ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 14, 2007
3:07 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Jay Ramras
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 108
"An Act extending the termination date for the Board of Marine
Pilots; and providing for an effective date."
- MOVED CSHB 108(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 49
"An Act relating to credit memos, gift certificates, and gift
cards, and to unclaimed property; and making a violation of
certain gift card prohibitions an unlawful trade practice."
- MOVED CSHB 49(L&C) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 108
SHORT TITLE: BOARD OF MARINE PILOTS
SPONSOR(s): LABOR & COMMERCE
01/25/07 (H) READ THE FIRST TIME - REFERRALS
01/25/07 (H) L&C, FIN
02/14/07 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 49
SHORT TITLE: GIFT CARDS
SPONSOR(s): REPRESENTATIVE(s) GATTO, GARDNER, SEATON, GRUENBERG
01/16/07 (H) PREFILE RELEASED 1/5/07
01/16/07 (H) READ THE FIRST TIME - REFERRALS
01/16/07 (H) L&C, FIN
01/29/07 (H) L&C AT 3:00 PM CAPITOL 17
01/29/07 (H) Heard & Held
01/29/07 (H) MINUTE(L&C)
02/05/07 (H) L&C AT 3:00 PM CAPITOL 17
02/05/07 (H) -- Meeting Canceled --
02/14/07 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
CAPTAIN ROBERT WINTER, Pilot
Southeast Alaska Pilots Association
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 108.
RICK URION, Director
Division of Corporations, Business, and Professional Licensing,
Juneau Office
Department of Commerce, Community, & Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 108.
AL CLOUGH, Deputy Commissioner
Department of Commerce, Community, & Economic Development
(DCCED);
Chairman, Board of Marine Pilots
Juneau, Alaska
POSITION STATEMENT: Testified in Support of HB 108.
PAT DAVIDSON, Legislative Auditor
Legislative Audit Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions during the
hearing on HB 108.
PAUL FUHS, Lobbyist
for Southwest Alaska Pilots
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 108.
HEATH HILYARD, Staff
to Representative Carl Gatto
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 49 on behalf of Representative
Gatto, joint prime sponsor.
RACHEL LEWIS
Unclaimed Property Section
Tax Division
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
49.
HUGH ASHLOCK, Partner
Dimond Center, LLC,
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 49.
ACTION NARRATIVE
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:07:14 PM. Representatives
Gardner, Neuman, Buch, LeDoux, and Olson were present at the
call to order. Representatives Gatto and Ramras arrived as the
meeting was in progress.
HB 108-BOARD OF MARINE PILOTS
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 108, "An Act extending the termination date for
the Board of Marine Pilots; and providing for an effective
date."
3:07:53 PM
CAPTAIN ROBERT WINTER, Pilot, Southeast Alaska Pilots
Association, said that he is in support of HB 108. He
encouraged the committee to pass the bill as it is currently
written.
3:08:34 PM
REPRESENTATIVE NEUMAN made a motion to adopt CSHB 108, Version
25-LS0445\C, as the working document. There being no objection,
Version C was before the Committee.
3:08:55 PM
RICK URION, Director, Division of Corporations, Business, and
Professional Licensing, Juneau Office, Department of Commerce,
Community, & Economic Development (DCCED), stated that he is in
favor of HB 108. During the auditing process, many questions
were brought up. He opined that these were answered
"satisfactorily."
CHAIR OLSON and Representative Neuman pointed out that Version C
extends the sunset date to 2013.
MR. URION stated that he has "reservations about extending the
dates." He explained that from time to time, statutes need
minor revisions, which are difficult to address without a sunset
review. If this date is extended, it will be more difficult to
address the aforementioned issues as they come up. In response
to a question from Chair Olson, he explained that the eight year
sunset date was recently implemented. Prior to this, all
extensions were four years.
3:11:14 PM
REPRESENTATIVE GARDNER referring to the [sponsor statement],
pointed out that the extension is recommended by the Division of
Legislative Audit.
MR. URION opined that the extension "makes less work" for the
Division.
3:11:32 PM
REPRESENTATIVE LEDOUX asked how many times the Board of Marine
Pilots ("Board") has been extended. Additionally, she inquired
as to how many of these extensions have dealt with other
concerns as well as the extension.
MR. URION replied that he is not sure how many times the board
has been extended. The sunset review has been in effect for 30
years. In response to additional questions, he stated that
boards often have unforeseen issues that need to be dealt with.
When these issues come up, the legislature is asked to amend the
law; however the Board of Marine Pilots has no problems at this
time.
3:13:28 PM
REPRESENTATIVE NEUMAN asked if the regulatory changes can be
brought to the Administrative Regulation Review Committee.
MR. URION replied that the changes would be statutory, rather
than regulatory. He explained that regulations can not be made
without permissive statutory language.
MR. URION, in response to a question from Representative Neuman,
explained that board members serve limited terms which are
"staggered." Additionally, the members serve at the will of the
Governor.
3:14:48 PM
AL CLOUGH, Deputy Commissioner, Department of Commerce,
Community, & Economic Development (DCCED); Chairman, Board of
Marine Pilots ("Board"), stated that the Board supports Version
C. He explained that the statute which governs the Board "went
through an extensive rewrite" around 10 years ago. The majority
of changes are regulatory; however there are also statutory
issues that require attention.
3:16:02 PM
REPRESENTATIVE GATTO commented that this seems pretty "straight-
forward." He inquired as to the future of statutory changes.
MR. CLOUGH surmised that larger ships or changing traffic
patterns may result in statutory changes. The board may not
have regulatory authority to deal with the various issues that
may come up. In response to additional questions, he explained
that homeland security is becoming more of an issue for the
Board, and is taken seriously. He does not anticipate that the
Board will request a statutory change to deal with the pilots'
method of getting on or off ships. However, he is unable to say
for sure. The U.S. Coast Guard is considering these issues, and
the Board is involved in discussions regarding ship and port
security.
3:19:11 PM
MR. CLOUGH, in response to a question from Representative
Neuman, stated that in regard to the extension, he is speaking
on behalf of the Board. The Board has not debated this issue
"in any great detail." He stated that his personal opinion
"would be the longer, the better," although he understands the
intent behind a shorter date. In response to an additional
question, he explained that the Board maintains the ability to
come before the legislature or the Administration to make
requests for legislation.
3:21:42 PM
PAT DAVIDSON, Legislative Auditor, Legislative Audit Division,
Alaska State Legislature, explained that sunset audits are
required by statute and must be made available to the committees
considering the extensions. She explained that two years ago,
the statute regarding extensions was changed from "a period not
to exceed four years" to "a period not to exceed eight years."
The four year audits were too expansive, and resulted in "very
few statutory change recommendations." The Boards are health,
safety, and welfare boards, and would be a "high enough priority
for the legislature" to make any necessary changes. In regard
to the Board of Marine Pilots, she said, there were operational
concerns, such as drug testing. She explained that
"administrative tightening" was needed. In addition,
investigative backup for the marine pilot coordinator was also
needed. The Board uses a peer review as a way to ensure
continued competency. Interviews and surveys of marine pilots
have shown that this is not viewed as "particularly effective"
as a method of showing continued competence. The Division
recommends that this be reevaluated. In addition, rate-setting
is a concern. Most occupational boards do not deal with this.
The Board has an equal number of marine pilots and industry
representatives. However, due to the ethics act, marine pilots
may recuse themselves, while industry members may not. Thus,
the balance is not maintained. This concern resulted in the six
year recommendation. In response to a question, she agreed that
she is comfortable with the six year recommendation.
REPRESENTATIVE GATTO asked if a marine pilot has ever failed a
drug test, and if so, inquired as to the penalty.
MS. DAVIDSON replied that during the course of the most recent
audit, there were no drug test failures. She explained that the
Division is concerned with the method used to select individuals
for testing, adding that this concern is administrative in
nature. While the Coast Guard is "on top" of drug testing, the
Board is not "on top" of the testing program.
3:27:51 PM
PAUL FUHS, Lobbyist for Southwest Alaska Pilots, explained that
the Southwest Pilots bring liquefied natural gas (LNG) tankers
into Valdez, and handle cruise ships, as well as a variety of
other vessels. Previously, there were "huge battles" between
the industry and marine pilots. The state requires that
companies retain pilots, which results in "an unusual labor
relations situation." The board has two pilots, two industry
members, and three public members. He explained that if there
is a disagreement regarding tariffs, the pilots and industry
members "cancel each other out," and the decision is made by the
public members. He then explained this process. He opined that
this works well as long as the public members appointed are
"truly public members."
MR. FUHS encouraged the committee to consider a "longer term"
extension, as this provides stability. He added that a shorter
term may result in attempts to "sneak" items in while the issue
is being considered by the legislature. There is a heightened
consideration of terrorism. All of the pilot boards and the
majority of the industry are members of the Marine Exchange of
Alaska, and vessels are tracked on a continuous basis. This
information is reported to the U.S. Coast Guard. In addition, a
marine distress signaling system in place. In regard to a
question from Chair Olson, he explained that if a marine pilot
makes a mistake, he or she can be fired immediately. He pointed
out that marine pilots must attend a three or four year
training, must keep up with all changes, and are tested on a
regular basis.
3:32:31 PM
REPRESENTATIVE NEUMAN moved to report CSHB 108, Version 25-
LS0445\C out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, CSHB
108(L&C) was reported from the House Labor and Commerce Standing
Committee.
HB 49-GIFT CARDS
3:34:08 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 49, "An Act relating to credit memos, gift
certificates, and gift cards, and to unclaimed property; and
making a violation of certain gift card prohibitions an unlawful
trade practice."
3:34:18 PM
HEATH HILYARD, Staff to Representative Carl Gatto, Alaska State
Legislature, joint prime sponsor of HB 49, noted that a
committee substitute has been drafted to address concerns
brought up at the previous hearing.
3:35:03 PM
REPRESENTATIVE NEUMAN moved to adopt CSHB 49, Version 25-
LS0263\M, Bannister, 2/6/07, as the working document. There
being no objection, Version M was before the Committee.
MR. HILYARD explained that Section 1 of Version M substitutes
"gift card" for "gift certificate." These two terms are now
interchangeable, and "gift certificate" is removed from statute.
Section 2 contains a technical change, amending AS 34.45.760(8)
to reflect the definition of "gift card" found in AS 45.45.940.
Section 3 amends AS 34.45.760(11) by adding "gift cards" to the
list of items included under "intangible property." Section 4
stipulates that gift cards do not have an expiration date. In
addition, this section excludes gift cards awarded under a
loyalty or promotional program, cards donated to non-profit
organizations, and "open universe" cards. This section refines
the definition of "device" to clarify that this does not apply
to telephone calling cards. Finally, Section 4 alters the
definition of "gift cards" to remove references to "purchaser"
or "recipient." All refund requirements have been removed.
3:38:52 PM
REPRESENTATIVE RAMRAS relayed a concern regarding local tenants
in a mall setting. Referring to Section 4(a)(1), he inquired as
to what effect this would have on small, independent businesses.
MR. HILYARD replied that all property, regardless of the
[expiration] date must still be turned over to Unclaimed
Property after three years. He surmised that small, local
retailers carry a greater likelihood of going out of business,
which creates a concern for the consumer.
REPRESENTATIVE GATTO, speaking as a joint prime sponsor of HB
49, commented that a retailer may be inclined to send a letter
reminding the consumer of the remaining value of the gift card.
He opined that this would make both parties "winners."
3:44:22 PM
REPRESENTATIVE RAMRAS questioned whether HB 49 would preclude
retailers from conducting free enterprise.
MR. HILYARD replied that "in a broad sense," HB 49 does preclude
this. However, he opined that exempting cards issued under
promotional or royalty programs offers flexibility to
businesses.
REPRESENTATIVE RAMRAS commented that gift cards contain specific
provisions which are an agreement between the purchaser and the
seller. He said "I hate to see government, on principle, insert
itself into a free enterprise transaction between a purchaser
and seller." The expiration date is a condition of transaction.
He opined that businesses may not want to have gift cards that
last in perpetuity. He questioned whether this condition should
be the "privilege of the retailer," and the "privilege of the
buyer ... to consummate that transaction." He opined that the
conditions between the buyer and the seller should not be a
concern of the recipient of the gift card.
REPRESENTATIVE GATTO replied that the retailer may still offer a
refund for the dollar value of the card, after it has reached
its expiration. He pointed that the intent of HB 49 is to
protect consumers who are not aware that it is against the law
[for gift cards to have an expiration date].
3:50:19 PM
REPRESENTATIVE GARDNER offered her understanding that a gift
card with an expiration date would still become unclaimed
property if not redeemed, and asked if this is correct.
MR. HILYARD replied that he is unable to answer this. He
clarified that "open universe" cards may be used at a number of
retailers, and are not specific to large retailers.
REPRESENTATIVE RAMRAS commented that while the intent behind HB
49 is good, it does not include protection for small businesses.
He opined that the government should not attempt to protect
consumers in all situations, and business owners are entitled to
run businesses "the way that they see fit."
3:55:22 PM
REPRESENTATIVE NEUMAN stated that he shares these concerns, and
pointed out that bartering also occurs. He expressed concern
regarding the effect the aforementioned gift card requirements
may have on bookkeeping. He opined that if a business owner
wants to offer a gift card with a 2-year expiration date, he or
she has the right to do so. In response to a question from
Representative Gatto, he commented that if the business is
required to refund the value of a gift card, it must then keep
the purchaser's name and contact information "on the books".
This is a "good" and "workable" suggestion. However, this adds
an additional burden to businesses.
REPRESENTATIVE RAMRAS offered his understanding that it is legal
to "use or lose" leave time that is accrued. He reiterated his
earlier statement regarding businesses' gift card policies. In
response to a question from Representative Gatto, he explained
that his business sells and gives away gift certificates. Those
that are given away have blackout and expiration dates.
4:00:39 PM
MR. HILYARD pointed out that in the original bill, the gift
cards had an expiration date of 7 years, which was changed in
response to concerns. He opined that an expiration date of
three years or more is more appropriate.
REPRESENTATIVE NEUMAN asked if the gift cards may be cashed in
for monetary value.
MR. HILYARD replied this is up to the individual retailer. In
response to an additional question, he offered his understanding
that this is included in current law.
4:04:04 PM
REPRESENTATIVE BUCH opined that more specific definitions would
make it easier to regulate each gift card according to purpose
and use, and suggested that this be considered.
REPRESENTATIVE GARDNER offered her understanding that currently,
a gift certificate that is used for promotional purposes or
donated may expire. HB 49 applies to gift certificates
purchased at face value. She reiterated her understanding that
even if a gift certificate expires, any unclaimed portion must
be turned over to Unclaimed Property. The merchant does not
keep the unclaimed funds. She surmised that this does not
happen often, adding that those merchants who understand the
current law do not oppose the expiration date prohibition.
REPRESENTATIVE RAMRAS suggested that Section 4(a)(1) be amended
to include the following conceptual amendment "unless there is a
specific date of expiration set and agreed upon between the
buyer and seller, which may or may not have an effect on the
recipient of the gift card." He stated that he does not want to
"encroach on the rights of the business owner, in [an] attempt
to protect the consumer...."
4:08:57 PM
CHAIR OLSON commended the sponsor for changes made in Version M.
However, he said "it appears to me, that we're trying to protect
people from themselves, and from their own actions." He
surmised that Version M would not move through the legislative
process, [without further revisions].
4:09:56 PM
RACHEL LEWIS, Unclaimed Property Section, Tax Division,
Department of Revenue (DOR), explained that currently,
regardless of whether or not a gift card expires, any unredeemed
funds must be turned over to Unclaimed Property. She stated
that an exchange of money for goods and services is a
"contractual obligation." Payroll checks and health insurance
reimbursements are other types of unclaimed property.
4:12:54 PM
REPRESENTATIVE NEUMAN asked if a gift card purchased from a
franchise that goes out of business can be redeemed at a
different franchise.
MS. LEWIS replied that she is unsure; however, when a business
dissolves, any unredeemed gift certificates are turned over to
Unclaimed Property. In response to an additional question, she
explained that currently, the state is holding approximately
$58,000 in unclaimed gift certificates. She opined that
electronic gift cards are easier to buy and redeem, which has
resulted in the current concern. In response to a question from
Representative Gardner, she reiterated that all unclaimed gift
cards and gift certificates must be turned over to Unclaimed
Property, regardless of whether there is an expiration date.
The Unclaimed Property office has a computer system which uses
tracking numbers to track any gift certificates or gift cards,
if the name of the holder is unknown. In response to an
additional question, she stated that the unclaimed property must
be turned in [three years] from the date of the sale.
CHAIR OLSON inquired as to the current compliance rate.
MS. LEWIS replied that she is unsure.
4:17:05 PM
REPRESENTATIVE RAMRAS thanked Ms. Lewis for her testimony.
REPRESENTATIVE NEUMAN commented that he agrees with the intent
of the legislation.
REPRESENTATIVE GATTO commented that the intent of HB 49 is to
protect consumers that are "too trusting," adding that the
unredeemed amount may be small, which provides an opportunity
for proprietors to take advantage of consumers. He inquired as
to the process used for gift cards that are turned in to
Unclaimed Property if the owner is unknown.
MS. LEWIS replied that the business turns in a report listing
all available information, which is then entered in to a
searchable database. This database is available on the
internet, and is linked to a national database. In response to
a question from Representative Gatto, she explained that if the
dollar amount of the unclaimed property is $100 or more, the
company is required to send a letter to the last known address
of the individual, to inform him or her that the unclaimed
property is available.
4:24:51 PM
HUGH ASHLOCK, Partner, Dimond Center, LLC, stated that he is
concerned about how this would affect small businesses in
Alaska. He offered his understanding that HB 49 is aimed at
larger corporations, and opined that it would add an additional
burden to small business. There are fewer small, privately
owned businesses in Alaska every year. Allowing businesses to
include a two year expiration date would help with accounting.
REPRESENTATIVE RAMRAS noted that he shares these concerns. He
asked what changes would make this less of a burden on small
businesses, while honoring the intent of the sponsor.
4:29:10 PM
MR. ASHLOCK suggested that companies be required to print a
warning on the gift card, or on company literature. He opined
that gift cards are a tool to bring customers into stores,
adding that he does not like to see gift cards go down in value
as a result of fees. He agreed that customers need to be
protected.
4:31:43 PM
REPRESENTATIVE GARDNER inquired as to how many locally owned
businesses in the Dimond Center Mall have gift certificates with
expiration dates.
MR. ASHLOCK replied that does not have this information. While
national chains have provisions regarding gift certificates,
locally owned businesses do not. Family owned business sales
are difficult to track.
REPRESENTATIVE GARDNER offered her understanding that 17 states
currently do not allow expiration dates on cash-value gift
cards. She opined that this is not "nearly as problematic as it
might seem."
MR. ASHLOCK reiterated that this would be a large burden on
locally owned businesses, and again suggested a two-year
expiration date.
REPRESENTATIVE GARDNER reiterated that regardless of whether an
expiration date is allowed, any unused portion of a gift
certificate must be turned over to unclaimed property after
three years. She opined that HB 49 provides businesses with
additional flexibility by prohibiting expiration dates.
REPRESENTATIVE GATTO, in response to a question, stated that he
would like to move the bill through the committee process. He
added that he would be willing to address members' concerns.
4:37:06 PM
REPRESENTATIVE RAMRAS moved to report CSHB 49, Version 25-
LS0263\M out of committee with individual recommendations and
the accompanying fiscal notes.
4:37:22 PM
REPRESENTATIVE NEUMAN objected. He requested that certain
concerns be addressed prior to moving the bill from committee.
4:37:45 PM
MR. HILYARD, referring to Section 4(a)(1), suggested removing
"and," and inserting "or." Referring to Section 4(a)(2), he
suggested removing "issuance" and inserting "[expiration]."
REPRESENTATIVE NEUMAN agreed that printing the expiration date
would be helpful.
4:39:40 PM
REPRESENTATIVE RAMRAS inquired as to the sponsor's position on
the aforementioned changes.
REPRESENTATIVE GATTO replied that he is not in favor of changing
the bill in this manner.
4:42:19 PM
REPRESENTATIVE NEUMAN withdrew his objection.
CHAIR OLSON noted that there was no further objection.
Therefore, CSHB 49(L&C) was reported from 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
4:42:49 PM.