ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 12, 2001
3:20 p.m.
MEMBERS PRESENT
Representative Lisa Murkowski, Chair
Representative Andrew Halcro, Vice Chair
Representative Kevin Meyer
Representative Pete Kott
Representative Norman Rokeberg
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 91
"An Act relating to the membership and quorum requirements of
the State Medical Board."
- MOVED HB 91 OUT OF COMMITTEE
HOUSE BILL NO. 119
"An Act exempting joint action agencies from regulation by the
state or municipalities; relating to the relationship between a
joint action agency and the public utilities that form the joint
action agency; relating to powers and immunities of a joint
action agency; requiring filing of the joint action agency
agreement; relating to the financial affairs of a joint action
agency; declaring certain joint action agencies to be political
subdivisions for certain purposes; relating to liability and
indemnification of officers, employees, and agents of joint
action agencies; and defining 'agency agreement' as used with
reference to joint action agencies."
- HEARD AND HELD
HOUSE BILL NO. 27
"An Act relating to the licensure and registration of
individuals who perform home inspections; relating to home
inspection requirements for residential loans purchased or
approved by the Alaska Housing Finance Corporation; relating to
civil actions by and against home inspectors; and providing for
an effective date."
- MOVED CSHB 27(L&C) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 91
SHORT TITLE:ADD PHYSICIAN ASST TO STATE MEDICAL
SPONSOR(S): REPRESENTATIVE(S)FATE
Jrn-Date Jrn-Page Action
01/24/01 0158 (H) READ THE FIRST TIME -
REFERRALS
01/24/01 0158 (H) L&C, HES, FIN
02/12/01 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 119
SHORT TITLE:PUBLIC UTILITY JOINT ACTION
SPONSOR(S): REPRESENTATIVE(S)WILSON
Jrn-Date Jrn-Page Action
02/09/01 0281 (H) READ THE FIRST TIME -
REFERRALS
02/09/01 0281 (H) L&C, JUD
02/12/01 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 27
SHORT TITLE:LICENSE HOME INSPECTORS
SPONSOR(S): REPRESENTATIVE(S)ROKEBERG
Jrn-Date Jrn-Page Action
01/08/01 0031 (H) PREFILE RELEASED 1/5/01
01/08/01 0031 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0031 (H) L&C, JUD, FIN
01/31/01 (H) L&C AT 3:15 PM CAPITOL 17
01/31/01 (H) Heard & Held
02/02/01 (H) L&C AT 3:15 PM CAPITOL 17
02/02/01 (H) Heard & Held
02/02/01 (H) MINUTE(L&C)
02/12/01 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE HUGH FATE
Alaska State Legislature
Capitol Building, Room 416
Juneau, Alaska 99801
POSITION STATEMENT: Sponsor of HB 91.
TOM WILSON
Alaska Academy of Physician Assistants
(No address Listed)
POSITION STATEMENT: Testified in support of HB 91.
ED HALL, Physician Assistant
Alaska Academy of Physician Assistants
1360 Windward Circle
Anchorage, Alaska 99516
POSITION STATEMENT: Testified in favor of having a physician
assistant on the Alaska State Medical Board.
JOHN HALL, Emergency Physician
Providence Hospital
3600 Providence Drive
Anchorage, Alaska 99508
POSITION STATEMENT: Testified that it is time to have a
physician assistant on the Alaska State Medical Board.
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Community and Economic Development (DCED)
P.O. Box 110806
Juneau, AK 99811-0806
POSITION STATEMENT: Testified on HB 91 and HB 27 for the
division.
REPRESENTATIVE PEGGY WILSON
Alaska State Legislature
Capitol Building, Room 409
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 91. Introduced
HB 119 as the sponsor.
MICHAEL SCHRADER, Legal Counsel
to the Four Dam Pool
AterWynne, Attorneys at Law
222 South West Columbia, Suite 1800
Portland, Oregon 97201-6618
POSITION STATEMENT: Spoke on HB 119 as counsel to the Four Dam
Pool Project Management Committee.
TOM FRIESEN, Ketchikan Representative
to the Four Dam Pool
Ketchikan Public Utilities (KPU)
2031 2nd Avenue
Ketchikan, Alaska 99901
POSITION STATEMENT: Testified on HB 119.
ERIC YOULD, Executive Director
Alaska Rural Electric Cooperative Association (ARECA)
703 West Tudor Road, Suite 200
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on behalf of the ARECA in strong
support of HB 119.
JANET SEITZ, Staff
to Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
POSITION STATEMENT: Commented on language in HB 27.
GAYLE HORETSKI, Assistant Attorney General
Commercial Section
Civil Division (Juneau)
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Commented on language in HB 27.
ACTION NARRATIVE
TAPE 01-15, SIDE A
Number 0001
CHAIR LISA MURKOWSKI called the House Labor and Commerce
Standing Committee meeting to order at 3:20 p.m. Representatives
Murkowski, Crawford, Rokeberg, and Kott were present at the call
to order. Representatives Hayes, Meyer, and Halcro joined the
meeting as it was in progress.
HB 91-ADD PHYSICIAN ASST TO STATE MEDICAL BOARD
Number 0043
CHAIR LISA MURKOWSKI announced that the first order of business
was HOUSE BILL NO. 91, "An Act relating to the membership and
quorum requirements of the State Medical Board."
REPRESENTATIVE HUGH FATE, Alaska State Legislature, sponsor of
HB 91, said the bill is based on a request from the Alaska
Academy of Physician Assistants and noted that the Alaska State
Medical Board (ASMB) supports the bill. The bill adds one
licensed physician assistant ("PA") to the ASMB and changes the
quorum for meetings from four to five [people].
REPRESENTATIVE FATE explained that there is currently no PA
license representative on the board, even though consideration
of PA licensure, regulation, and discipline are frequent topics
[at ASMB meetings]. PAs are also an increasingly significant
factor in providing medical care.
REPRESENTATIVE FATE stated that participation of a PA would
strengthen and support the ASMB and contribute to its decision-
making process by providing valuable opinions representing a
wider spectrum of medical practitioners in Alaska.
Number 0199
TOM WILSON, Alaska Academy of Physician Assistants, via
teleconference, said there are approximately 250 licensed PAs in
Alaska, licensees of the ASMB for 20 years. He echoed
Representative Fate's explanation of the need for a PA on the
board.
MR. WILSON said PAs care for over 50,000 Alaskan each month in a
wide number of institutions and locations, and, therefore, would
provide a good representation of their patient population in
matters before the ASMB. The PAs have proven an interest in and
a willingness to accept the great responsibility and commitment
required to be a member of the ASMB by attending all meetings
over the past four years.
MR. WILSON said "we" feel that we would offer to the state, "our
patients, our profession, and the ASMB a valuable opinion that
will represent a wider spectrum of medical practitioners in
Alaska." He said this was presented to the ASMB in Juneau on
January 19 [2001], and they voted to accept a PA on the ASMB.
Number 0404
REPRESENTATIVE KOTT asked Mr. Wilson when PAs began to be
recognized in Alaska, and what level of participation there has
been in the past with PAs and the ASMB.
Number 0430
MR. WILSON replied that prior to 1980 there was not a statute or
regulation for PAs. The original regulation for guiding the
practice and licensing of PAs in Alaska happened in 1980.
Physician assistants have been avidly attending ASMB meetings
for the past four years.
Number 0516
ED HALL, Physician Assistant, Alaska Academy of Physician
Assistants, via teleconference, said he supports the decision
the ASMB made. He emphasized that it was a unanimous decision
that PAs be granted a seat on the ASMB. He said it is very
important that "we" have a representative. He thanked
Representative Fate for sponsoring the bill, and mentioned that
he has experience with people who are not medical doctors (MDs)
participating on the board.
MR. HALL said when he and Mr. Wilson were in Juneau three weeks
ago, a question was raised about what sort of opposition would
there be to this bill. He said there has not been any
opposition to the bill because PAs and the MDs that work with
them think it is a good thing.
MR. HALL commented that he had sent a letter to the Alaska State
Medical Association (ASMA) and has not heard from them. He said
he presented the whole resolution to them in order to see that
the bill passed through. He suggested that John Hall speak to
that, since he has been active with ASMA.
Number 0661
CHAIR MURKOWSKI verified that Mr. Hall had not received a
response from ASMA.
MR. HALL said he had not, but John Hall may be able to speak to
that since he has been active with ASMA.
Number 0691
REPRESENTATIVE KOTT asked Mr. Hall to enlighten the committee as
to whether there has been significant growth in the number of
PAs since 1980, and what the net effect has been of an increased
number providing medical service in rural Alaska.
Number 0726
MR. HALL said there has been growth in PAs, with the concept
being about 30 years old. Since the inception in Alaska, there
has been increasing growth; there are now about 250 providers,
with the predominance in the rural areas. He said rural Alaska
has been better served because of the PAs.
Number 0756
REPRESENTATIVE KOTT asked if the 250 currently practicing PAs
that Mr. Hall referred to include those in the military.
MR. HALL said he didn't think that it included military PAs.
REPRESENTATIVE KOTT said, then, he would think that the number
of PAs would be larger, and he also suspects that as the
military PAs move into the private sector, it is probably a plus
for "you guys."
Number 0803
JOHN HALL, Emergency Physician, Providence Hospital, member of
the Alaska Emergency Medicine Associates, via teleconference,
stated [that he is part of] a group of 13 [physicians], who are
board-certified in emergency medicine and provide emergency care
at Providence Hospital in Alaska. He said in addition to
covering the emergency department at Providence, "we" also serve
as sponsors for multiple PAs around the state. He said he
serves as primary collaborator for 12 PAs for British Petroleum
("BP"), and his partner serves as the alternate collaborator.
MR. HALL said "we" also serve as collaborators for Fairweather,
and for a company called Remote Medical, who provide PAs for BP
whenever their PAs are on vacation or continuing medical
education. He said "they" also serve several other clinics that
are just starting to open around the state. One is down in Port
Anchorage (ph) for Veco and another one in Deadhorse. He
understands that they want to open one in Nikiski and there are
several other projects around the state. This demonstrates that
PAs are rapidly growing throughout the state.
MR. HALL noted that both private hospitals in Anchorage,
Providence and Regional, have granted privileges to PAs and
nurse practitioners within the last six months for them to work
in the hospitals. He said "they" will be working under the
supervision of a physician but will have responsibilities such
as taking care of patients on their own under supervision,
writing histories and conducting physicals, and doing transfer
dictations as well as discharge summaries.
Number 0922
MR. HALL said the bottom line is that PAs are becoming more and
more prevalent in the state. When he began doing this 13 to 15
years ago, there were not very many PAs working in Anchorage,
and now it's difficult to find a large office that doesn't have
at least one. Many physicians in private practice are employing
PAs to help them with their workload. He said as a physician
who has served as a collaborator for a long time, he thinks it
is time to have a PA on the ASMB, and he speaks in support of
that.
MR. HALL mentioned that he has worked on the grievance committee
for the ASMA, and he figures that the reason a letter hasn't
been received is because sometimes "the State Medical
Association just works rather slowly, they don't have ...
(indisc.) meetings." He said from his association with members
on the ASMA, [he doesn't believe] there wouldn't been any
opposition to having a PA on the ASMB.
Number 0987
REPRESENTATIVE MEYER asked whether the difference between a PA
and an Emergency Medical Technician (EMT) is just a difference
in education.
Number 1006
MR. HALL replied that [the difference] is in the amount of
schooling and training. He said an EMT comes at different
levels; an EMT 1, 2, 3, and EMT paramedic each has a certain
amount of education. He said an EMT 1 has about 140 hours of
training, and a paramedic would have anywhere from a year to two
years of training. A PA usually has to have a college degree,
and some medical, health, or health science background, and go
on to at least two years that includes training in hospital
(indisc.). For example, Mr. Ed Hall had gone to Emory
University and received a master's degree as a PA.
Number 1056
REPRESENTATIVE PEGGY WILSON, Alaska State Legislature, commented
that she lived in Tok for four years, and during that time "we"
weren't able to get an MD to come and practice. There were
advanced nurse practitioners or PAs under the purview of a
doctor out of Delta Junction. She said PAs were an absolute
necessity and she doesn't know what would have been done without
them. She said the PAs had to make the decisions that a doctor
would make. She spoke in support of the bill.
Number 1107
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Community and Economic Development (DCED), said
her division staffs the ASMB. She reiterated that the ASMB does
support adding a PA to the board.
Number 1131
REPRESENTATIVE HALCRO said it looked like the vote was
unanimously in support of adding a PA to the board. He asked if
there is any reason that it has taken this long to get one on
the board.
Number 1155
MS. REARDON replied that she believes this is the first time
that bill has been introduced to do it, "a matter of waiting for
the time to be ripe," in the opinion of the PAs and MDs.
REPRESENTATIVE KOTT said he was hoping that one of the PA
members could validate what Ms. Reardon had said. He said the
issue of putting a PA on the board has been around for a couple
of years.
Number 1188
MR. ED HALL said it has just been in the past four years that
PAs have dedicated time and funds to send representatives to the
medical board meetings, although the interest hasn't just been
inspired in the last four years. He explained that in the years
of attending meetings, "we" have realized that PAs carry a lot
of business with the ASMB. As [PA] numbers grew, "we" felt it
was important to be a part of the board. Long ago there was
some bad history, some attitudes were not really appreciated and
tolerated by other members, which gave them a rocky footing with
the board. He said in the past four to five years the
relationship has improved considerably.
Number 1260
MR. WILSON reiterated Mr. Ed Hall's comment that four years ago
PAs decided not to make a commitment to be a member of the ASMB.
He said serving an apprenticeship over four years, they would be
able to prove to themselves and to the medical board that they
were very ready for the commitment and responsibility. He said
he thinks they have done that. He said to his knowledge, he
doesn't believe there have been prior efforts to have a PA on
the ASMB.
Number 1319
REPRESENTATIVE KOTT said adding a PA to the board brings the
membership up to eight, an even number, which could be
problematic unless the board tends to agree on things. He asked
Ms. Reardon if there are other boards with an even-numbered
membership.
Number 1346
MS. REARDON responded that the only other division board with an
even number of voting members is the Board of Architects,
Engineers, and Land Surveyors, with ten members. She said it
doesn't present a problem because a tie loses under the
division's system, so the outcome of any vote would be certain.
And it is not unusual to have an even number of members because
vacancies and seats can take several months to fill; at any time
during the year, there may be several boards with an even number
of people.
Number 1404
MS. REARDON mentioned that boards tend to operate in a fairly
collaborative manner, not usually with a one-vote difference.
There has to be a quorum, and the majority of the votes wins.
Number 1454
REPRESENTATIVE FATE mentioned that he spent five years on the
Board of Dental Examiners, and was a presiding officer for two
years. He was there when the dental hygienists applied and
finally a bill "was put in for the hygienists." He said at
first there might have been some resistance by the Board of
Dental Examiners, and perhaps, the dental society. "We" were
pleased when the hygienists got on the board; the contribution
they made was truly significant because they were part of the
healing team. He said this was what made him want to help out.
He had been through this "maneuver" before.
Number 1492
CHAIR MURKOWSKI stated that it is particularly telling when the
ASMB unanimously endorses the addition to its board.
Number 1505
REPRESENTATIVE HAYES asked what the fund source "RSS" meant.
Number 1515
MS. REARDON replied that it means "receipt-supported services,"
a type of program receipts that mean license fees. The receipt-
supported services aspect of that means that this is a program
where fees cover the operation cost; there is a list of those
programs in statute now. She explained that they are accounted
for a bit separately [when compared to] other aspects of the
general fund. The addition to the ASMB will be funded through
license fees.
Number 1567
MS. REARDON said there are 2,200 licensees under the ASMB, so it
should not be a huge thing.
Number 1570
REPRESENTATIVE KOTT revisited the issue of PAs in the military.
He said he thinks the origin of PAs started with the military
because he remembered getting service about 30 years ago. He
said he appreciates all of the work that PAs have done over the
years and knows that it did alleviate a lot of the physicians'
workload.
Number 1597
REPRESENTATIVE KOTT made a motion to move HB 91 out of committee
with individual recommendations and attached fiscal note. There
being no objection, HB 91 was moved out of the House Labor and
Commerce Standing Committee.
HB 119-PUBLIC UTILITY JOINT ACTION AGENCIES
Number 1663
CHAIR MURKOWSKI said the committee would take up HOUSE BILL NO.
119, "An Act exempting joint action agencies from regulation by
the state or municipalities; relating to the relationship
between a joint action agency and the public utilities that form
the joint action agency; relating to powers and immunities of a
joint action agency; requiring filing of the joint action agency
agreement; relating to the financial affairs of a joint action
agency; declaring certain joint action agencies to be political
subdivisions for certain purposes; relating to liability and
indemnification of officers, employees, and agents of joint
action agencies; and defining 'agency agreement' as used with
reference to joint action agencies."
REPRESENTATIVE PEGGY WILSON, Alaska State Legislature, sponsor
of HB 119, said last year the legislature passed legislation
that authorized the sale of the Four Dam Pool projects to the
local utility communities. She said "they" have been working
since that time to get it going. During the process it became
apparent that there needed to be "some legal cleanup." She
directed the committee to Mike Schrader, Legal Counsel to the
Four Dam Pool, for any questions; any questions on the history
of the project were directed to Dave Carlson,
Divestiture/Project Coordinator.
Number 1735
MICHAEL SCHRADER, Legal Counsel to the Four Dam Pool, AterWynne
LLP, stated that "we" represent the project management committee
and the newly formed Four Dam Pool power agency, a joint action
agency ("JAA") that was formed pursuant to the legislature. He
said HB 119 is a technical bill, and the JAA is the vehicle that
will be the owner of the Four Dam Pool projects when the
projects are purchased from the state at the end of the year.
MR. SCHRADER relayed that during the formation of the JAA, a
number of issues were worked through with the member utilities;
a number of those dealt with the terms of the actual agreement
that formed the agency. That agreement has been executed and
approved by all of the member utilities. However, a handful of
issues were raised in the process. They were technical in
nature and essential to the JAA and the whole divestiture
process in order to realize the business objectives.
Number 1794
MR. SCHRADER explained that there were three issues raised,
which are addressed in HB 119. HB 119 has some language that
clarifies that the member utilities are limited in their
liability. He explained that the JAA is a limited liability
entity. The member utilities [want to ensure] that a claim
against the JAA, as the owner of the Four Dam Pool projects,
could not also be made against the member utility, just as a
shareholder in a corporation is insulated from the liability of
the corporation.
MR. SCHRADER said the second issue is more technical. The JAA
is currently granted the powers of a public utility, which
includes the power of eminent domain - the power of
condemnation. In order to carry out its business goals, the JAA
needs flexibility to operate without being subject to federal
taxation. It also would need flexibility down the road if one
of the projects were to be sold to a community that purchases
powers from one of the projects, which is contemplated in the
divestiture and enabling legislation. He said it is key that
all of that be done on a federally tax-exempt basis.
Number 1890
MR. SCHRADER mentioned that a private letter-ruling request is
being put together for the Internal Revenue Service (IRS) to
confirm the tax-exempt status of the JAA. He said part of this
exercise is to demonstrate that the JAA is a governmental unit;
a key factor is the scope of the entity's eminent domain or
condemnation powers. The bill, therefore, clarifies that the
JAA has the eminent domain or condemnation powers that its
member utilities have. He reiterated that the clarification is
to get a ruling request from the IRS stating that the entity is
tax exempt or a governmental unit.
Number 1918
MR. SCHRADER explained that the third piece of the legislation
confirms the exemption from regulation by the Regulatory
Commission of Alaska (RCA). Four of the five member utilities
are currently exempt. The power-sales "master" agreement
defines the relationship of the communities to the project, and
the price at which power is purchased - which under statute is
specifically exempted from RCA regulation.
MR. SCHRADER emphasized that this confirms that the JAA is
exempt from RCA regulation.
Number 1944
REPRESENTATIVE HALCRO asked Mr. Schrader what type of potential
liability claims he sees arising against the JAA.
MR. SCHRADER said, "Any kind of claims that might arise in just
the course of operations or ownership of a power project. It
could be a catastrophe [and] could be a contract claim, or
something like that." The key is to add language to the
existing JAA statute to make sure that the JAA, as the owner, is
a limited liability entity, similar to a port authority or other
entities created by Alaska law.
Number 1984
REPRESENTATIVE MEYER asked Mr. Schrader if the RCA has taken a
position.
MR. SCHRADER said the RCA has not taken a position yet, but his
firm has been in contact with RCA staff and provided them with a
draft of the bill, along with a summary of what it proposes to
do.
REPRESENTATIVE MEYER asked whether the labor unions are
supportive of this [legislation].
MR. SCHRADER said, "That is my understanding; I'd have to defer
to Mr. Bob Evans for more information on that."
REPRESENTATIVE MEYER said normally the committee would hear from
these groups if they were not in support of the legislation.
Number 2023
REPRESENTATIVE ROKEBERG said the IRS has a number of tests that
are laid out by regulation in the tax court of rulings. He
asked what other factors there are, besides the power of eminent
domain. And, what elements does the JAA have to meet for the
"safe harbor test?"
Number 2049
MR. SCHRADER explained that "safe harbors" are articulated in a
number of private-letter rulings and in other authority. He
said the baseline test is articulated in the authority: "Does
the entity exercise sovereign powers?" In the ruling request
and the authority that is out there, the principal sovereign
power that was looked at was the eminent domain or condemnation
power.
MR. SCHRADER said there are also rule making authority and
police powers. He said he thought eminent domain, the ability
to promulgate rules, and the police powers were the three main
ones. In this case, the only one that applies to the JAA is the
condemnation power.
Number 2077
MR. SCHRADER stated that the JAA currently has condemnation
powers because it has powers by statute of a public utility,
which identifies the procedure it is subject to. He said right
now it is ambiguous as to whether the JAA is subject to the
procedures of its municipal member utilities, the declaration of
taking procedure, or the other procedures of an investor-owned
utility. This says it has the powers and procedural rights of
its member municipal utilities.
Number 2109
REPRESENTATIVE ROKEBERG said, "Clearly, the municipal members
would have their own powers of eminent domain, but refresh my
memory, do RAs [regional authorities] or co-ops have that same
power?"
MR. SCHRADER explained that cooperatives do not have the
declaration of taking power; they have an eminent domain power,
but it is different. The declaration of taking is streamlined
and the process is short-circuited; cooperative utilities have a
different procedural requirement that has to be gone through to
exercise powers of eminent domain.
Number 2151
REPRESENTATIVE ROKEBERG clarified with Mr. Schrader that the way
the statute was drafted was the way it was intended to be - for
the actual agency to have the power of eminent domain.
MR. SCHRADER said it was ambiguous, and it was determined that
the JAA was the appropriate vehicle. As "we" began to focus on
the actual terms of the agreement and the ability to operate on
a tax-exempt basis, the ability to not dictate the terms of a
subsequent breakup of the [Four Dam] Pool, 15 or 20 years down
the road, became critical. He said when the tax analysis was
done, it was determined that with some changes in federal law in
recent years, some private-benefit rules could dictate what one
does on an operating basis now, which would dictate some of the
terms of a breakup down the road.
MR. SCHRADER said the reason for asking for the clarification on
the condemnation powers is due to the issue of getting the tax-
exempt status, which goes back to the sovereign powers issue.
Number 2208
REPRESENTATIVE ROKEBERG asked if the agency needs those powers
for its own operations; if those powers are invested in the
ownership, from an operational standpoint; or if those powers
are rendered only for the tax requirement.
MR. SCHRADER said that is the only reason it is in the bill
right now, because each of the member utilities has condemnation
power.
REPRESENTATIVE ROKEBERG asked if Mr. Schrader conceives of the
agency going out for financing for the entire entity, and asked
if that is the concept here, that the gross assets of the whole
pool would be the credit behind the bonding.
MR. SCHRADER said, "At some point, if there were debt incurred,
yes, it's contemplated (indisc.)."
REPRESENTATIVE ROKEBERG said there would be an agency's debt
backed by the assets of all of the membership.
Number 2244
MR. SCHRADER concurred and reiterated that the JAA is the
vehicle, the separate legal entity that would own the project
and would assume the state's obligations and liabilities. He
said it would essentially be an Industrial Development Bond
(IDB).
REPRESENTATIVE ROKEBERG asked how that would affect the state's
allocation for IDBs.
MR. SCHRADER said it wouldn't be subject if it was done on a
tax-exempt basis, and it would have to be volume-capped.
REPRESENTATIVE ROKEBERG asked if the state is limited in the
amount of IDBs that can issue annually.
MR. SCHRADER said "certainly" but the only debt that is
contemplated currently for the JAA is the indebtedness to the
state to purchase the projects as part of the divestiture
transaction. He said bonding authority is down the road, and
there are a host of tax issues, such as: whether "you" can
finance on the bonds themselves; whether the entity itself is a
tax-exempt entity; and whether its obligations have interest
that is tax-exempt.
MR. SCHRADER said that "we're" seeking clarification of
condemnation powers to clarify that the entity is tax-exempt on
an operating basis, at this point. He said down the road, if it
issues bonds for repair or maintenance, and if it were possible
to issue those bonds on a tax-exempt basis, those issues would
be addressed at that point.
REPRESENTATIVE ROKEBERG asked, "Couldn't you go through the
Alaska Municipal Bond Bank to qualify?"
MR. SCHRADER said, "If that were an appropriate mechanism of
financing, yes." He said what "we" are concerned with,
currently, is not debt issuance on a tax-exempt basis. Rather,
it is the ability to operate on a tax-exempt basis and not be
subject to taxation on income, allocations to member utilities,
and the ability to not have the purchase price dictated by the
federal tax (indisc.).
MR. SCHRADER said current operations and the future breakup of
the pool are what are driving this provision, with respect to
the eminent domain powers.
Number 2345
REPRESENTATIVE ROKEBERG asked about the exemption from the RCA.
He said it is a very sensitive issue, and there is a "right of
utilities" in Alaska to opt out of economic regulation. He
asked if the original bill was organized to do that, since it
had been mentioned that it has exemptions.
Number 2361
MR. SCHRADER said he is not sure that it completely filled the
gap because it clearly contemplated the JAA in the power sales
agreement. There is specific language added in Title 42 last
year to the existing exemption for the power-sales agreement,
the master agreement that defines the power cost and other
things; it extends the exemption of the power-sales agreement to
the JAA. He said he thinks it is clearly contemplated that it
would not be subject to economic regulation by the RCA. He said
it was clear that the power-sales agreement would continue to be
an exempt agreement.
Number 2402
REPRESENTATIVE ROKEBERG said he knew that Copper Valley Electric
Association opted out for fear of deregulation. He asked if
municipal utilities are handled differently.
MR. SCHRADER replied that they are exempt under [page 2, Section
2], AS 42.05.711(b), and later in that section are the
provisions which allow the cooperatives to go through the
procedure to opt out from regulation. He said in his
understanding, Copper Valley [Electric Association] did that.
Number 2426
REPRESENTATIVE ROKEBERG said this provision allows the agency to
opt out but allows the cooperative to remain in - but be
separate.
Number 2438
MR. SCHRADER reiterated that the bill would not change who is
and isn't regulated. He said four of the five [member
utilities] aren't regulated. Kodiak is the one that is
regulated and will continue to be. If that changes in the
future, it will be because [a member utility] decided to opt out
or there was some change in the law.
Number 2447
REPRESENTATIVE ROKEBERG asked who would pay for a claim against
the JAA, and if it is just the assets that are under control.
Number 2466
MR. SCHRADER said the JAA would be the owner of the project, and
it would be entitled to the revenues for power purchases. He
said its liabilities will pay for its assets. He reiterated
that it is characterized like a port authority, and is a
limited-liability entity. He pointed out that the current
legislation says that the JAA has a separate and distinct legal
existence, which means that it is a separate legal entity for
liability purposes, so claims can't be made to the member
utilities for claims against the JAA.
TAPE 01-15, SIDE B
Number 2491
REPRESENTATIVE HALCRO referred to the legislation passed last
year, HB 446 and HB 447, and reconfirmed that the original
intent was that the JAA would not be under RCA regulation and
would be exempt from regulation. He verified that the intent of
this new legislation is to clean up some of the language.
MR. SCHRADER said there is specific language in HB 446 and HB
447 that deals with the continued exemption of the power-sales
agreement once it is assigned from the state to the JAA.
Number 2451
CHAIR MURKOWSKI referred to the information provided [from
AterWynne] to the committee and said it talks about taxes that
the state may impose on it, saying "that the joint action agency
is subject to state and local taxes to the extent any of the
public utilities forming the agency is subject to that
particular tax." She expressed her understanding that the
intent goes beyond that: "Don't confuse, don't cloud it,
because there are different entities that may be subject to
different taxation, so let's just give us a complete exemption."
She asked if her interpretation was correct.
Number 2391
MR. SCHRADER said it was a fair characterization. He said it is
not currently clear, since there are two types of entities -
municipal member entities and cooperative member entities -
which are subject to different kinds of taxation. He said the
exempt status of the JAA under state law is another factor in
that analysis for the federal tax-exempt status. He said the
bill proposes to treat the JAA like a port authority, which is
exempt.
Number 2370
CHAIR MURKOWSKI said there is not a fiscal note with the
legislation but wondered what was being lost; she asked if there
are payments in lieu of taxes that the state would be losing out
on if the legislature goes ahead and provides this exemption
under the state tax exemption.
MR. SCHRADER said he didn't know because it would depend on
whether the tax treatment of the JAA was that of its member
utilities or that of the cooperative utilities, or some
combination.
Number 2345
CHAIR MURKOWSKI said she has not spoken to anyone on the RCA but
was handed a message from one of the commissioners that said the
JAA is requesting that it be exempted from a certificate. She
said she thought he was referring to the certificate of public
convenience. She asked the sponsor why the JAA wanted an
exemption from the certificate of public need.
Number 2295
MR. SCHRADER said the current exemption that the JAA is exempt
under is an exemption from economic regulation, not from the
certificate of need requirement. He said "we" believe that a
complete exemption is appropriate because this transaction - the
sale of the projects to the Four Dam Pool power agency, the new
JAA - has already been approved by the legislature. He said in
addition to all of the other administrative procedures that have
to be complied with, in terms of the "lands issue" and transfer,
the process and procedure that is already dictated by state law
is a significant hurdle in completing this transaction by the
end of the year. He said there is also the Federal Energy
Regulatory Commission's (FERC's) transfer of licenses, which
imposes a similar process of suitability and soundness of the
licensee for the Four Dam Pool power agency.
MR. SCHRADER said it is appropriate to have the exemption from
the certificate of need because of the administrative
transaction costs, and because the Alaska State Legislature
already approved the transaction.
Number 2241
CHAIR MURKOWSKI asked if this legislation would allow for other
public utilities to form other joint action agencies that would
also be exempt from RCA authority.
Number 2215
MR. SCHRADER said theoretically and potentially, "yes," but in
reality, "no," because the language in AS 42.45.310, the new
provisions added last year to allow the creation of the JAA, are
specifically limited to the Four Dam Pool projects. He said
there is some grandfathering language, which refers back to
projects that were in existence. In his understanding, these
are the only projects for which this type of JAA could be
formed. He said it is legislation designed to facilitate this
divestiture transaction, even though the language looks as if it
is broad.
Number 2191
CHAIR MURKOWSKI said her concern is that it is theoretically
possible. She understood the intent to be limited to the Four
Dam Pool divestiture, and "this" is to facilitate that. She
wanted to make sure that it was narrow enough in scope so it
wouldn't have an unintended consequence, but she also recognized
that it couldn't be too narrow either.
Number 2148
MR. SCHRADER stated that the language in AS 42.45.310 is
carefully crafted to deal with this situation by referring
specifically to projects from the energy program in Alaska,
which ties in specifically to this project.
Number 2129
REPRESENTATIVE ROKEBERG referred to AS 42.45.310(c)(2) [page 3,
Section 7, of the bill], which says that the agency has the
power to sue and can be sued. He asked how the request to limit
liability is justified with regard to the existing law.
MR. SCHRADER replied, "The power to sue and be sued,
absolutely," but said if there is a judgment entered against the
JAA, it means that the judgment can't be enforced against the
member utility, just as a claim against a corporation can't be
made against a shareholder unless the shareholder has done
something to expose himself or herself to liability. He said
liability is being limited.
TOM FRIESEN, Ketchikan Representative, Four Dam Pool, Ketchikan
Public Utilities (KPU), said with the 12 budgets that he has
participated in with KPU there were no payments in lieu of taxes
made on any of the utility values to the state. He said he
didn't think that it would affect the state's collection in this
venture.
MR. FRIESEN said with regard to union support, during the
enactment of HB 446 and HB 447 legislation, "we" had letters
from Gary Brooks (ph), International Brotherhood of Electrical
Workers (IBEW), and from Vera Plumb, Business Representative for
Wrangell, Petersburg, and Ketchikan. He said "they" were 100
percent behind this divestiture program.
CHAIR MURKOWSKI asked Mr. Schrader at what point the private
federal ruling from the IRS has to be done.
Number 2011
MR. SCHRADER said he has a draft and wants to submit it
immediately because of the time involved in going through the
process. He said it was drafted based on existing law, and the
intent is to attach a copy of this bill, explaining that it is
pending legislation. He explained that the intent was that the
member utilities would complete the process of approving the
document and would begin forming the entity a few weeks ago. He
said it is now a legal entity, which is a precondition to being
able to file the letter-ruling request. He said there is now a
tax identification number, and the documentation will be
complete in the next week to ten days.
Number 1942
MR. SCHRADER said the timeframe for getting a letter of ruling
depends on the section of the IRS that it goes to. He said "we"
are cautiously optimistic and hope that the process is less than
three months, but it could be four to six months. The key is to
have as much done [as possible] so the process of the
divestiture transaction can continue.
MR. SCHRADER said the divestiture transaction to purchase the
Four Dam Pool projects from the state needs to be complete by
the end of the year. There are a number of things that need to
occur prior to December 31, 2001, including: confirming the
tax-exempt status of the entity; transferring licenses; having
FERC licenses for each of the projects; and negotiating the sale
and purchase agreement with the state.
MR. SCHRADER said the firm and project management committee of
the Four Dam Pool have made an effort to provide information to
the Office of the Attorney General, Department of Law. The RCA
is reviewing it, but has not reviewed it sufficiently to take a
position. He said "we" have provided the Office of the Attorney
General with "our" detailed tax analysis and there have been
concerns expressed about the condemnation powers. They were
also given a detailed analysis of the letter-ruling request and
its background. He said it is in process, and "they" have not
indicated that they object to it, but continue to have questions
on the objectives, specifically, the tax analysis and tax
treatment of the entity. He said the general discussion about
condemnation is about whether the entity has condemnation
powers, and whether that is sufficient to cause it to have
governmental status for tax purposes, since there would be
private interests such as the cooperative utilities in that.
MR. SCHRADER said there aren't assurances when dealing with the
IRS, but with this House bill amending what is currently in
place, based on existing precedent, there is a substantial
likelihood of getting favorable tax treatment. This is
essential in order to move forward with the transaction. He
assured the committee that "we" and other representatives of the
project management committee have been in communication with
people at the RCA, the Alaska Energy Authority (AEA), and the
Office of the Attorney General.
Number 1752
REPRESENTATIVE ROKEBERG referred to Section 10, which repeals
and reenacts AS 42.45.310(f). It read in part:
Bonds and other obligations issued by the agency and
all interest and income from them and all fees,
charges, funds, revenue, income, and other money
pledged or available to pay or secure the payment of
the bonds or obligations or interest on them are
exempt from taxation. The real and personal property
of an agency formed under AS 42.45.300 and this
section and the assets, income, and receipts of the
agency are exempt from all taxes and special
assessments of the state or a political subdivision of
the state, including the electric cooperative tax(AS
10.25.540 - 10.25.570).
He asked if that means that since the Kodiak utility is a
member, it pays an electric cooperative tax to the state.
Number 1679
MR. SCHRADER said he is not sure if Kodiak does, but said this
would not change.
REPRESENTATIVE ROKEBERG said that the intent of the language has
changed from last year's legislation, and "you come in and
completely deleted that section and replaced it with language to
become a tax-exempt entity."
MR. SCHRADER said the JAA is a tax-exempt entity, and the member
utilities' tax status is whatever it is under current law.
REPRESENTATIVE ROKEBERG said he reads it to mean that whatever
portion is attributable to the JAA, to Kodiak utilities, is
subject to state taxation. He said he isn't sure what the
intent of the legislature had been.
MR. SCHRADER said he doesn't think the intent is clear because
there is an entity with two types of member utilities, and how
it is extrapolated from what the tax status of that entity is -
based on the different tax status of its member entities - he
isn't sure.
MR. SCHRADER reiterated that the language in the bill was lifted
from the port authority statute, which is most analogous to the
JAA statute; it says municipalities can form a limited corporate
entity to do certain kinds of things.
Number 1576
CHAIR MURKOWSKI said with regard to tax-exempt status, an entity
is better off if it meets a whole laundry list of criteria, such
as the condemnation, eminent domain, and state tax status. She
interprets the intent of last year's legislation to say that
"you" are subject to state taxation to the extent that the
entity is already subject to it and doesn't provide a wholesale
state exemption. She asked if it jeopardizes the ability to get
the federal tax exemption. She said it looks as if it is going
contrary to what was provided for last year.
Number 1521
MR. SCHRADER stated that it is one of several factors, and for
the IRS these are fact and circumstance tests. He said one goes
through the authority and tries to figure out the consistent
themes and precedents, and looks for what is more like the JAA.
He said "we" have not been able to locate, in the various
pronouncements from the IRS, a private-letter ruling, or other
authority that is on all four points with this; it is clearly a
fact and circumstance test. The state tax treatment is one of
these factors. He said it is an important factor, but probably
not critical in the overall analysis based on the review of the
federal tax authority as the condemnation and eminent domain
powers. That seems to be the factor with the most weight, but
the tax-exempt status under state law is also a factor.
Number 1416
ERIC YOULD, Executive Director, Alaska Rural Electric
Cooperative Association (ARECA), via teleconference, said ARECA
is the statewide trade association for the electric utility
industry in Alaska. He said the members include many of those
that would be affected by the JAA. He testified in support of
HB 119 and said the bill provides a technical fix to legislation
passed last year that is very important to the ultimate
completion of the $200 million endowment that provides power
cost equalization for Alaska, primarily to communities
throughout the state where the cost of electricity is
significantly higher than in urban areas.
Number 1350
MR. YOULD said HB 119, if passed by the legislature, will go a
long way toward ensuring that the divestiture can take place.
House Bill 119 ensures that the JAA is not subject to RCA
regulation, provides eminent domain powers to the JAA, clarifies
the tax-exempt status of the JAA, and limits the liability of
the communities that are recipients of power from the JAA. He
added that all of the clarifications, as mentioned earlier by
Mr. Schrader, comport with the port authority legislation.
Number 1333
MR. YOULD explained that it is the same type of information,
legislation, and powers contained in the original Alaska Power
Authority statutes used to develop the Four Dam Pool, the
Anchorage-Fairbanks intertie, Bradley Lake, and all of the other
power projects that now reside under the ownership of the AEA,
the successor to the Alaska Power Authority. He further
explained that there is precedence from prior legislation that
these are necessary for financing and operating an entity such
as the JAA.
MR. YOULD said "we" were made aware, shortly after passage of
last year's legislation, that there were some technical
amendments that needed to take place in order to get a favorable
ruling out of the IRS - to allow the divestiture to take place.
Consequently, his board of directors at a December 14, 2000,
board meeting adopted resolution 01-2 unanimously. He stated:
It is a resolution supporting legislation that would
cure defects to the Four Dam Pool Divestiture
Authorization Act, passed by the legislature in the
year 2000. Its final conclusion, ... [is that], ARECA
supports amendments to the authorizing legislation
that would cure the present defects in the underlying
legislation to facilitate divestiture of the projects
as originally envisioned by the parties, the parties
being the governor and the legislature.
Number 1200
MR. YOULD emphasized that ARECA strongly supports the
legislation. There is a question about RCA jurisdiction, and
the JAA would be a political subdivision with limited powers.
It will be a wholesale entity, and can only sell its power to
the communities that would be served. The communities would
then resell that power, and there is not a problem with
encroachment by the JAA within the certificated territories of
the utilities that the entity serves. He said ARECA would like
to see it moved through the legislature this year because the
legislature imposed a date of December 31, 2001, for conclusion
of the divestiture that will provide the balance of funds needed
for the Power Cost Equalization Endowment fund that brings power
[prices] down for the rest of the state.
Number 1136
CHAIR MURKOWSKI said she agrees that "we" should do what we can
to facilitate this in a timely manner, and she would like to
think that these are all technical, conforming amendments. She
reiterated that she has a concern over the state taxation issue.
Number 1086
MR. YOULD said the JAA will provide power, for instance, to a
cooperative, and the cooperative is the only entity that can
sell that power, at least in its service territory. That
cooperative is subject to the taxes that are on the books and
pays taxes on any power that retails as a result of buying
wholesale from the JAA.
Number 1058
REPRESENTATIVE ROKEBERG cautioned Mr. Yould to call it
"technical" because the liability issue alone is a substantive
issue. He asked Mr. Yould if he recalled the legislative
history of the bill from last year.
Number 1035
MR. YOULD said last year HB 446 and HB 447 came late in the
session and passed within a couple of months. He thought the
bill had gone through the House Labor and Commerce Standing
Committee but said it could have gone straight to the House
Finance Committee.
Number 0977
CHAIR MURKOWSKI said it is somewhat distressing to not hear
comments from the RCA or the state, because they obviously have
a keen interest in it. She said she would like to think that
they are participating. Noting that the House Judiciary
Standing Committee is the next "stop" for the bill, she said she
hoped that they would be present at that time.
Number 0940
REPRESENTATIVE KOTT agreed that the state should be active
participants in this, but noted that other members of the public
were certainly aware that this hearing was taking place. If
there was an active interest, they should have showed up at the
Legislative Information Offices (LIOs) or called from their own
offices offline. He said Representative Rokeberg's concerns
could be taken up by the House Judiciary Standing Committee.
Number 0907
REPRESENTATIVE ROKEBERG asked if there was supposed to be a
fiscal note.
CHAIR MURKOWSKI said the person who was supposed to prepare the
fiscal note had overlooked it.
Number 0872
REPRESENTATIVE KOTT suggested the committee could make a motion
to move the bill to the House Judiciary Standing Committee
pending receipt of the fiscal note.
REPRESENTATIVE ROKEBERG said Chair Murkowski had some concern
about the taxation, and he is concerned about the authorization
of IDBs. He said a substantial portion of the bill has to do
with bonding and finance, so he is concerned about how it fits
into the whole realm of things. He said taxation questions
would be a more appropriate thing for this committee versus the
House Judiciary Standing Committee.
Number 0789
REPRESENTATIVE KOTT said the taxation questions would be for the
House Finance Standing Committee, and based on the committee's
recommendation, [the bill] could receive a House Finance
Committee referral from the Speaker of the House. This would
require a letter signed by the committee addressed to the
Speaker of the House requesting that it be done.
REPRESENTATIVE HALCRO said the committee has two options. If
members have specific questions to be posed to the bill sponsor,
then the sponsor can come back with the answers before moving
the bill, and wait for the fiscal note. The other option is to
express members' concerns about the issues and allow them to be
provided to the committee of next referral, so the legislation
can move forward.
Number 0704
CHAIR MURKOWSKI said she would like to talk to people on the
RCA, and that the bill will be held over.
REPRESENTATIVE ROKEBERG asked if someone from the Department of
Revenue could speak about the IDBs and bond allocation. [HB 119
was heard and held.]
HB 27-LICENSE HOME INSPECTORS
Number 0417
CHAIR MURKOWSKI announced that the final bill to be heard today
would be HOUSE BILL NO. 27, "An Act relating to the licensure
and registration of individuals who perform home inspections;
relating to home inspection requirements for residential loans
purchased or approved by the Alaska Housing Finance Corporation;
relating to civil actions by and against home inspectors; and
providing for an effective date."
REPRESENTATIVE ROKEBERG, sponsor of HB 27, stated that he
believed public testimony was closed. He said committee members
should have received proposed Version L of HB 27, and an
explanation of the changes between Version F and Version L.
Number 0365
CHAIR MURKOWSKI asked if there was a motion to adopt Version L
[22-LS0136\L, Lauterbach, 2/8/01] as a work draft. She then
announced that Version L was adopted.
REPRESENTATIVE ROKEBERG thanked Representatives Hayes and
Crawford for taking an interest in this legislation and working
with his office in trying to overcome some of their concerns.
REPRESENTATIVE ROKEBERG said the liability issue still needs to
be "tackled" but asked the committee to indulge him since the
bill has two other committees of referral, the House Judiciary
and House Finance Committees. He intends to resolve the
liability issue, he added, and gave his word to Chair Murkowski
that he would run it past her.
REPRESENTATIVE ROKEBERG directed the committee to the two-page
memorandum with the changes. He said he had discussions with
committee members about some of the changes, such as the "oral"
[versus written inspection report]. He had worked with Ms.
Reardon from the Division of Occupational Licensing, and said
she had been very helpful.
Number 0244
REPRESENTATIVE ROKEBERG pointed out that the chief executive
officer (CEO) of the Alaska Housing Finance Corporation had a
change in the last version, from an ex officio member of the
board to a voting member of the board for a two-year period, to
help form the regulations. Subsequent to that, [Terri
Lauterbach] of Legislative Legal and Research Services
("Legislative Legal"), Legislative Affairs Agency, had said:
By memorandum, [in the] Bradner v. Hammond case,
Alaska 1976, ... because of the appointment of
confirmation powers, et cetera, et cetera, Ms.
Lauterbach thought it would be a potentially
unconstitutional appointment of a confirmation to a
board and commission without the confirmation of the
legislature.
REPRESENTATIVE ROKEBERG further explained that these boards and
commissions constitutionally need to be confirmed by the
legislature. He went on to say that there is another minor
technical amendment that was offered by the department.
Number 0125
CHAIR MURKOWSKI referred to page 4, [line 1], paragraph (6),
Version L, Sec. 08.57.060, Qualifications. She said it was new
language that was not included in Version F. She said she
understands the rationale behind wanting to keep out those who
have been involved in unresolved complaints or disciplinary
actions. She noted that it is written in such a way that it
doesn't appear that it has to be an unresolved complaint or
disciplinary action related to home inspection. For example, if
someone was a commercial fisherman on the side, and was involved
in some kind of regulatory action or discipline, under this,
even though it is not related to home inspection, it may be
grounds for denial of licensure.
REPRESENTATIVE ROKEBERG said he thought it was true.
JANET SEITZ, Staff to Representative Norman Rokeberg, Alaska
State Legislature, said she had asked the drafter, Ms.
Lauterbach, who didn't see a problem with the way it was
written.
TAPE 01-16, SIDE A
Number 0048
CHAIR MURKOWSKI stated, "With these qualification[s], ... the
board shall authorize the department to issue them for these
following things." She said the board doesn't have the
discretion to look at [paragraph] (6) " and say, "Well it
related to a fishing regulation." She said the way she sees it,
one has to be "clean" on all of them. She asked Ms. Reardon if
she was correct.
Number 0070
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Community and Economic Development (DCED), said
she believed one needed to be "clean" on all of them, although,
it may be that the courts and the Department of Law would expect
the board to read [the statute] as it relates to home
inspections. It could be that they would expect some connection
in how it is actually applied. For example, if a person's
license was turned down because he or she was being investigated
by the Alaska Public Offices Commission (APOC), that wouldn't be
the kind of thing that would hold up during a hearing because
"they" would expect some logical connection to the type of
license.
Number 0136
REPRESENTATIVE ROKEBERG said:
Unless there was another licensed activity that they
were doing, ... like [being] a real-estate appraiser,
there wouldn't be any jurisdictional issue. Right now
there is absolutely no jurisdiction over ... home
inspection activity, so there is no way they could be
involved in a disciplinary [action] for home
inspection.
CHAIR MURKOWSKI commented that perhaps someone from the
Department of Law could enlighten the committee.
Number 0203
GAYLE HORETSKI, Assistant Attorney General, Civil Division,
Commercial Section, Department of Law, specified that she does
occupational licensing. She said the way the language is
drafted is broad enough to include complaints that are not, in
the least bit, related to home inspections. She referred to
paragraph (5) [page 3, Section 08.57.060, Qualifications], where
it says, "has not had the authority to perform home inspections
revoked in this state or in another jurisdiction". The
legislature wants to tie a factor to performing home
inspections, she said, which was done in paragraph (5).
MS. HORETSKI commented that the legal effect of that is that
qualifications have been subject to constitutional challenge if
a person can say that "that factor has absolutely nothing to do
with being a good barber, or a good this or that." But if an
argument can be made that there is a rational relationship
between the factor and the ability to perform that task, then
the Department of Law would attempt to defend against a
challenge and enforce an actual practice of the statutory
requirements.
MS. HORETSKI pointed out that there is a case right now where a
person is charged with wrongdoing that has had no connection
with his duties - this person was not a home inspector. The
requirement for individual qualifications and disciplinary
action is "lack of good moral character," so "we" have said that
it doesn't matter that it didn't have to do with his license
activities because the theft conviction shows a lack of good
moral character.
MS. HORETSKI said those issues are raised, that there is no
connection with the profession, but obviously "we" would try to
enforce such a limitation if it were included in the
qualifications.
Number 0355
REPRESENTATIVE HALCRO questioned whether paragraphs (5) and (6)
could be combined, since (5) outlines that a person can't
receive a license if the authority to perform has been revoked
in this state or other jurisdiction. It appears that (5)
addresses those actions that have been completed against a
person and (6) relates to those actions that are under review.
Number 0416
MS. HORETSKI said the two paragraphs could certainly be
combined; the sponsor would have to decide if what is now
paragraph (6) was intended to be restricted only to home
inspection-type activity. She added, "Or if you have a barber's
license and ... they say you have an unlicensed person in your
barber shop, so you're under investigation as a barber, does
that come under paragraph (6)? It would right now, yes."
Number 0439
REPRESENTATIVE ROKEBERG said the policy call [arises when] a
barber, who being thrown out of his or her profession, wants to
become a home inspector.
REPRESENTATIVE HALCRO said it certainly might speak to the
person's capability of performing.
REPRESENTATIVE ROKEBERG commented that he believed that was why
the drafter put it in there. He said he has no problem leaving
it in the bill. The two paragraphs could be combined but are
two separate things. He raised the point that this covers a
pending action but asked: What if there was a regulatory
determination in another state? He said he thought it was
[referring to] an unresolved complaint or a disciplinary action.
If a person has been subject to any disciplinary action by a
regulatory authority, he or she would be subject to non-approval
of a license until the complaint is resolved. If it was
resolved and the person wasn't found guilty, then there wouldn't
be anything (indisc.). He commented that it is a pretty high
standard.
Number 0551
CHAIR MURKOWSKI said she liked the change that had been made to
Version L regarding the oral-versus-written reports, but asked
the sponsor about the additional sentence which provides that
"an oral inspection report may be given by the home inspector
during or after the inspection." She said as she understands
it, this lets the home inspector still tell the homeowner that
he or she has a problem with the house. She asked if having
this language in the bill is allowing (indisc.).
Number 0615
REPRESENTATIVE ROKEBERG referred to the proposed amendment, 22-
LS0136/L.1, Lauterbach, 2/12/01, which read:
Page 3, line 11, following "Qualifications.":
Insert "(a)"
Page 3, line 26:
Delete "section"
Insert "subsection"
Page 4, following line 3:
Insert a new subsection to read:
"(b) A person may register with the board as an
associate home inspector upon application, payment of
the required fee, and determination by the board that
the person
(1) within the seven years preceding the
date of application, has not been under a sentence for
an offense related to forgery, theft in the first or
second degree, extortion, or defrauding creditors or
for a felony involving dishonesty;
(2) has not had the authority to perform
home inspections revoked in this state or in another
jurisdiction; and
(3) is not the subject of an unresolved
complaint or disciplinary action before a regulatory
authority in this state or in another jurisdiction."
Page 4, line 16, following ".":
Insert "A license that has been suspended expires
at the end of the period for which the license was
issued, regardless of whether the period of suspension
has expired."
Page 7, line 3:
Delete "An"
Insert "In addition to the written inspection
report required under this section, an"
Page 7, line 16:
Delete "AS 08.57.060(4)"
Insert "AS 08.57.060(a)(4) or (b)(1)"
[The foregoing was adopted later as Amendment 1.]
REPRESENTATIVE ROKEBERG referred to the section that refers to
page 7, line 3 of HB 27, Version L. He pointed out that a
written inspection is mandated. The ambiguity about "written"
or "oral" was deleted by mandating "written," and an inspector
is not precluded from doing an oral report. He verified that
throughout the bill, it refers to written inspection reports.
Number 0689
REPRESENTATIVE HALCRO referred to the amount of time that a
person has to respond if there is a problem. He asked if the
180 days applies to the oral [inspection report] given to a
person when walking through the house.
REPRESENTATIVE ROKEBERG replied that he thought any evidence
would be on the written report. He said an oral report could
have been left out [of the bill], but he wanted to ensure that
the people "on the ground" know that it is allowed. The written
report is the statutory requirement, and an oral report is
permissive by adding the "in addition to".
Number 0743
CHAIR MURKOWSKI paraphrased from page 8, [Sec. 08.57.810], the
legal actions against home inspector, which read in part: "A
person may not bring an action against an individual licensed
under this chapter based on a written inspection home report if
the report is more than 180 days old". She said it is clear
that it's based on the written report.
Number 0786
REPRESENTATIVE ROKEBERG reported that he will be taking up the
issue of the 180 days in his committee [House Judiciary Standing
Committee] because he wants to limit the length of the report,
in terms of its validity, but he is reluctant to limit the
liability under it, because if there is an omission or an error,
there should be liability attached to it. He said there is a
distinction between the length of time a report should be valid
and the liability.
Number 0814
REPRESENTATIVE ROKEBERG went through the rest of proposed
Amendment 1. He said the amendment was offered at the
suggestion of Ms. Reardon. He referred to line 8, which refers
to page 4, following line 3, paragraphs (1) (2), and (3), of
Version L. That section read:
Insert a new subsection to read:
"(b) A person may register with the board as an
associate home inspector upon application, payment of
the required fee, and determination by the board that
the person
(1) within the seven years preceding the
date of application, has not been under a sentence for
an offense related to forgery, theft in the first or
second degree, extortion, or defrauding creditors or
for a felony involving dishonesty;
(2) has not had the authority to perform
home inspections revoked in this state or in another
jurisdiction; and
(3) is not the subject of an unresolved
complaint or disciplinary action before a regulatory
authority in this state or in another jurisdiction."
REPRESENTATIVE ROKEBERG pointed out that subsection (b) is being
added to those who qualify for a license by adding exactly the
same thing for the associate home inspector. It clarifies the
issue between a home inspector and an associate home inspector.
REPRESENTATIVE ROKEBERG referred to line 21 of proposed
Amendment 1, which refers to page 4, line 16, Version L,
following "." That section read:
Insert "A license that has been suspended expires at
the end of the period for which the license was
issued, regardless of whether the period of suspension
has expired."
He explained that it is a clarification from Legislative Legal
regarding what happens when there's a suspension before
expiration.
REPRESENTATIVE ROKEBERG said the amendment that refers to page
7, line 16, of the bill is the result of adding the associate
home inspector language on the first page of the amendment.
That section of the amendment read:
Delete "AS 08.57.060(4)"
Insert "AS 08.57.060(a)(4) or (b)(1)"
REPRESENTATIVE ROKEBERG made a motion to adopt Amendment 1.
Number 0925
CHAIR MURKOWSKI announced that Amendment 1 had been moved, and
there being no objection, it was adopted.
Number 0942
REPRESENTATIVE ROKEBERG pointed out that "we have also extended
the date ... that was in question before, to 2004, to make sure
that their lack of grandfathering didn't upset people." He
clarified that the date had been 2003 and is now 2004, with a
time period of implementation for when one has to have a
license.
Number 0975
MS. SEITZ, referred to the transitional license. She said the
transitional license part of the bill starts on page 14, and
there are three different licenses. If a person is a home
inspector on October 1, 2000, and has passed the International
Conference of Building Officials (ICBO) exam, that person can
get a joint transitional license that allows him or her to
inspect new and existing construction. If a person has just
passed either the American Society of Home Inspectors exam or
the Examination Board of Professional Home Inspectors, he or she
can get a transitional, previously occupied or existing
residence [license]. And if a person has passed the ICBO exam,
he or she can get a [license to inspect] new construction.
MS. SEITZ explained that all of the licenses are valid as
transitional licenses until January 1, 2004, which
Representative Rokeberg spoke about earlier. She said the
previous bill version [F] had it set at 2003, but after
discussing the regulatory process, it was decided to extend the
date. She said at the end of that period, everyone must comply
with the qualifications set forth by the board. Everyone must
have certain qualifications by the time the transitional
licenses expire because the licenses are not renewable.
CHAIR MURKOWSKI reiterated that all of the transitional licenses
expire January 1, 2004, and everyone has to take a board-
determined examination and will all be on the same track with
licensure.
Number 1090
REPRESENTATIVE ROKEBERG surmised that the regulations would be
grandfathered in, except for continuing education on "Artic
conditions" or something like that because of the existing
national exams and the desire of the new board to keep the fees
down.
Number 1118
REPRESENTATIVE ROKEBERG concluded by complimenting
Representatives Crawford and Hayes on the amendments that they
brought to him. He said Representative Hayes brought him
several amendments, two of which have been taken care of by the
changes. Representative Hayes had brought up an issue; a
constituent in Fairbanks felt that just because a person is an
engineer doesn't make him or her a home inspector.
Representative Rokeberg said over the years "we" have had a lot
of debate about this issue. Having an educational background as
an architect or engineer doesn't necessarily mean that a person
would have education and training in how to do a home
inspection. He agreed with this point.
Number 1178
REPRESENTATIVE ROKEBERG recognized that there are engineers and
architects that do participate as home inspectors. That
particular organization has about 5,000 members, he said, and
without the exemption in the bill, he's afraid that any chance
of the consumer being protected by passing this bill would be
overcome by "the death somewhere in its journey to the third
floor." He understood the wisdom of leaving well enough alone
and leaving the exemption in.
Number 1238
REPRESENTATIVE CRAWFORD commented that he appreciates the
changes and considerations that the sponsor made, and he is glad
that the bill is "getting through."
CHAIR MURKOWSKI said she has Representative Rokeberg's assurance
that he is going to deal with the liability issue in the next
committee [House Judiciary Standing Committee].
Number 1276
REPRESENTATIVE MEYER stated that this is the first bill he saw,
even before being sworn in, and it has come a long way. He said
Representative Rokeberg made a lot of concessions, and it merits
being passed on at this point.
Number 1314
REPRESENTATIVE HALCRO made a motion to move Version 22-LS0136\L,
Lauterbach, 2/8/01, from committee with individual
recommendations and the attached fiscal notes. There being no
objection, CSHB 27(L&C) moved out of the House Labor and
Commerce Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:20 p.m.