House Labor & Commerce, 4/15/26, 3:15pm

This meeting of the House Labor and Commerce Committee will come to order. The time is 3:19 PM on Wednesday, April 15th. Members present are Representative Carrick, Representative Freer, Representative Sadler, Co-Chair Fields, and myself, Co-Chair Hall. We are asking for everybody to please silence your cell phones. We do have a forum.

We're asking that staff and members of the audience not approach the table. If you need to pass a note to committee members, please get the attention of my committee aide, Jonah Wilkerson, and she will take care of it. I'd like to thank Andrew Magnuson, the Labor and Commerce Committee Secretary, and Renzo Moises from the Juneau LIO for tech and teleconferencing support. We are considering 5 bills this afternoon. Those bills are SB 180 by the Senate Resources Committee.

It's, uh, about LNG import facilities. We have HB 335, um, which is Representative Eichide's bill about disaster emergency plans for pets. HB 316 by Representative Gray, which would adjust the damage limit for personal injury and wrongful death. HB 350, qualified entity income tax bill by co-chair Fields. And HB 302, travel insurance, which is sponsored by my office.

With that, we will get into our first hearing for SB 180, liquefied natural gas import facilities. Paige, Paige Brown, please come to the table, put yourself on the record, and begin your presentation. Thank you, Co-Chair Hall, Co-Chair Fields, members of the House Labor and Commerce Committee. For the record, Paige Brown, staff to the Senate Resources Committee. SB 180 is purposed to remove confusion about regulatory authority of the RCA.

The confusion began in 2024 with HB 50, which was related to carbon storage, cooking oil and gas.

Um, the Federal Energy Regulatory Commission, also known as FERC, is in charge of the authority over siting, construction, and expansion and operation of LNG import and export facilities. Title 15 of the U.S. Code, Section 717, Subsection E, Paragraph 1 says that FERC shall have the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal. The Regulatory Commission of Alaska, in Alaska Statute 4305.141, under the general powers and duties, authorizes the Regulatory Commission of Alaska to regulate every public utility engaged in or proposing to engage in a utility business inside the state, make or require just, fair, and reasonable rates, classification, regulation, practices, services, and facilities for a public utility, and considering approval of a rate or gas supply contract proposed by a utility to provide a reliable supply of gas for a reasonable price in the public interest. In other words, the RCA is in charge of rate-making decisions.

This was clear until in 2024, House Bill 50 on carbon storage, including natural gas storage facilities, added a new subsection in AS 4205.711 under the Regulatory Commission of Alaska's authority, saying that a liquefied natural gas import facility under the jurisdiction of the Federal Energy Regulatory Commission is exempt from this chapter. It was placed in a CS for House Bill 50 in Senate Finance Committee, and there was no discussion or debate in the legislative record about why Section 49 was added to this bill. What does this mean for the role of the RCA in natural gas liquefaction or regasification facilities? There was confusion generated evidenced by docket U-25-004 with a final decision on April 22, 2025, which members should have received in their bill packet. It was a challenge by private sector developer regarding regulatory Commission of Authority— Commission of Alaska authority to regulate actions by NSTAR.

It was argued that it was the legislature's intent to restrict regulatory commission jurisdiction when it expressly decided to remove language stating, "For rate-making purposes, the Commission shall consider investment of a public utility in an LNG import or export facility" from a draft of HB 50. All parties agree to FERC's authority on siting, construction, operation, or expansion of LNG import or export facilities is inclusive under Title 15 of the U.S. Code, Section 717, Subsection B, paragraph E, however, FERC's jurisdiction does not extend to price regulation of imported LNG or to a decision to procure gas supplies or capacity in a FERC jurisdictional project. In that same docket, the RCA summarized that no party disputes that FERC has exclusive jurisdiction over siting, construction, expansion, or operation of an LNG facility and use—. Use in either interstate or foreign commerce under the Natural Gas Act. RCA concluded in the docket, after hearing testimony testimony related to the confusion, stating that FERC jurisdiction ends where the LNG terminal connects to a state-regulated pipeline, and it doesn't extend to the purchase of LNG supply or the purchase of the service from LNG importation and regasification facilities.

Instead, intrastate activities in Alaska by a local natural gas transportation and distribution company are regulated by the commission, including interactions with LNG terminal regulated by FERC, and that is on page 33 of that docket provided to members. This scenario is no different than RCA regulatory authority over purchase of natural gas from Cook Inlet platforms. RCA has north—. No authority over placement of the platforms but does have jurisdiction to regulate utility offtaker of those platforms. The RCA says we have jurisdiction to consider gas supply and terminal use agreements arising from a utility use of an LNG import facility services, and we are not barred by AS 42.05.711(v) from doing so.

And that was the section that was added in HB 50. But the confusion still repeated in Docket I-26-001, which was also provided to members. So, um, that one sentence inserted into HB 50 continues to create confusion, requiring repeated RCA hearings, incurring cost, and distracting from their other work. SB 180 seeks to cure this confusion by simply repealing the sentence. Available for any questions.

Thank you, Ms. Brown. And for the committee's awareness, we have several folks online to help answer questions. That includes John Espendola, the Board Chair for RCA, RCA Board Member Steve Devries, and Utility Engineering Analyst with RCA, Claire Knudsen Latta. So, Co-Chair Fields. Thank you.

Through the Chair to, I think, Chair Espendola, so in the April 2025 decision, April 22nd, the RCA essentially said that you have authority over a gas sales, um, agreement and that you could look at the reasonableness of the amount of money that, say, an Enstar put into an import terminal. So that's under existing law, and I just wanted you to confirm that if SB 180 passed You would continue to have that authority to look at a gas sales agreement from, say, Linfarn or Hilcorp or anyone else who went out and built an import facility and then made a sales contract to a utility.

Mr. Espandola. For the record, this is—. For the record, this is John Espandola, Chair of the Regulatory Commission. To Chair Fields, yes, with the repeal of this provision, we We believe we have the authority to review the terminal use and gas supply agreements. However, my colleague Commissioner DeVries can go into some of the uncertainty and confusion that this particular provision has caused.

Through the chair, Representative Fields, this is Steve DeVries. I'm a commissioner of the Regulatory Commission of Alaska. Short answer to your question is if this bill is passed and that subsection is repealed Yes, we will continue to have jurisdiction to review those gas supply agreements and terminal use agreements. The confusion that was spoken to by Ms. Page on behalf of Senator Giesel revolves around the use of that provision by litigants arguing that that particular provision would deprive us of that authority.

And it has been used or was used in the docket that was pointed out to you by, by Ms. Brown in that order for just that purpose. So what this bill will do will be essentially to remove that particular tool as an argument that can be raised by other litigants in other proceedings to attempt to deprive us of jurisdiction. Just to be clear, our order that we issued last year was an order of the Commission. Our— the Commission is not the final arbiter of our jurisdiction. That's the province of the courts.

So to the extent that any other party at any other time wished to challenge our jurisdiction, that argument would be one that could be made. I should emphasize that we, the Commission, do not believe that that provision deprived us of our jurisdiction to review those gas supply agreements or terminal use agreements, but that would be an argument that could theoretically be raised. And the reason that, uh, Senator Giesel has expressed as the justification for passage of this bill is to remove that uncertainty. It does not change the jurisdictional status quo as we understand it. I hope that answers your question.

It does. Can I just make a closing comment? Uh, Co-Chair Fields. In my opinion, this bill affirms a pro-consumer position that RCA has taken, which is that it has jurisdiction over gas sales agreements. And I think that's a good thing for consumers because the risk is on developers of an import terminal.

The risk is not on consumers. So I think the RCA made the right decision. I think this bill protects their authority to make such a decision in the future. Thank you. Thank you, Co-Chair Fields.

I'd also like the record to reflect that we've been joined by Representative Coloma and Representative Nelson at approximately 3:22-ish PM. Further questions from the Committee. Representative Carrigan. Thank you, Madam Co-Chair. I just have a couple of quick process questions.

So the— what was the— this only changed in the previous legislature, and was this just kind of an issue that was an oversight or didn't get interpreted the way we thought it would, or is this reversing a substantive policy decision that the previous legislature made. And then I have one other question too. Ms. Brown. Through the chair, Representative Carrick, um, this was placed in House Bill 50 when it was in Senate Finance in the last 2 weeks of the legislative session in 2024. Um, it was introduced in a CS.

We do not know the intent behind the language. There is no legislative legislative record about the intent, but it has created confusion. So the goal of the bill is just to clear it up. Representative Carrick. Thank you.

One other question, Madam Co-Chair, if I might. And then I know that this is a committee substitute. This is the L&C version from the previous body, or from the other body. What, what was the change between introduction in that Committee.

Through the chair, Representative Carrick. The only change was adding an immediate effective date.

Thank you. Further? Representative Kollom. Thank you, Chair. So, so I remember HB 50.

I remember this happening at the time. There were— there was a lot of talk of importing gas. Which is what made me concerned about why it just popped up in there. So I'm not sure who— maybe RCA could answer this. But so if you— it seems pretty clear what FERC regulates and what the RCA regulates.

So I'm not totally sure about the confusion. I know that there is a confusion, but if If this is removed, is the gas coming from that facility— is it coming to the facility? If it's not being used by utility, does the RCA regulate that?

Through the—. Mr. Espendola or Mr. Derese, did you have an answer? Through the chair, Representative Kulum, if it's— Gas is being sold to a non-regulated entity or an industrial customer, and it would not be regulated by the Commission. Okay. And was that Mr. DeVries or Mr. Espendola who was speaking?

Sorry, through the Chair, that's Steve DeVries, Commissioner. Thank you, Mr. DeVries. And follow-up? Follow-up? Mr. DeVries, I think I asked this when we heard this before, a version of this bill before.

So, um, so if the RCA is regulating the contracts with, say, NSTAR, and NSTAR puts the cost of the facility into their gas rate, is that something that they can do?

I'm sorry, through the chair, Representative Kolumb, uh, The— what would be presented to us in the form of a gas supply agreement is— would be typically the cost of the gas, the commodity. If there was going to be a cost associated with the development of the facility, I would presume that we would see that in a different agreement, what would typically be framed as a terminal use agreement or a reservation or capacity agreement. Agreement, and what costs would be included in there would be something that would be subject to discussion and negotiation between the two parties. It would be when those— when that particular contract was presented to us that we, the Commission, would have the duty to determine what is jurisdictional and what is not jurisdictional. What's not jurisdictional is that which would fall under FERC's umbrella.

What is jurisdictional is what would fall under our umbrella, which would be reasonable costs for purposes of reservation and capacity fees or other uses made by a user of that facility for purposes of providing natural gas service to consumers. Okay. Follow-up? Follow-up. So just to clarify, so the RCA would review the use contract, but you would not have jurisdiction necessarily over everything in the contract?

[FOREIGN LANGUAGE] Without seeing what those contracts are, it's difficult for us— it would be impossible for us to determine what would and what would not be jurisdictional for us to consider. It would be when they are presented to us that we would have that opportunity to review them, investigate them, and make that determination. If they are determined— if costs or certain parts of those contract costs were determined not to be jurisdictional, meaning that they fall under FERC's umbrella, then they would be something that would not be recoverable in rates because it would be beyond our jurisdiction to allow them to be included. Okay, okay, great. Thank you, that's helpful.

Okay, thank you, Representative Colombe and Mr. DeVries. Further questions from the committee? Okay. Hearing and seeing none, we are going to set an amendment deadline for Tuesday, April 25th at 5 PM. We will now set this bill aside.

Thank you, Ms. Brown, for being here, and thank you for those online helping to answer committee member questions. The next bill we will take up today is HB 335, Disaster Emergency Plan for Pets. Representative Eichide and staff Erin Callahan, please Please come to the table, introduce yourself for the record, and begin your presentation.

Ready? Okay. Welcome to House Labor and Commerce, Representative Eischeid. Yeah, thank you, Co-Chair Hall, uh, Co-Chair Fields, and members of the committee for hearing us today. I'm Representative Ted Eischeid.

I represent Northeast Anchorage, uh, North Muldoon, House District 22, and I'll let my staffer introduce himself this time. Good afternoon, co-chairs and committee members. For the record, I'm Aaron Callahan, staff for Representative Eichide. Okay, again, Ted Eichide. For the record, uh, thank you for this opportunity to present this bill, House Bill 335, Disaster Emergency Plan for Pets.

House Bill 335 addresses emergency plans for the rescue, safeguard, and reunification of pets and service animals with their owners. It does this by revision of current laws. It clarifies systems already in place for disaster planning, specifically regarding pets. It incorporates lessons learned from disasters like Typhoon Halong. There was some confusion There was some chaos and there was some reunification issues with that natural disaster.

Why is this important? Well, we know that Alaskans' lives are closely intertwined with their pets. You know, we just had Iditarod finished. A lot of pets in the news with that while they were working animals. But, you know, for many of us, pets are very important.

I know in my House district, I knock a lot of doors, and I'm always amazed at the— I call it the Alaska doorbell— dog barking, or multiple dogs. So, you know, we just know from our everyday life that our pets are very important to us. And we also know that when a disaster strikes, whether it's a weather event, an earthquake, a large fire, that, you know, we put people's lives first when we evacuate and safeguard our citizens. However, we also need to accommodate our pets. And indeed, we know that sometimes folks will actually stay behind in emergencies because they're worried about their pets and what will happen to them if they leave and there's no way to safely take care of them.

Next.

We do know that people suffering from disaster losses do get a lot of psychological comfort in those situations of loss from their pets. So anything we can do to improve the opportunity for folks to get reunited with their pets, to make sure their pets are, are, uh, evacuated, taken care of until they are reunified is important for people's mental health. And as I said, it actually helps people who will actually take the evacuation directives maybe a little more seriously if they know their pets are being taken care of.

I will now ask the— that the committee allow my staff, to do the sectional analysis. Mr. Callahan, please proceed. Once again, Aaron Callahan, staff for Representative Eichardt. I'll go through the sectional analysis. Section 1 amends AS 0898-125 to include a section extending exemption to licensure for veterinarians and veterinary technicians who are licensed in and reside in another state and provide assistance under the Pet and Service Animal Disaster Emergency plan established by AS2623040.

Section 2 amends AS2623040 to add a new subsection directing the Alaska Division of Homeland Security and Emergency Management to prepare and maintain a pet and service animal disaster emergency plan. This plan must establish a process to be followed during an emergency for evacuation of transport, and temporary shelter of pets and service animals; to identify evacuation shelters designed to accept and temporarily house pets and service animals; and to establish an identification system to facilitate reunification of pets or service animals and owners.

The plan must implement a public information program that at a minimum provides guidance to owners to help create evacuation plans, create an emergency checklist for evacuation, and identify local organizations owners can contact for help. This plan will also authorize properly contained animals to be transported on public transportation and establish procedures for out-of-state veterinarians and veterinary technicians to provide assistance within Alaska during a disaster. And Section 3 amends AS 2623.071 to change the makeup of the Alaska State Emergency Response Commission, adding one position that must be a member of a statewide association of animal control officers, a staff member of an animal shelter, or other animal welfare professional operating in Alaska, changing the number of the commission members from 7 to 8. Sections 4 and 5 amend AS2623-073 to reflect changes made in Section 3.

Thank you. Okay. Thank you, Mr. Callahan. Next, we will turn to invited testimony. And I am seeing online we have Kelly Donnelly with the Alaska SPCA.

Ms. Donnelly, could you please put yourself on the record and begin your testimony? [Speaker:KELLY DONNELLY] Thank you, Madam Co-Chair, and thank you, Co-Chairs Field and members of the Committee. For the record, my name is Kelly Donnelly, and I serve as the Executive Director for the Alaska SPCA. We are a statewide organization providing sheltering, veterinary care, and emergency response for for dogs and cats. For more than 70 years, the Alaska SPCA has served as the backbone of animal welfare in our state.

We are not affiliated with the ASPCA. We were founded, funded, and focused entirely on Alaska and Alaska pet families. And I'm here today in strong support of HB 335. During the October 2025, 2026 excuse me, typhoon, our team was directly involved in response in providing kennels, veterinary supplies, and basic animal care resources when the local shelter in Bethel became overwhelmed. We also helped coordinate intake and support displaced animals across multiple communities.

What we experienced during that response is that Alaska does not yet have a fully coordinated coordinated system for managing pets during disasters, and that that gap creates real consequences. We saw delays in decision-making, confusion around roles, and challenges coordinating shelter capacity and reunification. We love animals, and, and that's where our heart is, but those breakdowns don't just affect the animals. They slow evacuations. They increase risk to first responders, and they make already difficult situations harder for families.

Underlying all of this is one simple reality: people don't want to leave their pets behind. When systems don't account for that, compliance with evacuation orders drops and risk increases for everyone. HB 335 addresses these issues in a structured practical way. It requires the state to establish a comprehensive plan for evacuation, transportation, sheltering, and reunification of pets and service animals. It builds coordination by integrating animal welfare expertise into both state and local emergency planning structures.

It strengthens response capacity by allowing qualified out-of-state veterinary professionals to assist during declared disasters. Just as importantly, it invests in two foundational tools that we currently lack: a statewide identification and reunification system, and a public information program so pet owners know how to prepare before a disaster occurs. This bill is about Alaska's operational readiness. It's about reducing chaos in response. And it's about making sure that when the next disaster happens, we are better prepared to keep people safe and keep pet families together.

These are not theoretical improvements. They are directly reflective of the gaps we encountered on the ground here. For these reasons, The Alaska SPCA respectfully urges you to support HB 335. Thank you for this opportunity, and I'm happy to answer any questions. Thank you, Miss Donnelly.

I hope you'll be able to stay on for just a few minutes. We're going to turn to our second invited testimony. Thank you, Miss Donnelly. And that is Miss Lisa Kaufman, the senior campaign strategist with Best Friends Animal Society. Miss Kaufman, if you could please put yourself on the record and begin your testimony.

I can read the testimony for Tiffany Deason if she is not on the phone. She is in charge of our disaster response committee for Best Friends Animal Society, but I'm— I can't see if she's on or not. Thank you, Ms. Kaufman. She is not on, so if you could please proceed with reading her testimony, that would be appreciated. And then also, for both invited testifiers, if you wouldn't mind emailing your written testimony to the, to the committee so that we can, uh, the co-chair's office can disperse it to committee members, we would appreciate it.

Please proceed, Ms. Kaufman. Thank you, um, Chair and members of the committee. My name is Lisa Kaufman and I'm the senior campaign strategist for Best Friends Animal Society. I am going to read our Director of Disaster Services testimony today, Tiffany Deason. I apologize, she's on Eastern time, so it's quite late for her in the evening.

I want to thank you for the opportunity to testify today. Tiffany Deason is the Director of National Operations for Best Friends Animal Society, and she oversees our emergency response department. She is in support of House Bill 335, having supported and responded to several natural disasters across the U.S. She wants to start by briefly explaining where this bill fits into Alaska's emergency response system. When disasters occur, the focus is rightly on protecting people and moving communities to safety quickly. That work is coordinated through State Emergency Plan, the Alaska State Emergency Response Commission, and local emergency planning committees.

At the same time, disasters often create additional needs related to pets and service animals. Because animals don't always move through evacuation and sheltering systems in the same way that people do, especially during rapid evacuations or in remote communities, their care requires advanced planning and coordination with the existing emergency framework. HB 335 is designed to address that need. During Alaska's recent typhoon, evacuations happened quickly and under very challenging conditions, particularly in the air access only communities. As residents were moved to safety, animal related needs had to be addressed alongside of the response.

Local animal welfare organizations worked hard to manage this, and the national organ— organizations, including Best Friends Animal Society, became involved to help access needs and support local efforts. Organizations like Best Friends don't operate independently. When asked to assist, we could coordinate with state and local partners, help identify what's needed on the ground, and support existing capacity. During the recent storm, that assistance was valuable, but it also highlighted how difficult coordination can be without a clearly established plan for pets and service animals built into the state emergency system. HB 335 directly responds to that challenge.

It requires the state to include a pet and service animal plan within Alaska's existing emergency plan and includes animal welfare representatives in the planning committee. It establishes clear processes for evacuating, transporting, and temporarily sheltering animals during disasters, and for helping people reunite with their pets if separation occurs. It also ensures Alaskans have clear public guidance on how to plan ahead for emergencies involving animals. Finally, it clarifies how veterinarians and veterinarian technicians, including those from out of state can assist during a disaster response. The bill also strengthens coordination by ensuring animal care perspectives are included at both the state and local emergency planning levels.

What this accomplishes is clarity in the— in the disaster response, which then quickens being able to help both your constituents, residents, and animals in Alaska. When expectations are defined ahead of time, emergency planners understand how animal needs fit into response efforts, local organizations know their roles, and outside partners can integrate more smoothly when support is requested. That clarity reduces uncertainty during emergencies, and it helps the overall response move more effectively. In closing, Alaska's recent storm demonstrated the resilience of of the communities and the dedication of responders across the state. HB 335 builds on that strength by making emergency planning more complete and better coordinated when animals are part of the picture, as they often are.

They are our pets, they are our friends, and they are part of our families. Thank you very much for your time and the consideration of House 3— House Bill 335, and we hope you support this very important piece of legislation for both the people of Alaska and their pets. Thank you very much. Thank you, Ms. Kaufman. Um, with that, I would like to turn it over to the committee for questions.

But before I do that, I want to let everybody know that we have several folks online available to help answer questions. And at this moment, that includes Sarah Cobham, the state veterinarian with the Office of the State Vet under DEC. We have Shandi Perry, the Director of the Division of Environmental Health with DEC, and we have Reagan Lynch, the Legislative Attorney for Best Friends Animal Society. With that, I will look to the committee for questions. Representative Carrick, followed by—. I have a question.

I'd like a point of order. I just have a little concern about having Ms. Kaufman read someone else's testimony. It might be a fix to have— make sure that's sent in under Tiffany Deaton's name just to protect against an accusations that this is not real testimony. Representative Sadler, that is noted. And as she said at the beginning of her testimony, she was reading it, um, for Ms. Deaton on her behalf.

And my understanding, the way that I interpreted it, was that those were definitely Ms. Deaton's words. We will ensure that the public record reflects that when the testimony is submitted. Representative Carrick. Thank you, Madam Co-Chair. Through the co-chair, really like this bill.

Thank you to Representative Eichide Thank you for bringing it forward. Um, I have just a couple of questions. One is I see pets and service animals. Um, I have one additional example besides Halong to directly provide, which is we had a major fire on Chena Hot Springs Road area a few years back in the Fairbanks North Star Borough. And, uh, there's a lot of working animals, horses used at Chena Hot Springs Resort for tour guiding on horseback and dog mushing outfits that are out that road.

And I just wonder if they would qualify as pets in this definition, because evacuation of those animals was a really major concern, and they're not really pets. They're— I think the owners probably consider them working animals. So how are working animals provided for? Through the co-chairs. Aaron Callahan, Representative— Representative Carrick, under the current definition of pets in AS 1865-590, working animals do not qualify.

So this bill unfortunately would not address that issue. Representative Carrick, thank you. Through the co-chair, would, would that be something that the bill sponsor would be potentially open to including. Just, just thinking about all the, in particular, dog mushing outfits we have. And I would, I would gather that those owners care about those animals just as much as the average pet owner, and I just want to make sure we're thinking about how we're providing for them too.

Uh, Representative State, or Ted Eichide, for the record, um I'm open to discussing it, but the, you know, I think there's always going to be an issue of capacity. You know, I was in the area when we had the 2014 Sakai fire up in the Mat-Su, and in an area with a lot of mushing dogs, and so You know, I would want to hear from our emergency responders about what their capacity would be. You know, we're always— it's to put people first, but we did limit to pets and service animals specifically to keep it kind of constrained. Okay, thank you. I have one other question, if I might.

Representative Carrick. Thank you, Madam Co-Chair. Just through the chair, one other question for the bill sponsor. I see that this bill has generated a fiscal note. It creates a new assistant state veterinarian position, which if that position is truly necessary— and I might dispute under what's being asked for in this bill whether it is truly necessary to have a whole new position— but if that position was implemented, it sounds like they would be just about the perfect person to serve on the commission.

And so I just wonder if that's something that you've thought about or considered yet.

Yeah, Representative Ted Aishide, you know, we do have some folks online that could perhaps provide some information about the fiscal note or here in the room as well.

Yeah, yes, I guess if we're going to employ an assistant veterinarian, that's an option. It says, you know, the, the language has an animal welfare person, and I believe a veterinarian would qualify as an animal welfare person. Representative Carrick, we do have Sarah Coburn, the state veterinarian, online. I'm not seeing anybody from, from the Department of Military and Veterans Affairs. Oh, there we are in the back.

Would you like to come forward, put yourself on the record? Is this Miss Laflamme? Okay, thank you very much, Miss Laflamme, for being here. Please come forward, put yourself on the record, and attempt to answer the question. But we can also go to the state veterinarian as well.

Representative Carrick, do you want to start with the fiscal note and then expand beyond there? I actually think, Madam Chair, it might be expeditious to let other members ask questions, and I can follow up if there's time. Okay, uh, Representative Saddler followed by Representative Klum. Thank you, Madam Chair. I do have a question for Miss Laflamme, if it's possible to bring her up.

Miss Laflamme, get your steps in, guys. Sorry, you were almost off. Sorry. So Thank you for being here, Ms. LaFlamme. Thank you, Madam Chair.

Ms. LaFlamme, the fiscal note— I'm not gonna ask you about theirs, but it says the state already has an emergency operation plan, and it talks about adding an assistant veterinarian. What is the current annual expense that the Division of Homeland Security has for its emergency operation plan? What does it take to maintain that plan year-round, year by year? For the record, Angela LaFlamme, legislative liaison for the Department of Military and Veterans Affairs through through the chair, Representative Sadler. Um, we already do that as part of our ongoing duties, uh, maintain— create and maintain that, the state emergency operations plan.

I don't know if we have a cost specifically associated with generating that. What I'm trying to get to is Representative Sadler, if we're proposing to add $177,000 to the cost for 75, just wonder what the, the baseline cost rate is. Is that increase it by just a little bit or by doubling it or what? Any even a rough estimation of what, what the division costs or spends to do this? Thank you.

Through the chair, Representative Sadler, our fiscal note is not specific to the operations plan. We already have pet operations plans included in our state emergency operations plan. The two programs that are accounted for in the fiscal note would be additional things that we do not currently do. Thank you, Madam Chair. That's my question.

Oh, okay. Um, with that, Representative Kolum. Uh, thank you, Chair. Yeah, so a couple of those questions I had, so I don't need to ask those. But I guess I'd ask for the sponsor of the bill.

So this, this identification system that you talk about in here, what's the vision for that? Are we chipping our dogs? Are we—. Is it like What kind of ID system are you envisioning?

Through the co-chairs, Erin Callahan to Representative Kolum. The bill itself does not dictate how these systems are going to work. It leaves it open to DHS and EM to come up with their plans, Representative. Follow-up. Follow-up.

And then for the implementation of a public information program, is that a state— is your vision a statewide public information program? Is that just an area that's going through a disaster or statewide? I can take that. Representative Ted Eichide. Through the co-chair, Representative Colon, it would be a statewide information education program.

And, you know, we talked about the typhoon Halong, but of course most of Alaska is a seismic risk area. Many areas have wildfire risk, landslide risk here, so it would be statewide. It would be statewide.

I had one other question. I can put you back in the queue, Representative Kolum. Okay, next we have Representative Nelson. Excuse me. Thank you, Madam Co-Chair.

Through the chair to Representative Eichide, first off, is that, is that your new puppy on there?

Through the co-chair to Representative Nelson, yes, this is Seamus. He just turned 3 years old, and as you may recollect, I lost a Labrador last year, and Seamus was with us at that time, but is our replacement. Thank you. Follow-on to that—. Representative Nelson.

Thank you. So looking at specifically for Section 3, could you go into more detail about why you want to have specific specifically, uh, a new, uh, a veterinarian aspect on the Alaska State Emergency Response Commission.

Through the co-chairs to Representative Nelson, Aaron Callahan, um, Section 3 changes that— changes the makeup of that commission to ensure that someone related to animal welfare is, is on there just to ensure that the needs of animals are looked out for. So currently there is not someone dedicated to animal welfare. Follow-up? Follow-up? Yeah, no, I appreciate that, um, and I understand.

I'm asking about why specifically. I mean, if the, uh, the commission really wanted to have an opinion, I imagine they could have reached out to the state veterinarian and gotten their opinion. Having someone dedicated to on the board in itself is a good idea. You know, it's good to have their opinion, but when it comes up to an emergency, like say a cyber attack emergency, uh, the animal welfare person is probably not going to have that much of a say or that much of expertise for an emergency. So just want to know what your kind of history behind why you added that section in there.

Through the co-chairs to Representative Nelson, I understand your point absolutely, but we, we feel that in most emergency situations there will be some involvement of animals, and that's, that's the reason to dedicate that position. Thank you. Next in the queue, Representative Sadler. Did you have your hand raised earlier? I thought a whole bunch.

Yes. Okay, thank you to the sponsor of the bill. I also want to echo some of the concerns I heard expressed by Representative Colon. On page 2, line 21 to 24, the directive to establish an identification system to ensure— provide with all information necessary. That's a rather broad mandate, and I would think— I was thinking about that— would have to include information on the pet owner, the name, address, and contact, and some information on the pet itself, some way to differentiate between one black lab and another.

And then the, the all information necessary, that just seems broad. So my question, I guess the formal question is, um, if you're leaving that to the department or to someone to do by regulation, are you concerned that the bill might need to authorize gathering and maintaining this kind of data? I just, I'm just trying to see how regulations could authorize the collection of that kind of data and maintaining a database. I'd appreciate more thoughts on that, please.

Through the co-chairs to Representative Sadler, I do see your point. The reason it's left so broad is to allow those emergency planners to come up with a system that makes sense to them and works for them. We're trying not to dictate that. And if I may, through the co-chair, to Representative Sadler, you know, other states have similar processes. I have, uh, Washington, uh, Florida, Texas, I think.

So, um, this isn't something new, and I think many of those states would have the same concerns. Um, of course we want to be careful with information, but the goal is to reunify, um, pets with their owners. Follow-up. And, and there's concern that— I don't know if those states have statewide, uh, licensing of pets. I know where I grew up we had to get a dog license every year and that necessity had a database someplace.

So I applaud the desire to do what's necessary to reunify. I just don't know how broad the authority needs to be to enable Homeland Security to gather and maintain that information. So that's a question that will remain outstanding. Thank you, Madam Chair. Okay, Representative Kollum, do you have your question?

Yeah, thank you for the delay. Thank you, Chair. I actually had a question for the state vet. Okay. I apologize, I don't know her name.

Sarah Coburn. Are you still online, Ms. Coburn?

Yep, this is Dr. Coburn. I'm sorry, was it Dr. Coburn or Coburn? Because I might have it wrong on my screen here. I just want to double-check, make sure I'm I'm saying your last name correctly? Dr. Coburn.

Coburn. C-O-B-U-R-N. Thank you very much, Dr. Coburn. Representative Klum. Thank you.

Thank you, Dr. Coburn. I was just asking, or wanted to ask you, right now, do you have any involvement with the disaster plans for pets? Do they ask your input now? Do you have any, do you have any touchpoint around that currently?

We, we do have some, yeah, just more in kind of a consultation role, or as things come up and there, there's some questions. But as far as developing the plan specifically, we have, have not been directly involved with that for the plan as it currently exists. Follow-up. Follow-up. So this bill proposes an ID system.

Can you tell me kind of What is the ID system in the state now as a whole? Is there— I know we're not all mandated for CHIPS or licenses, but what is kind of— what I guess I'm looking for, how big of a lift is this to implement a system right now to do that?

Thank you for that question. This is Dr. Coburn through the chair. Representative Paloma. Currently, it is quite variable across the state with municipalities that may have a licensing requirement, but even with that, if a license is required, it doesn't necessarily require a permanent ID like a microchip. So it is, it is quite variable and not very standard.

And then even for a microchip, which would be considered, you know, the gold standard for a long-term identification, the rural communities may not have access to that or someone that can administer that type of ID. So the short answer is it's very variable. Okay. All right. Thank you.

Okay. Thank you, Representative Klobuchar. Thank you, Dr. Coburn. Not seeing a— Representative Carrick. Thank you.

Through the co-chair, I'm just—. I'm—. I don't want to get totally stuck on the establishment identification identification system, but wouldn't an expansion on the current microchipping system count as an identification system under this legislation? And I think about that for Typhoon Hoang in particular as a good example. A lot of the pets were probably not microchipped, and this is kind of a reactive measure for that situation.

It's also a proactive measure in the future. So could something like that potentially help meet the provisions of this bill? I think that's a question for invited testimony. Would that be a question perhaps for Dr. Coburn? We start there.

Dr. Coburn, do you have— can you take a stab at answering Representative Carrick's question?

For the record, this is Dr. Sarah Coburn, the state veterinarian, and Representative Carrot, could you repeat that question? I'm not sure what the specific question was. Uh, thank you. Through the chair, Ms. Coburn, I guess I'm wondering, like, if we had just an expansion on the state's— or consistent— either expansion or just consistently applying our current microchipping system, would that count as establishing an identification system under Section 2 in this bill. Would you see that as something that would count?

I, um, there's not really a microchip system in place. It's just individual owner responsibility and choice to do that. So at a state level, there's no requirement or oversight. There is no program to expand. It's It's just individual owner choice.

Okay. I guess as one more follow-up. Follow-up. If there were a program to expand and establish some kind of a statewide microchipping system, would that potentially meet the provisions of Section 2 of this bill?

I think that it probably would. As I understand the bill as it's written. Um, certainly availability and, and some expectation or, or, um, opportunity to microchip pets certainly would be critical to having a, a quicker response and reunification options. Thank you. Okay, thank you, Representative Carrick.

Uh, thank you, Dr. Coburn. With that, um, I'm going to turn to to public testimony.

Public testimony is now open. Is there anybody in the room who would like to provide testimony on HB 335? Seeing none, I will turn online, and I am not seeing anyone online. With that, I will close public testimony. Okay, we're going to set an amendment deadline for HB 335 for next Tuesday, April 21st at 5 PM for this bill and set the bill aside for a future date.

But before we really put a plug in that, Representative Aishai, did you have any closing comments you wanted to share with the committee? Yeah, I did, uh, Co-Chair Hall. Just that I appreciate, uh, the robust discussion I do think this is an important topic for many of my constituents, many of our fellow Alaskans. I would like to also thank Representative Nellie Jimmie from Tussock Bay. She assisted with the bill, and of course, her district was where Typhoon Halong had perhaps the biggest impact.

So I appreciate the committee, and I appreciate— represent Jimmy. Okay, thank you very much, Representative Eichide and Mr. Callahan and everybody who joined us to help answer questions and provided invited testimony. With that, the bill will be set aside for a future date. Next, we will consider the third bill on the agenda today, HB 316, Adjust Damage Limit, Personal Injury and Wrongful Death. That is by Representative Gray and his staff, Dellen Hitchcock Lopez.

So if you could please please join us at the table, introduce yourself to the committee, and begin a recap of the bill. Thank you very much for being here. Yes, thank you, um, Co-chair Hall. My name is Andrew Gray. I represent House District 20, the UMed district in Anchorage.

Uh, good afternoon. Dylan Hitchcock Lopez, staff representative Gray. Um, so HB 316 is a conceptually very simple bill. It creates an inflation adjustment mechanism to fully inflation correct the non-economic damages caps for non-economic damages and personal injury and wrongful death cases, which were set in 1997, to just ensure that those amounts maintain the same proportionality as they had back when, at the time of enactment. Thank you.

Do committee members have questions for the bill sponsor? Representative Sadler. Thank you. Uh, Mr. Uh, sorry, pardon me.

Uh, Representative Gray, do you know how many other, uh, places in state law there are inflation adjustment mechanisms for criminal or civil penalties?

To my staff? Yeah, through the co-chairs. Um, I have not totaled them recently. I know, uh, Co-Chair Fields had at one point produced a list of a number of inflation adjustment mechanisms across statute. There are, there are many.

I'm sorry, through the chair, I believe Representative Sattler was asking what other states had done. What other states? Oh no, no, no, um, yeah, we just give many, some, I mean, it's a rough idea. I would say I think it was close to 20, Representative. Okay, 20.

And, and I would need to put that in context. If there's 20 that are inflation adjusted, how many are there that are not? Through the co-chairs, I don't believe our office has totaled that. We could have Leg Legal work on that for you if you wanted a complete list. Thank you.

Okay. Seeing no further questions from the committee, we did notice public testimony, so I will open public testimony. Is there anybody in the room who would like to provide testimony? Not seeing any, we will turn online, and I see one person online. Kerry Silverman, counsel with the American Tort Reform Association.

Kerry Silverman, will you please put yourself on the record, identify yourself, and begin your testimony?

Hi, good afternoon, Madam Co-chair Hall, Co-chair Fields, members of the committee. My name for the record is Kerry Silverman, and I am counsel to the American Tort Reform Association. Association, ATRA. ATRA is a national coalition of businesses, trade associations, and others that support fair, balanced, and predictable civil justice system. ATRA's concerned with the legislation as it would substantially and suddenly increase the maximum award for non-economic damages in personal injury cases.

What we've seen in recent years across the country is a troubling trend of lawyers asking for ever larger amounts for non-economic damages, levels that most people would never earn in a lifetime or several lifetimes—$50 million, $100 million, or more—for what's supposed to compensate a person for an injury, not punish a defendant for that via punitive damages. Fortunately, Alaska's limit on non-economic damages is an important backstop, and it provides consistency and predictability. It avoids the nuclear verdicts we've seen in states without those laws. We appreciate that this legislation keeps a limit in place. Now, we understand that Alaska's maximum award levels have not been adjusted for some time.

Let me just offer 3 observations on that point. First, non-economic damages, pain and suffering awards are amounts that are on top of awards that are there to offer compensation for verifiable injuries, for the economic damages, which were completely uncapped, unlimited, cover medical expenses, cover lost income. Those are all, you know, outside of this limit to begin with. You know, second, this law, Alaska's law, its current levels, which can reach $1 million or more in cases involving severe lifelong injuries, are still in the mainstream. Some states have limits that are in the same range, like Maryland, Michigan, Mississippi, and Tennessee.

Some have lower limits like Idaho, some have higher. When states have increased limits, they typically have done so with annual inflation adjustments. This bill does that in the future, but as it stands, it would also double the maximum award overnight by my calculations. That is our concern, is it will have consequences for for residents and businesses. It means a sudden spike in how much lawyers will demand to settle personal injury lawsuits, whether they stem from car accidents or slip and falls.

And that's likely to have costs for Alaska's drivers, homeowners, and businesses when they buy insurance. It may also raise the prices of goods and services as those costs are passed on to consumers. I thank you for your time, and I welcome any questions. Thank you, Mr. Silverman. We actually do have a question from Co-Chair Fields.

Thank you. Through the chair, uh, who funds the American Tort Reform Association?

Um, the American Tort Reform Association has been around since the 1980s, and it's— I can't give devolved information about specifically who funds what, but it has a very broad coalition of, of, uh, individual companies, trade associations, and other businesses and municipalities. Interesting. Thank you. Okay. Representative— thank you, Mr. Silverman.

Representative Sadler has a question for you. Thank you, Madam Chair. I guess to Mr. Silverman, I'm not quite sure about the tort system very much. It sounds like know more than I do. Does this bill address penalties that juries already have the ability— or does it adjust jury awards, or is this a formulaic reward or a cap on the formulaic reward?

This is specifically for non-economic— oh, I'm sorry, I'm, um, Madam Chair, may I respond to that? Please do, Mr. Silverman.

Um, this, this bill of the limit are specific to non-economic damages. That's primarily pain and suffering, but other forms of intangible harm. Compensation for intangible harms are a type of compensatory damages. They're not penalties. They're not civil penalties or any other kind of penalties.

They're not meant to punish. They're meant to compensate a person for subjective injuries that can't be objectively measured by, say, a medical bill, for example. Or lost wages, everything else. Follow-up? Useful information, Mr. Silverman, but that's not quite the— my question is, where do jury awards factor into this system of torts for both economic damages and penalties?

The jury is, in a trial, has to return an award. Uh, fine to whether or not, number one, to find liability, and number two, what they believe is a fair amount of damages. And, um, they will, you know, detail that by, I believe, in Alaska, by the amount for, you know, various items of damages. The plaintiff's lawyer may ask for certain amounts, and they return that award. My understanding is that after the reaches that award, the judge will issue a judgment based on what the law is, and part of that includes the statute.

And I guess follow-up, Representative Sadler. I think I put a fine point— so does this bill limit what a jury can award for either for, uh, intangible or intangible expenses or damages? Pardon me. That's correct. Okay, very good.

And okay, okay, thank you, Representative Sadler. Not seeing further questions for Mr. Silverman, I will— and not seeing anyone else online— Representative Sadler. Thank you. I do have one more question. Does this, uh, and this is for Mr.

Silverman, does this bill limit what a jury can award for punitive damages?

It does not. There's a separate law that addresses punitive damages. This does not impact punitive damages at all. Great, good to know. Thank you.

Thank you for your testimony, Mr. Silverman. With that, not seeing anybody else online— thank you— I'm going to close public testimony. Okay, um, are there any questions for the bill sponsor, Representative Kloom? Chair, I actually like to— is Wanted to know if DOA is here to explain the fiscal note. I do not see anybody from the Division of Administration online, and I don't see anybody in the room.

No. Okay, so, so it says it's indeterminate. There's a zero fiscal note, but they have a kind of a big paragraph in the back saying possible cost to all of our insurance if this goes through, which was alluded to by the caller. The caller, DOA says adjusting this number for inflation per the legislation equals $9 million, effectively doubling the cost of insurance premiums. So since they are not here, I mean, maybe the sponsor could just respond to that.

I am sure you have gotten that question.

So— Dylan Schack-Lopez, Staff Director Dray, through the co-chairs. Uh, that is one I, I did talk to the Division of Risk Management. I, I frankly, I do not understand their fiscal note after that conversation. So perhaps they, they should come next time. Um, because the narrative in that fiscal note is the inflation corrected the entire premium for the self-insurance for the state of Alaska, is my reading of that.

Yeah, me too. Um, but again, there have only been a 4, 3 or 4 cases claims in the last couple years that were the total amount of the claim, including all economic damage, exceeded $400,000. So I just frankly don't understand how that would result in inflation correction of the entire premium. I'm not an insurance specialist. I didn't quite follow it, so I don't want to put words in their mouth, but I think that they would be the most appropriate to answer that.

Yeah, that's helpful. I just didn't know if we were doing another hearing or not. I ask. Thank you. Representative Sadler.

Thank you. Um, if we have the gentleman from the Department of Law available, I'm just curious, there's a certain number of deaths per year in Alaska. How many of them come with a, uh, a civil penalty, uh, for tangible or intangible damages? Yeah, how big a universe of a problem is this, or an issue is this? Representative Gray, you're Staff Hitchcock Lopez, are you able to answer?

I don't see anybody from the Department of Law online. I would refer to my staff. So, I mean, I think that that would be a difficult question a little bit to answer, because there are a fair number of people, particularly impoverished people, who, because of this existing scheme, cannot find an attorney to represent them. Because if you have the— and I can actually, if I may, I will actually through the co-chairs answer your previous question as well, Representative Sadler, related to the relationship to jury awards. So I think that that's something that's foundational and very important with this.

This does not instruct anyone to award more money. A jury has to find, after being duly instructed by a judge, they have to find the amount of non-economic damages that they believe is fair. The non-economic damages cap only comes in to reduce the amount of the award that a jury of one's peers has already decided is appropriate. So the first check on runaway damages is the jury system itself. So it's— you're only going to see the application of this cap if a jury comes in and awards, right now, more than $400,000 in a— for non-economic damages in a typical personal injury or wrongful death case.

Right now, then, a jur— the jury is never instructed. There's a separate pattern, civil pattern jury instruction on this based on case law. A jury is never informed of the cap. So they have no idea that this statute exists. They decide what is fair, and then right now, if what they thought was fair is more than $400,000, the court will then reduce it to the cap.

So if this statute was enacted, it would not necessarily mean that everyone who anybody who walks into a court and says, I've been harmed, give me $10 million, is going to get it. It just says that if a jury decides that more than $400,000— that up to the cap, you know, more than $400,000 now, $600,000 is appropriate, then that would be within the inflation-adjusted range. And so the relationship there, though, to, I think, some of the underlying policy consideration is that, in terms of access to justice for particularly lower- to middle-income Alaskans, If you don't earn a lot of money, you don't have a lot of economic damages, because you spend most of the money that you earn on the cost of living. And so, if you go to an attorney and say, "Hey, I've been, you know, I've been severely harmed. Will you represent me in this case?" And the attorney looks at it and says, "Boy, even if I ring the bell and a jury awards you, you know, a bunch of money, because such a small proportion of that is economic, your case is really only worth $400,000." your life, your, you know, I mean, this happens where people who have died and their children say, "Hey, you know, we would like an attorney to go after this other person." An attorney might say, "Well, I can't actually afford to bring this case, because $400,000 in today's economy for the cost of litigation is actually not really enough to make it feasible." And so, and I would also want to flag for the committee that there was a family, I believe they're Representative Carrick's constituents, constituents.

They were hoping to testify at the last hearing. They were not able to make it to this hearing. That family did submit written testimony. They're from Fairbanks, and I would also urge the committee to, to read that written public comment because I do think it is moving. So sorry for the long-winded kind of wrap-up there.

We appreciate the context. Thank you very much, uh, Mr. Hitchcock Lopez. Further questions from the committee? Okay, seeing none, we are going to set an amendment deadline HB 316 for Tuesday, April 21st at 5 PM. And for the time being, we are going to set the bill aside.

Thank you very much, Representative Gray and Mr. Hitchcock Lopez, for being here and presenting the bill today. Thank you.

Next, we are going to move on to our fourth bill on the agenda, HB 350, Qualified Entity Income Tax. Chair Fields sponsored this bill, and I believe, Mr. Co-chair, would you like to address the status of HB 350? Uh, yes, we have a CS to consider in response to some feedback from stakeholders.

Okay, um, Mr. Chairman, I move to adopt the proposed committee substitute for HB 350, Work Draft 34LS1474/G, as a working document. And I'll object so Evan Anderson can explain the changes. Great. Thank you for being here, Mr. Anderson. Please put yourself on the record and explain the changes in the CS that the committee is considering adopting.

Good afternoon, Co-Chair Hall, Co-Chair Fields, and members of the committee. Thanks for having me again.

Briefly, this CS is— it does not undertake major changes. Everything you remember from HB 350 is the same. It's income on partnerships, LLCs, sole proprietorships, and S corps, and for taxable income above $25 million annually. However, we received a letter that's been added to the record. I just remember the acronym right now.

It's ASCI. I apologize, I don't remember the full name. But they opined that the effective date on the bill was, was too quick. We had like a retroactive effective date in the original draft. And that it would be helpful if the state had access to taxpayers', uh, taxable income data prior to implementing the tax.

In response to that, this CS very simply creates a new reporting requirement for the tax year 2026, and then the actual tax would go into effect on January 1st, 2027. So there would be no tax obligation for this current tax year. However, in, in the new year, we'd require each, each taxpayer to file. And then in starting January 1st, 2027, so the first taxes would be due in the first quarter of 2028, we would have like one year of, uh, one year of reporting that the Department of Revenue could look back at and sort of anticipate, uh, who might be a taxpayer. Okay, thank you, Ms. Anderson.

I guess I would ask, does anyone have questions? And if not, I might remove my objection. Okay, I object. Well, there's still the objection in front of the committee. I just withdrew it.

I'm sorry, I was just asking if anyone—. Oh yeah, Representative Kollum, do you have a question? Yeah, I'm trying to wrap my head around, uh, reporting income and taxes and revenue but not paying the tax.

So I'm not— how is that helpful to DOR to know a year before? I guess I'm not sure why that's important. Well, I can answer that. Co-chair Fields. Through the chair, Rep. Colon, this was just in response to a business group that wrote in and they didn't support the retroactivity, and I don't think retroactivity makes sense.

There had also been committee discussion about, well, who is subject to this tax, and basically the idea is to have a phase-in and understand who's going to pay the tax before the tax gets implemented. Now, there are going to be people who don't support, um, taxation of LLCs and S corps in general, and I get that, but to address the retroactivity issue, I thought the CS— I thought addressing that was a good suggestion from a stakeholder. Well, normally I would— Representative Klum. Normally I would agree But, um, so the legislature has been trying to get these numbers from S corps for quite a while, so it's not a small thing, in my opinion. It's kind of a big deal.

Could I do a follow-up? Follow-up? Yeah. And, uh, under the structure, if the numbers were surprising or concerning in some way, we would have an opportunity to change course before it went into effect.

Representative Carrick. Thank you, Madam Co-Chair. I just want to make sure I'm crystal clear on the CS. So all the entities to be taxed and the tax amounts stay the same. The retroactivity is removed and the effective date is correspondingly moved to the present.

So that's the only changes in this version before us. Well, the— through the chair, the effective— yes, it eliminates the retroactivity, but people would not be paying tax taxes for the current year were in. I see. So Department of Revenue would start to collect information to determine the universe of who would be taxed, and people would pay taxes for tax year '27, and the state would actually receive revenue in '28 after collecting that tax information. Right.

Okay, thanks for the clarification. Yes. Co-chair Fields, do you maintain your objection? I don't I will maintain my objection. Okay.

Seeing no further objection before the committee, the CS has been adopted.

Um, are there further questions in this moment? If not, I will turn to public testimony. Seeing none, I will open public testimony. Public testimony is now open. Is there anybody in the room who would like to to testify?

Seeing none, I am looking online, and online I see no one online for public testimony. I will close public testimony.

Okay, um, Representative Sadler. Thank you. No public testimony. I do have a question for the sponsor, a couple maybe. Representative Fields, the last time we heard this bill, I've asked the question what you thought the effect would be on the tax operations and responses taxed, you said you thought there would be no effect and no change.

Do you still believe that to be the case, having had time to consider? I apologize, through the Chair, could I ask you to restate that question? Sure, yeah. Last time we had this before us and I asked the question, what do you think the response is going to be by the entities that are taxed, and you said you thought there would be no effect, that they would make no change in their operations, and I just— it's been couple weeks. I just wonder if you still maintain that position.

Yes, because we have a tax based on profits. Entities— through the chair— entities that are making profits will continue to make profits and pay a modest percentage of that in corporate income tax. Okay. I think the underlying structure of our corporate income tax this is probably a wise structure. Representative Sadler.

Thank you. And I believe, as I say, it's been a while since I've read this, but while the state's corporate income tax system is— it's tranching up, it graduates up, I don't think that there is a graduation element in the tax. I haven't looked through the CS enough to know. But is it true that this would not have a graduation? It would just be a boom, 9.4% tax?

Through the chair, that's true, Representative Sadler, because this has a higher threshold than the corporate income tax, which is fairly low at $5 million. So, you know, there's a balancing act. I'm not sure that I'm necessarily trying to capture every LLC that earns $5.6 million. I think there would probably be a lot of those. If committee members wanted to address or wanted to set the threshold lower, then I think we would also want to graduate.

I think if we have a relatively high threshold, are only capturing very large companies, that maybe the graduated rate becomes less important. Okay.

Seeing no— Representative Sadler? I don't want to— I don't see further questions from other committee members. And if I may ask another question of the sponsor, how many entities do you think would be affected by this tax? Through the chair, I would not say DUR has been super helpful. And trying to figure out this information, I think they probably could.

Um, we actually went through Alaska Business Monthly and, you know, the 49 largest companies, you can look at how much money they earn and we looked up their incorporation type. Um, so I think it's fair to say there are a small number of companies. We believe it's, um, possible that a company called CMI Construction Machinery Incorporated may fall into this incorporation type. Type and earn sufficient revenue to pay taxes. I have not called them up and asked them, but this bill— I introduced this bill more to be forward-looking.

I think that with the reality of the global economy, we're likely to have data centers built in Alaska, and I think that there will be other large LLCs, S corps that operate in the state. And when they come here, and I hope successful, I hope that they pay a modest amount in revenue.

Representative Colon. So I probably should know this, but I assume that the Alaska Native Corporations, nothing is touched because they're taxed—. They don't pay C-Corp taxes through the chair unless we missed something in our analysis. I believe [Speaker:JOEL] Well, if our analysis is correct, I'm not aware of Alaska Native corporations that would be captured by this. Another large Alaska company that people often ask about is the Lenden family of companies, and they're actually incorporated as a C corp.

[Speaker:MARY JO GIOVACCHINI] Okay. [Speaker:JOEL] Oh, I should mention one company that may be affected is JL Properties, which is a real estate company in Anchorage. They are incorporated as many LLCs and S corps C-Corps and the way the bill works is you could not shield yourself from taxes by having, say, each building be a different LLC. A lot of real estate companies operate that way. So you could have a very large real estate company that might be—.

That might pay some revenue. So Alaska Native corporations pay C-Corp taxes, or are they exempt? Through the chair, I believe they do. Okay.

And I'll just share it back to Representative Fields. Senator Peters' comments about the possibility of other industries coming to Alaska, data centers potentially. I think that a bill like this or one that is similarly drafted could be really helpful when it comes to diversifying our revenue sources, diversifying our revenue portfolio so that we can have a more stable economy here for those businesses to function and have that ripple out to Alaskans writ large. Representative Sadler, did you have another question? I just, again, hadn't read the CS, hadn't been— is this— would this tax fall on Hilcorp, which operates the Prudhoe Bay?

Through the chair, Representative Sadler, it would encompass Hilcorp. Um, as you know, we had a bill that only addressed S-corp taxation for oil and gas companies, and I, I think it's probably fair for Hilcorp to pay taxes, but I didn't like that that bill only encompassed oil and gas. I hope that we have diversification of our economy, and I think we have a public policy imperative to address the disconnect where growing economic activity right now often doesn't produce revenue. And I think addressing that disconnect is valuable looking forward, and that is the intent of the bill. But yes, Hilcorp would pay taxes under this.

This bill is not targeted at oil and gas. It is not targeted at any sector or any company. And from my perspective, I think that's an incredibly valuable piece of the legislation. Additional questions from committee members for Co-Chair Fields or Mix Anderson? Okay.

Representative Sadler. Thank you. Representative Fields has opined a couple times that the education system in Alaska needs more money. Would it be your intention to use the revenue generated from this? I know we can't designate, but is that your intent, Representative Fields?

Through the chair, I certainly think that I think funding a strong system of public and higher education should be a high priority for state government. And in a world where both labor and capital are highly mobile, I think highly skilled workers and companies will tend to move to and stay in jurisdictions that have strong education systems. So yes, in terms of global competitiveness, for me, a high— a strong public education system is very important. Mr. Kainer, thank you. Okay.

All right. Seeing no further questions at this time, I'm going to pause setting an amendment deadline for now. I want the bill back in front of the committee again with the Department of Revenue available to help answer additional questions from the committee. So with that, we will set the bill aside for now. The last bill that we have on the agenda is HB 302, travel insurance.

It is on its third hearing. My office is a sponsor of this bill. We set an amendment deadline and received one amendment, which originates from my office. Mr. Keith Bruce, would you please come forward, identify yourself, um, um, uh, and be prepared to speak to the amendment? Um, what would amendment number 1 do?

Thank you, Co-Chair Hall and Co-Chair Fields and the members of the Labor and Commerce Committee. For the record, my name is Keith Bruce, staff to Representative Hall. Amendment number 1 does 2 things. On page 7, line 28, the amendment replaces "wet marine and transportation lines" with "inland marine line." This is a technical change and points to the correct line of insurance under which travel insurance is filed and reviewed. Historically, travel insurance has been filed under inland marine line, while wet marine line is typically reserved for high seas, air, and cargo.

The addition of wet marine and transportation lines was a drafting oversight, and the change to inland marine line is also consistent with page 7, lines 23 and 24, which state travel insurance is classified and filed for purposes of rates and forms under the inland marine line of insurance. The second change is on page 16 after line 12. This change adds an effective date of January 1st, 2027. We arrived at this date, um, in consultation with Division of Insurance to give them adequate time to prepare for the filing changes under this bill. Thank you.

Thank you, Mr. Bruce. With that, I move Amendment Number 1. Object for purposes of discussion. Okay, there is an objection. Do members Members of the committee have questions for myself or the bill sponsor.

We also have Heather Carpenter here, the Director of the Division of Insurance. Representative Sadler. Thank you. I will direct my question to the gentleman who just spoke. I'm sorry, I have not reviewed this bill thoroughly.

Wet marine— can you define what that term is in terms of insurance? Yeah. All marine is wet, isn't it? Representative Sadler, through the Chair. Wet marine, kind of as I said before, is typically reserved for high-season air cargo, whereas it's the shipping flights.

I think this is also a question that maybe Heather Carpenter, a subject matter expert, could speak to better. I agree, Mr. Bruce. Thank you for your attempt. We certainly appreciate it. Director Carpenter, thank you very much for being here and for being our subject matter expert.

We appreciate it. For the record, Heather Carpenter, Director of the Division of Insurance. Keith did a fairly good job of taking a stab at wet marine. The easiest way to think about it is when you're thinking about the difference of inland marine and wet marine, wet marine is wet. You're talking about things on the ocean, boats.

Inland marine is a little bit of a catch-all. So while it is called inland marine, it is where insurers file kind of everything that doesn't really fit. So you might have expensive artwork there, expensive jewelry, travel insurance. So it covers a pretty broad amount of insurance under there. Interesting.

Thank you, Director Carpenter. So I'm sorry, is it inland marine or is it inland slash marine? I'm sorry, I'm just curious why they'd use the term marine to describe artwork. It just seems to be one of the arcane definitions of the insurance world, or—. Through the chair, Representative Sadler, that is long been how it has been done, and I don't think I have the ability to change the entire insurance industry on my own.

But yes, no más, no más. Thank you. You could try though. I could try. Um, Representative Kollum.

Um, thank you, Chair. Just a clarification, the second change on the amendment, you said it was the effective date?

Uh, yes, the second change is the effective date. Okay, so I don't see an effective date on the version I have. So did you add it or change it? Uh, we added an effective date. The original version did not have an effective date.

And when was it? What's the effective date? The new effective date is January 1st, 2027. Okay, thank you. Okay, additional questions for Director Carpenter, myself, or my staff?

Mr. Bruce?

Okay, with that, is, uh, Co-Chair Fields, you maintain the objection? No. Okay, seeing no further objection from the committee, Amendment Number 1 is adopted. That concludes our work on amendments. Um, brief at ease.

We are back on record. Are there any final concluding questions for Director Carpenter or Mr. Bruce? Okay, seeing none, Mr. Co-chair, do I have a motion? I move to report House Bill 302, Work Order 34-LS1437, 1436/A as amended out of committee with individual recommendations and accompanying fiscal notes. Okay, seeing no objection, HB 302, work order 34-LS1436/A, is reported out of committee as amended with individual recommendations and accompanying fiscal notes.

Okay, thank you very much, Director Carpenter. Thank you, Mr. Bruce, for being being here. We appreciate your time. This concludes our business for the day. Members, please stay in the room to sign the committee report.

And thank you to members of the public and members of the committee and sponsors of bills who had legislation before us today. We certainly had a very challenging schedule over the last couple of weeks in the House of Representatives, and so we are thrilled to have had today as an opportunity to get these bills before the committee. With that, the House Labor and Commerce Committee will meet next on Friday, April 17th, at 3:15. This meeting is adjourned at 4:48 PM.