insurance industry (Spoke via teleconference) Scott Fisher, Owner Foggy Mountain Shop 134 Franklin Street Juneau, Alaska 99801 586-6780 Position Statement: Supported HB 41 Don Hitchcock, Director Division of Risk Management Department of Administration P.O. Box 110218 Juneau, Alaska 99811-0218 465-2180 Position Statement: Addressed the Division's concerns Mitch Gravo, Lobbyist 2550 Denali, 17th Floor Anchorage, Alaska 99503 272-6474 Position Statement: Answered question re: regulations Tom Dreyer 2417 St. Elias Drive Anchorage, Alaska 99517 248-4118 Position Statement: Supported HB 41 (Spoke via teleconference) John Hansen, Gaming Manager Department of Commerce & Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 465-2581 Position Statement: Supported EO 82 Rod Mourant, Assistant Commissioner Department of Revenue P.O. Box 110400 Juneau, Alaska 99811-0400 465-2300 Position Statement: Supported EO 82 PREVIOUS ACTION BILL: HB 41 SHORT TITLE: CIVIL LIABILITY FOR SKIING ACCIDENTS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) PHILLIPS,Hudson,Porter TITLE: "An Act relating to civil liability for skiing accidents, operation of ski areas, and duties of ski area operators and skiers; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/11/93 34 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 35 (H) LABOR & COMMERCE, JUDICIARY, FINANCE 01/26/93 (H) L&C AT 03:00 PM CAPITOL 17 EXECUTIVE ORDER 82: EO 82 was previously heard in the House State Affairs Committee on 1/19/93. ACTION NARRATIVE TAPE 93-4, SIDE A Number 000 CHAIRMAN HUDSON called the House Labor and Commerce Committee to order at 3:05 p.m., January 26, 1993. Members present were Reps. Hudson, Green, Mulder, Porter, Williams, Sitton and Mackie. HB 41: CIVIL LIABILITY FOR SKIING ACCIDENTS Number 065 CHAIRMAN HUDSON announced his intention to hear HB 41 but not pass it out until committee members had a chance to see what the other body would do with its version. The Chairman also announced his intention to appoint a subcommittee to look at the bill and come up with a committee substitute to pass out of committee. CHAIRMAN HUDSON directed the committee's attention to two pieces of proposed legislation that he wanted the committee to look at for possible sponsorship. The first piece was requested by the Department of Labor and concerned increasing the size of the labor relations board by two. The second item was a bill concerning the liability of certain security interest holders. Number 080 REP. GAIL PHILLIPS testified as the PRIME SPONSOR OF HB 41. She noted three key areas in the bill: 1) HB 41 requires that ski area operators safely and efficiently operate ski areas; 2) HB 41 makes ski area operators liable for their negligence; and 3) HB 41 requires skiers to take responsibility for the inherent risks of skiing. Number 113 BRUCE RIZER testified via teleconference from Anchorage in opposition to HB 41. He related the circumstances surrounding the death of his son in 1991 in a skiing accident at Seibu/Alyeska Ski Resort. Mr. Rizer indicated that Seibu has had four deaths at the resort since they have taken over from Alaska Airlines. Mr. Rizer noted a recent study showing there was approximately one skiing death in 1,000,000 visits on average nationwide. He further stated that Seibu had 43,000 visits last year and, therefore, it should have taken them another 23 years before the first death. MR. RIZER also outlined court cases involving the liability of ski area operators and the responsibilities of the skier. Number 215 LEROY CABANA testified via teleconference against HB 41. Mr. Cabana felt that the bill would take away any responsibility on the part of the resorts to take extra care. Number 293 REP. JERRY MACKIE noted that there were some safety provisions in the bill and he wanted the witness to communicate in writing where he felt the bill was lacking. CHAIRMAN HUDSON pointed out that HB 41 was a working document and if there were any amendments to the bill he would like them to be faxed to his office. Number 384 RHONDA SCOTT testified via teleconference in opposition to HB 41 as it stood. She felt the bill allowed complete immunity to management and that consumers, if injured, should have legal recourse. Number 398 MARC BOND, LEGAL COUNSEL FOR ALYESKA SKI RESORT, testified via teleconference in favor of HB 41. He explained that the bill, as it stood, was an attempt to provide a reasonable list of specific duties that the ski area operator could reasonably undertake. Mr. Bond further commented that the sport of skiing can never be made 100 percent safe. MR. BOND said that the bottom line was that the ski area operator's duties are to provide warnings about certain hazards and the skier must take personal responsibility for the risks that could not be reasonably removed. Number 422 REP. BRIAN PORTER inquired if the definition of "inherent risks" that appeared on page 12, line 7, of the bill was the same definition used in the Colorado law. MR. BOND replied in the affirmative. Number 439 BILL ELANDER OF THE ANCHORAGE CONVENTION AND VISITORS BUREAU, testified via teleconference in support of HB 41. Mr. Elander noted that the board of directors sent the committee a resolution from the industry stating that they do recognize that the sport of skiing has inherent risks. Number 472 STEVE RUMME, PRESIDENT OF THE ALASKA SKI AREAS ASSOCIATION AND GENERAL MANAGER OF HILLTOP SKI RESORT, testified via teleconference in support of HB 41. Mr. Rumme observed that there was no way to make skiing absolutely safe. He said he was concerned that if this legislation was not passed, many of the smaller ski areas may have to close under the increasing insurance burden. Number 531 RALPH NOGAL, PRESIDENT OF THE ALASKA HOTEL/MOTEL ASSOCIATION, testified from the Anchorage teleconference site that he concurred with the preceding speaker in supporting the legislation. He said HB 41 would definitely increase economic development and tourism in the state because it would put the state's skier liability laws on equal footing with those of the Western states. Mr. Nogal asserted that Alaska would then be able to compete with the other states and even Canada. Number 545 THOMAS McCANN, REPRESENTING THE ALASKA SKI AREAS ASSOCIATION, AND OWNER OF CLEARY SUMMIT, stated via teleconference that skiing had changed dramatically in the last 30 years. Recent mandatory insurance and state control have pressured his small ski area to the point where they may not stay in business. Mr. McCann hoped that the laws would be changed to effect a more stable insurance environment. Number 557 CHAIRMAN HUDSON inquired about insurance costs for small ski resorts. MR. McCANN responded that his costs have gone from zero to $20,000 a year. Number 567 DAVE LOWE, testified from Anchorage that he has been an active skier for the past 40 years and is involved in the national ski patrol. Mr. Lowe stated he recognized that there was a need to share responsibility between management and the skier. Mr. Lowe's concern was that HB 41 would eliminate too much of the liability of the ski area. Mr. Lowe further stated that he would support a bill that more clearly defined the responsibility of both the ski area and the individual skiers. Number 597 CHAIRMAN HUDSON commented that the committee was looking for the balance between the responsibility of the operators and the people who use the ski areas. Number 607 SUSAN LOWE testified via teleconference that she was opposed to HB 41. She felt the bill takes too much responsibility away from the operators. She would like to see the bill reworked and reworded to provide adequate safety for the skiers. Ms. Lowe added that the public also needed to be educated as to the risks of skiing. TAPE 4, SIDE B Number 085 REP. ELDON MULDER asked if Ms. Lowe had any specific ideas for safety requirements the committee could consider for inclusion in HB 41. MS. LOWE did not have any specific areas to address. Number 170 LEX PATTEN OF THE ALYESKA SKI CLUB, testified via teleconference that he supported HB 41. He expressed three points in favor of the bill: 1) skiers use the natural conditions (not groomed) to improve their skills; 2) HB 41 would reduce the cost to the skiers; and 3) he felt that the operators consider safety their number one concern. Number 259 MIKE GRANDINETTI, RISK MANAGER AND SAFETY DIRECTOR AT ALYESKA SKI RESORT, testified for the record (via teleconference) that there has been only one death at Alyeska since Seibu purchased the resort and there are also over 145,000 skiers per year. MR. GRANDINETTI noted that the industry has been enjoying a soft insurance market recently, but all indications are that the market will tighten up in the next year or so. He believed Alyeska would be able to withstand this increase, but the smaller areas would be hit pretty hard. Number 291 SCOTT FISHER, OWNER OF THE FOGGY MOUNTAIN SHOP IN JUNEAU, testified in support of HB 41. Mr. Fisher said he has had extensive experience skiing at over 20 different resorts around the country and he finds the safety features in Alaska to be high quality. Mr. Fisher stated his belief that ski area operators could not make skiing totally safe and should not be required to do so. To do so would only make skiing more expensive and put it out of the realm of the average family. Number 364 DON HITCHCOCK, DIRECTOR OF THE DIVISION OF RISK MANAGEMENT, DEPARTMENT OF ADMINISTRATION, stated that the official position of the Division was neutral. The Division's concern was that under HB 41 as written, the Department of Natural Resources would be held to the same liability standards as the ski area operators when cross-country skiers used state land with or without sanction. Mr. Hitchcock noted that the committee substitute (CS) for the Senate version of the bill alleviated this problem by exempting cross-country skiing. Number 382 REP. MACKIE inquired if someone from the Department of Labor could explain what types of regulations there would be under AS 5.20.070 to deal with violations that constitute negligence. Number 393 MITCH GRAVO, LOBBYIST, responded from the audience that the Department of Labor would be responsible for promulgating the regulations needed to administer this bill. REP. MACKIE suggested a more detailed definition of negligence. CHAIRMAN HUDSON added that he believed HB 41 may very well need some definitions in the final legislation. Number 424 REP. MULDER inquired whether, under the bill, an operator was not required to post a warning sign by catwalks, roads or stumps because they are considered inherent risks. MR. GRAVO responded that under HB 41 that was not covered, but the CS the Senate passed out addressed this point. Number 448 TOM DREYER testified from Anchorage that he supported HB 41. He felt that willing participants in the sport should take the responsibility for the inherent risks. Number 470 REP. JOE GREEN commented that he favored the concept of HB 41, but he was concerned anytime "you waive your legal recourse." He further suggested that his concern in trying to pin down every definition and area of responsibility in the bill would open a Pandora's box. Number 513 CHAIRMAN HUDSON appointed three members to a subcommittee to look at HB 41 and come back with recommendations: Rep. Mulder as chairman, Rep. Porter and Rep. Mackie. EO 82: TRANSFER CHARITABLE GAMING PROGRAM FROM DCRA TO REVENUE Number 528 CHAIRMAN HUDSON brought up Executive Order 82, transfer of the gaming program from the Department of Commerce to the Department of Revenue. Number 530 JOHN HANSEN, MANAGER OF THE GAMING PROGRAM FOR THE DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified regarding the history of the gaming program and what the transfer would accomplish. He further stated that the transfer would help better regulate this activity. Mr. Hansen offered the following as reasons for the transfer: 1) financial statements organizations are required to file are in essence tax returns; 2) the program collects an excise tax of $1.7 million; 3) the auditors and tax examiners the program uses are Revenue auditors; 4) the hearing procedures used are the same ones the Revenue Department has long established; 5) the Department of Revenue's hearing staff are used to hear conflicts with the gaming program. Number 580 MR. HANSEN stated his belief that the transfer was logical and he was in support of the move. Number 587 CHAIRMAN HUDSON inquired how the program would be set up in the Department of Revenue. Number 589 ROD MOURANT, ASSISTANT COMMISSIONER FOR THE DEPARTMENT OF REVENUE, answered that the organizational structure of the program had been discussed, and the department was leaning towards either the creation of a new division or inclusion in the Income and Excise Audit Division. Number 638 REP. JOE SITTON commented that Mr. Hansen had done an outstanding job and wondered if he was going with the program. MR. MOURANT responded that if the program is transferred, the intention is to retain all current staff. Number 645 REP. GREEN asked if there was a negative cost to this transfer. Number 650 MR. HANSEN replied that his staff would be better utilized under the transfer since the program could then use some of Revenue's expertise. Number 683 REP. GREEN asked if the legislature could indeed expect to see a negative fiscal note. Furthermore, according to Rep. Green, given the current makeup of the administration, creating a new board or commission was probably not the best idea. Number 696 MR. MOURANT replied that the Department believes there will be additional cost savings as well as additional revenue. Number 719 REP. PORTER expressed concern that the program not be cut in any way. He felt that it was an area of regulation in the state that was underfunded and needed constant attention. REP. PORTER inquired if there were program receipts. He commented that it has been his experience that the state has the history of regulating at a minimum and allowing the activity at a maximum, which allows for the potential of corruption, etc. He said he would be happy to see an increase in the program's budget. Number 750 MR. HANSEN replied that the program receipts were $1.7 million and the program expends $600,000. He further noted that the program has a very minimum staff to run a $200 million industry. CHAIRMAN HUDSON inquired about the current staff and asked if they would remain the same. Number 770 MR. MOURANT explained that the Department has no intention of disrupting the program as it stands organizationally or geographically, nor does the department intend to pare down the budget in any way. Number 780 CHAIRMAN HUDSON suggested that the program staff prepare some suggestions for the next committee of referral (House Judiciary) about making the program more efficient given the huge load they have to regulate and control. Number 791 REP. MULDER inquired if the program has any legislation they were planning to introduce this year. MR. HANSEN replied that he had met with the Governor's Office and there may be some bills coming, but he could not speak for the Governor's Office. Number 877 REP. MULDER recommended that EO 82 be moved out of committee. With no objection, it was so ordered. Number 890 CHAIRMAN HUDSON directed the committee's attention to the two pieces of proposed legislation: 1) the liability of certain security interest holders; 2) expand the labor relations board from three to six members, and provide for an honorarium. CHAIRMAN HUDSON adjourned the meeting at 4:56 p.m.