Alaska Legislature: House Labor & Commerce, 5/1/26, 3:15pm

This meeting of the House Labor and Commerce Committee will come to order. The time is 3:21 PM on May 1st. Members present are Representative Carrick, Representative Freer, Co-Chair Fields, and myself, Co-Chair Hall. We have a quorum. Please silence your cell phones.

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 Joan 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 L.A.O. For their support. We have 5 bills on the agenda today, and we are joined by Representative Colon at 3:22 PM.

The first bill on The next item on the agenda is SB 164, Eliminate Tax Discounts, by Senator Merrick. There is HB 325, Industrial Hemp, by Representative McCabe. SJR 28, Supporting J-1 and H-1B Visa Programs, by Senator Tobin. SB 35, Transportation and Delivery Network Companies, by Senator Bjorkman. And HB 386, Gaming and Electronic Pull Tabs.

We will now move on to our first bill on the agenda, SB 164, Eliminate Tax Discounts, by Senator Merrick. Senator Merrick, if you and your staff would please come to the table, identify yourselves for the record and give us, please, a brief recap of this bill. Thank you, Madam Co-Chair. Good afternoon, co-chairs and members of the House Labor and Commerce Committee. For the record, I'm Kelly Merrick, senator for District L in Chugiak-Eagle River.

I appreciate you hearing Senate Bill 164 again. As a brief recap, Senate Bill 164 was inspired by the Indirect Expenditure Report with recommendations from the nonpartisan Legislative Finance Division. This bill eliminates the motor fuel tax timely filing credit, the tobacco products tax timely filing deduction, the cigarette stamp tax discount, and the tire fee timely filing discount. Department of Revenue estimates that this bill could raise nearly $500,000 a year for the state. Madam Co-Chair, this is the not-a-tax tax bill.

It's common sense legislation that will put money in the general fund and make government more efficient. Thank you, Madam Co-Chair. Thank you, Senator Merrigan, for the committee's awareness. We have Connor Bell with Ledge Finance on the line to help answer questions, as well as Dan Stickle, the chief economist with the DEX. Tax Division from the Department of Revenue also available to help answer questions.

Do committee members have any questions for the bill sponsor or those online?

Seeing none, we will move on to public testimony. I will open public testimony. Public testimony is open. Is there anybody in the room who would like to testify on this bill? Seeing none, I am turning online and I don't see anybody online for public testimony either.

I will close public testimony. Okay, an amendment deadline was set for this bill on April 28th at 5 PM, and one amendment was received from Co-Chair Fields. Co-Chair Fields, would you like to speak to your—. No, no amendments. Okay, the amendment has been withdrawn.

Uh, one last call. Do committee members have questions for the bill sponsor? Okay, seeing and hearing none, uh, Senator Merrick, do you have any closing comments before the committee takes action? Thank you for hearing the bill, Madam Co-Chair. Okay, thank you, Senator Merrick.

Co-Chair Fields, do you have a motion? I move to report committee substitute for Senate Bill 164, work order 34-LF0763/i, out of committee with individual recommendations and accompanying fiscal notes. Okay, seeing and hearing no objection, Senate Bill 164, work order 34-LS0763/i, is reported out of committee with individual recommendations and accompanying fiscal notes. With that, we will take a brief at ease to sign the committee paperwork and transition to the next item on the agenda. Thank you very much, Senator Merrick.

Thank you. Thank you.

We are back on record. Our second bill on the agenda today is HB 325, Industrial Hemp, by Representative McCabe. I don't see Representative McCabe in the audience, but I do see his staff. So welcome, thank you for being being here, please put yourself on the record and give a brief recap of the bill. Yes, thank you, Chair.

Um, Representative McCabe should be online, but for the record, my name is Ellie Shaver Almeida, staff to Representative Kevin McCabe. I do not see Representative McCabe online. He's not on. Okay, well, I will proceed and hopefully he'll be joining us soon. So, um, this bill, HB 325, is a big win for Alaska if it advances.

It modernizes our industrial hemp program by cutting red tape, creating a new microgrower category for small family farms, and giving growers practical tools like flexible testing, reconditioning options, and tax relief. By making it easier and more affordable to grow, process, and sell industrial hemp, House Bill 325 will create jobs, expand agricultural opportunities, especially in rural Alaska, and strengthen our local economy with versatile, sustainable crop.

Thank you. Do committee members have any questions for Ms. Almedia?

Okay, seeing none. At our April 24th hearing, we set an amendment deadline for Thursday, April 30th at 5 PM, and we received 2 amendments authored by Representative Carrick. Representative Carrick, do you have a motion? Thank you, Madam Co-Chair. I'll move Amendment N.1.

Object. For the purposes of discussion. Thank you, Madam Co-Chair. So I did shop both of these amendments with the bill sponsor, and it's my understanding that Representative McCabe is also supportive. But Amendment N.1 just clarifies that industrial hemp is not included in the marijuana excise tax.

So this is super important because industrial hemp is is a very separate industry from marijuana, and so I don't want there to be any gray area wherein we could see hemp taxed by the excise tax that the state currently collects on marijuana products. So that's what Amendment N.1 does. Thank you, Representative, uh, Carrick. Ms. Elmedia, do you have any comments on the amendment? No, we think it is a very friendly amendment and we urge the committee to support it.

Okay, great. Thank you very much. Uh, Representative Klobuchar. Thank you, Chair. To the sponsor, I guess, of the amendment, so it has the 0.3% THC.

So if, like we heard, sometimes it goes above that, would, would it be possibly taxable if it was higher THC? So through the co-chair to Representative Klobuchar, if you had it above that THC, it would no longer be classified as hemp in the underlying bill. And so I'm not sure what would happen if you were, say, between— if you're at 0.4 and something that could actually be a product you could reasonably sell as marijuana. I think that would be up to the division. Okay.

But what we're trying to do is, in line with what is currently classified as industrial hemp, we want to exclude compliant hemp from the marijuana excise tax. All right, thank you. Okay, seeing and hearing no additional questions, I will remove my objection. Not seeing or hearing any other objection, Amendment Number 1 is adopted. Representative Carrick.

Um, thank you, Madam Co-Chair. I'll also move Amendment N.2. I'll object for the purposes of discussion. Okay, so Madam Co-Chair, this amendment holds existing industrial hemp producers harmless from actions taken by the Department of Natural Resources between 2024 and 2025 that made industrial hemp illegal. And so we don't want to harm the legitimate industrial hemp industry.

So we have a few farms in Alaska who were enrolled prior to essentially this legislation, um, who have been doing cultivation and processing. And so basically this brings those, uh, prior prior farmers and growers in line with the provisions of this bill and holds them harmless from any potential action retroactively. And so it's just, just trying to align our existing practice with the provisions that are in the House Bill 325. And the, the real concern here would be if, if there was a change in that interpretation, the Department of Natural Resources could theoretically require that industrial hemp producers destroy what they've produced or grown between 2024 and 2025. And so just trying to prevent that from happening.

Okay, thank you, Representative Carrick. Ms. Elmedia, do you have any comments or thoughts on the amendment? We again think it's a very friendly amendment. Okay, thank you. Additional questions or comments from the committee?

Seeing and hearing none, I will remove my objection. Seeing and hearing no further objection, Amendment Number 2 is adopted. Ms. Omidyar, do you have any closing comments for the committee? We appreciate the committee hearing this bill. We thank Representative Carrick for bringing forward these amendments that we believe make the bill stronger, and thank you for taking the time.

Okay, thank you very much. Mr. Co-chair, do I have a motion? I move to report House Bill 325, Work Order 34-LS1302, back /n out of committee as amended with individual recommendations.

Okay, seeing and hearing no objection, HB 325, work order 34-LS1302/n as amended is reported out of committee with individual recommendations and accompanying fiscal notes. With that, we will take another brief at ease to sign the committee paperwork and transition to the next item on our agenda. At ease.

All right, we are back on record. We're going to move on now to our third bill in the agenda, SJR 28, Supporting J-1 and H-1B Visa Programs, by Senator Tobin. I believe Senator Tobin is in a committee. Committee meeting right now, and so we are pleased to see Mr. Mike Mason here. Thank you for being here.

Please put yourself on the record and begin your presentation. Thank you. Good afternoon. My name is Mike Mason. I am staff to Senator Lukey Gail Tobin.

I think she is still in a committee meeting at the moment, so I want to thank you for considering Senate Joint Resolution 28. It recognizes the important role that foreign worker visa programs play to our economy and also to the education of children and young adults across the state. Right now, as we all know, small businesses across Alaska are gearing up for a very busy summer tourist season. Foreign workers play a very key role in supporting our tourist industry, which we know is very seasonal in nature. Matter of fact, Alaska has the largest seasonal unemployment swing in the country, with a gap of about 43,900 jobs between the lowest and the highest employment months.

That's, uh, 14%. In 2024, visitor-related industries in Alaska employed 68,300 workers. There is public testimony, there's a public testimony document in your packet from Marilyn Yusebeli. She and her family own and operate the Black Diamond Resort Company in Healy. She wrote that despite extensive local recruitment, the small year-round population in the Denali Borough simply cannot meet the seasonal demand.

J-1 participants fill critical roles that allow us to maintain safe, high-quality operations, support other local businesses, and contribute to the broader Denali area economy. Unfortunately, in September of last year, the federal government imposed a $100,000 payment requirement for certain H-1B visa petitions. Previously, that fee was only $5,000. This effectively ended most employers' ability to use that program to fill jobs. The H-1B— I would note that the H-1B visas are intended for highly skilled workers.

In some instances, those visas can be valid for up to 6 years. As you will hear from the invited testimony from the director of the Alaska Education Retention and Recruitment Center, that $100,000 payment, uh, is made it very nearly impossible for Alaska Public Schools to utilize the H-1B visa program to hire international teachers. Currently, there are 573 teachers working in Alaska on foreign worker visas. In its 2026 report to the legislature, the State Board of Education and Early Development reported that Alaska schools continue to benefit from the contributions of internationally recruited educators who help districts fill positions that would otherwise remain vacant. Senate Joint Resolution 28 cannot change federal policy that is making it increasingly difficult for businesses and school districts in Alaska to use these foreign worker visa programs.

However, the resolution will put the Alaska Legislature on record in support of these foreign visa workers to fill unfilled jobs in Alaska. This resolution also urges the Alaska congressional delegation to work with federal policymakers to preserve and strengthen workable J-1, H-1B, and H-2B visa pathways that support Alaska's unique workforce needs. I want to thank you for taking the time to hear this, and we do have a couple of invited testifiers that I believe are online. Thank you, Mr. Mason. Before we turn to invited testimony, are there questions from the committee?

Representative Colon. Through the chair, can you explain what the difference is between an H-1B and an H-2B visa is? I'm familiar with the J-1, but I'm not sure I know what the difference is between the 1 and the 2B. For sure. Give me one moment here.

I've actually got some notes that should be able to go through all of this. So, uh, um, the H-1, uh, visa is, uh, intended for highly skilled workers. And, uh, there's kind of different lengths that they can be here for, basically up to 6 years for in some instances. Um, earlier this year, the federal government began replacing the random lottery process for H-1B visas with a system that prioritizes higher paid and higher skilled workers. That rule will be in place for the FY27 H-1B cap registration season.

This actually follows that presidential proclamation that I noted earlier regarding the $100,000 fee for the new H-1B provisions. And I would note that the congressional delegation, including Senator Lisa Murkowski, has put forward legislation to exempt public schools from that $100,000 fee. Moving on to the J-1 visa, it is a nonimmigrant visa that functions kind of like a work-study-based exchange visitor program. It is actually overseen by the U.S. Department of State. The visa applicants, they apply through a sponsor organization, and they must be accepted.

They're valid for the length of that specific program, which varies from a few weeks to several years. I think it's up to 5 years for researchers, highly skilled people. And then most of the J-1 visa holders must return to their home country for at least 2 years before they can get another J-1 visa. And then another program that our seafood industry has started using, even though there are some challenges there as well, that is the H-2B visa program. It allows employers to bring foreign workers to the U.S. to fill temporary non-agricultural jobs during shortages.

They're issued through a lottery system. There's currently a cap of only 66,000 of those H-2B visas per year. And employers using that program must prove that there are not enough U.S. workers who are able, willing, qualified, and available to do that temporary work. And the employers must also establish that employing the H-2B workers will not adversely affect the wages and the working conditions of similarly employed U.S. workers. So that's kind of the very high-level difference between those three programs.

Great. That's helpful. Thank you. Okay. Okay.

Co-chair Fields. Through the Chair, how many teachers are actually here under the J-1 versus the H-1B? I'm familiar with teachers here under the H-1B. I'm not familiar with any teachers here under J-1. So I have some data here.

I could probably find that, but our invited testifier is the person that would have the, like, the most up-to-date and really the best handle on that. I'll wait. Okay. Great. With that, we will turn to invited testimony.

2 Folks online. We have Jennifer Schmitz with the Alaska Education— Educator Recruitment Retention Center and Victoria Francis with the American Immigration Council. So let's start with Jennifer Schmitz. If you could please put yourself on the record, Ms. Schmitz, and begin your testimony.

Thank you. Good afternoon, Chair and members of the committee. For the record, my name is Jennifer Schmitz and I serve as the director of the Alaska Educator Retention and Recruitment Center, which is a division of the Alaska Council of School Administrators. And I thank you for the opportunity to speak today. I'm here in strong support of Senate Joint Resolution 28.

I, I provided a short slideshow that I think you have access to that offers additional data and context, but I want to take a few minutes to connect the issue directly to workforce realities in Alaska. At the core, it is a workforce issue. When we talk about teacher shortages, we're not just talking about We're talking about communities, local economies, and the stability of our workforce across the state. When classrooms are unfilled or unstable, it impacts families, it impacts retention of other professionals, and it impacts the community's ability to grow. Right now, Alaska is facing a persistent educator shortage.

Districts are using every strategy available. They're building— we're building local pipelines, working with universities, investing in grow-your-own programs. But those solutions take time and are not yet meeting current demand, especially in rural and hard-to-fill areas. International educators have become a critical part of the workforce solution. Through the Alaska Educator Retention and Recruitment Center, we support districts in recruiting, screening, onboarding our highly qualified international teachers who are filling these positions that would otherwise remain vacant.

Over the past 5 years, more than 500 H-1B teachers H-1B teachers have been placed in Alaska schools. In the current school year alone, 183 H-1B teachers are supporting students across the state. At the same time, federal restrictions have significantly limited the use of J-1 visas in rural Alaska, which means an even greater reliance on H-1B teachers moving forward. This is where the challenge becomes urgent. The recent $100,000 H-1B fee Requirement creates a barrier that public school districts simply can't absorb.

These are not optional hires either. They're positions that without our international teachers will remain unfilled. And when these positions go unfilled, the impacts extend beyond the classroom. It's larger class sizes, it's reduced course offerings, increased burnout, turnover among existing staff, and broader workforce instability in communities trying to retain families. Uh, Senate Joint Resolution 28 is important because it recognizes this as a workforce issue and supports efforts to secure an exemption for educators.

It's a practical step that helps ensure Alaska can, can continue to access the workforce it needs while longer-term solutions continue to develop. Our school districts aren't just choosing one strategy over another. We're using every available tool to keep school staff and communities strong and without access to H-1B teachers, especially as J-1 options decline, we are seeing that gap widen. Um, thank you for your time. I encourage you to support Senate Joint Resolution 28, and I'm happy to answer any questions that you might have.

Thank you, Ms. Schmitz. Um, I think we're going to turn to the next invited testifier, and then we'll turn to questions. Ms. Victoria Francis, are you online? And if so, please identify yourself for the record and begin your testimony. Yes, thank you so much.

Yes, thank you so much, Chair and members of the committee. Thank you for the opportunity to testify today. My name is Victoria Francis, and I'm the Deputy Director of State and Local Initiatives at the American Immigration Council. The American Immigration Council works to create a more welcoming America, one that provides a fair immigration process for new Americans and adopts policies that consider the vital contributions Alaskans and immigrants make to the U.S. economy. I'm here in support of Senate Joint Resolution 28 and to highlight the importance of the J-1 Exchange Visitor Program and the H-1B High-Skilled Visa Program, both of which play a critical role in supporting the U.S. and Alaskan economies and strengthening local workforces.

At the American Council, we work directly with employers across the country through our Global Talent Chamber Network. Comprised of over 90 chambers of commerce and 3 statewide business commissions that promote the interests of the business community through immigration and workforce policy. Additionally, through the Council's cultural exchange program, we sponsor J-1 visa interns, trainees, and research scholars at host organizations across the country. We have brought more than 500 international J-1 visitors to the United States where participants contribute directly to U.S. Workplaces and also building bridges in our countries. Through these programs and our ongoing engagement with business leaders, we consistently hear the same messages.

Programs like J-1 and H-1B are essential tools for meeting workforce needs and keeping businesses running. The J-1 program is fundamentally about meeting economic needs while fostering cultural exchange. It brings students, researchers, teachers, interns, and seasonal workers to communities across the U.S., including Alaska, where they support industries like tourism, hospitality, education, and research that are essential but often difficult to staff locally. Between 2015 and 2025, Alaska welcomed nearly 23,000 J-1 participants, averaging 3,900 per year. These participants are not permanent immigrants competing broadly across labor markets.

They are carefully selected temporary visitors who are demonstrate appropriate education for training, English proficiency, and an intent to return home after their program. The J-1 program operates under rigorous federal oversight by the Department of State, with designated sponsors responsible for monitoring compliance, ensuring participant safety, and enforcing program rules. At the same time, the J-1B program— excuse me, the H-1B program— fill a different but equally essential role by allowing employers to hire Highly educated professionals in specialized fields such as technology, engineering, and healthcare. Miss Francis? I'm sorry?

You're starting to be hard and difficult to hear. Are you on speakerphone? And if so, could you please take yourself off? You're starting to sound a little garbled a little bit as well. Yeah, let me take you off speakerphone.

Is this better? That is tremendously better. Thank you. Okay. Apologies for that.

At the same time, the H-1B program fills a different but equally essential role by allowing employers to hire highly educated professionals in specialized fields such as technology, engineering, and healthcare, where domestic labor shortages are well documented. Research shows that foreign workers complement rather than replace U.S. workers, help companies expand, increase productivity, and support job creation across the broader economy. While also contributing significantly to innovation, entrepreneurship, as well as federal, state, and local tax revenues. In fact, H-1B workers may actually increase the employment opportunities for U.S.-born workers, keeping unemployment rates relatively low in occupations that employ large numbers of H-1B workers. As of September 2025, there was a presidential proclamation in which employers will now be required to pay a one-time $100,000 fee per new H-1B petition.

Previously, it cost employers between $2,000 and $5,000 per petition depending on the size of their company. This policy is prohibitively expensive for small and medium-sized employers including K-12 and higher education institutions, healthcare providers, and companies involved in mining, quarrying, and oil and gas extraction. In fact, fewer than 90 companies have opted to pay the $100,000 fee since it was announced. Further demonstrating how companies are being priced out of accessing the workers they need to support their businesses. Additionally, in October of 2025, the U.S. Chamber of Commerce representing 3 million businesses across the U.S. filed a lawsuit challenging the H-1B visa fee.

The Chamber cited, quote, the new $100,000 fee will make it cost prohibitive for U.S. employers, especially startups and small and —midsize businesses to utilize the H-1B program, which was created by Congress expressly to ensure that American businesses of all sizes can access the global talent they need to grow their operations here in the U.S. Together, the J-1 and H-1B programs fill workforce gaps, support vital U.S. industries, and ensure that American businesses can compete globally. But these programs are increasingly at risk from policy changes and restrictions that could limit access distrupt workforce pipelines, and drive talent and investment to other countries. When these programs become harder to access, whether through increased costs, administrative barriers, or inefficiencies, businesses struggle to find workers. Innovation flows and economic opportunities are lost alongside the spending power, economic activity, taxes paid, and other contributions these workers make to local economies and communities.

That is why I urge you to vote in favor of Senate Joint Resolution 28 and its affirmation of the values of these programs and their importance to the Alaskan economy. Thank you for your time. Thank you, Ms. Francis. I believe we have a question from Co-Chair Fields. Through the Chair, Ms. Francis, who funds your organization?

I'm sorry, can you repeat that? Who funds your organization? Yeah, thank you for the question. Um, through the Chair, my organization is funded through individual grants, donors, foundations. If you would like, I'd be happy to send you a copy of our annual report that deals— that details who is funding us.

Yes. Through the—. Follow-up. Follow-up. Do employers of J-1 or H-1B visa holders fund your organization?

They participate through our cultural exchange program. There is fees associated with that. So there is a small portion of our funding that does come through running that program, yes. Follow-up? Follow-up?

Through the chair, you said that the J-1 visa is well regulated by the State Department. There's voluminous reporting on the fact that it is a widely abused and largely unaccountable program that is largely a labor trafficking program with minimal education. The New York Times in 2025 had one story entitled, "They were supposed to protect young workers, instead they cashed in.

I would appreciate a little more nuanced view of changes that would actually achieve the promise of J-1, which maybe could be valuable if it was used for something other than labor trafficking low-wage workers in from foreign countries. Thank you. Yes. Thank you for your statement through the chair. My response would be we share concerns.

Abuse of the program as well and often see that as an enforcement issue rather than a symptom of the program itself, but through more oversight needed for the organizations or the businesses who are perhaps sponsoring individuals, but not necessarily because the program itself is flawed. Okay. I have a question for the bell sponsor. Koji Airfield. Why through the chair?

Is this about J-1? H-1B writ large as opposed to just teachers. I totally support teachers, but I don't— I am totally uncomfortable papering over the widespread abuses of J-1 writ large. Well, Mike Mason, staff to Senator Tobin, through the chair. I think the— at the heart of it is we have a teacher shortage in the state of Alaska, and there are school districts across the state that are relying on foreign-born or foreign of visa worker program teachers.

You asked earlier about the numbers. There are 573 total international educators in Alaska with active work visas. So that's 573 teachers in classrooms. 232 Of those are on J-1 visas. There are another 341 that are on the H-1B visas.

Um, anecdotally, we've heard great reports about these teachers working in school districts. Uh, the Kodiak School District has relied heavily, I think the Kuspuk School District and many others. Um, as you know, there, there are, have been challenges with the J-1 program in, in the past, and that's why there are some new limitations on that, or there have been limitations put in place. Seafood industry used to use that program extensively. That was changed many years ago.

Uh, at the heart of this This resolution was simply an acknowledgment that we have a teacher shortage, we are relying on these international teachers, and the recent changes in federal policy have made it more challenging to use these teachers and to use these programs. Follow-up, Coach Enfield? Through the Chair, why don't we just— I guess my request for the bill sponsor, obviously you are not her, but we can follow up, is to go back and just focus this just on teachers where I think there is universal support. I think Senator Tobin would agree that we have tried many, many ways to get funding to school districts so that they can hire more teachers. Sometimes we've been successful, sometimes we have not been successful in that effort, but till further notice, I think that we are going to have to rely on some foreign teachers, at least in the short term.

Thank you. Representative Representative Freer, followed by Representative Kollum. Thank you. Through the co-chair to Mr. Mason, thank you for being here and presenting this bill today. I, I've worked with folks that were on a J-1 program that were not teachers.

I also used to be the director of human resources for the North Saltboro School District, where we were in the process of hiring folks in the J-1 H-1B program, and we were promised slots, and then they took those slots away, so we had to quickly revise our approach and then worked to be an H-1B administrator at the time, which we are now, and we appreciate all of our— the folks that come from overseas that support us. I actually have a bill that actually— that Jennifer Schmitz, who is an invited testifier we heard this morning that supports the concept of hiring international teachers and works on certification and those kinds of things. So I appreciate the work, but I share the same concern as Representative Fields and how it's expanded to all— or it sounds like it expands to all J-1s and I know that there are a ton of J-1 workers that come in for— to work in the seafood industry, and so I would be interested in seeing a fix in that as well. If you don't mind, if you give me one moment, I can actually pass along a little bit of information about that. So I actually— some people might remember I used to be a reporter out in Bristol Bay.

I covered the fisheries. And anyone that covered the fisheries remembers that the seafood industry used to rely heavily on the J-1 visa program. Unfortunately, federal restrictions that were implemented back in 2013 made it impossible for the Alaska seafood industry to use that J-1 visa program. Food manufacturers were actually excluded from that program. And that was a big shift for the seafood industry in the state of Alaska.

In recent years, Many seafood processors have been using the H-2B visa program. Uh, Unisea actually started using that program back in 2019. But as I noted earlier, there's a cap on that program. I think it was 66,000 visas per year nationwide, and it has been increasingly challenging for the seafood industry to get enough visas to fill their slots. So that's why just what, as Rep Fields and you, you just mentioned, is they are trying to recruit more people from the lower 48, more people in-state.

That's exactly what the education system is trying to do— recruit more teachers from the lower 48 and in-state. It's just been challenging. Thank you. Okay, Representative Kollom. Thank you, Chair.

So I had a question— I had two questions on the wording of the resolution, or maybe just some insight. So on the top of page 3. It says that Trump had issued a proclamation, proclamation restricting entry of certain H-1B non-immigrants unless the petition is accompanied or supplemented by a payment of $100,000. So it's a restrict— when you say restricting entry, so you can still, you can still apply, but it doesn't— like, I guess I'm reading this as Like, do you get more priority if you pay $100,000? Are you still able to do it without $100,000?

What is the restricting entry? Was that—. It is my understanding that basically it requires the $100,000 payment in order to get the visa. Okay. And follow-up, follow-up on the further resolved.

When I— when I— so you come through the whole Resolution, I don't see here where you are asking them to pull the $100,000. It says to preserve and to improvements on processing time, admin disruptions. Is there a reason why you didn't really address the $100,000 in the resolved? Or maybe Sarah and I missed it. I—.

To be honest with you, I think it was kind of implied, but you are right, it does not say we, the Alaska State Legislature, ask that you remove that $100,000. It simply several times in the resolution expresses how challenging it is for, uh, to meet that, to meet that payment. And then it, it, it talks about supporting the efforts to make those programs more workable. Yeah, I like the— I like the— I, I guess I, I would like it to be more precise and ask about the money because the resolution does point to that $100,000 a lot. So thank you.

Thank you. And seeing no questions from committee members, I have a question for Mr. Mason. Mr. Mason, could you please talk a little bit about SJR 28's journey in the other body? Okay, so it was originally written primarily kind of from the perspective of what we were talking about, the public education system. Senator Tobin is the chair of education.

I do lots of education stuff. It was kind of written from that perspective. But these programs are very vital to larger sections of our economy than just public education, so it was written a little broader than that. And then in the Senate Labor and Commerce Committee, Senator Merrick, who was here earlier, asked a really good question about why we did not include the H-2B visa program in this. And it was because it's actually not used that much in Alaska, but it is used.

And so it was amended in the, in the committee to add that other visa program to the language here. So this, it now incorporates basically the 3 main visa programs for foreign workers that are used in the state of Alaska. Okay, thank you, Mr. Mason. Additional questions from the committee for Mr. Mason or for our invited testifiers? Okay, seeing none, thank you, Mr. Mason.

We are going to set an amendment deadline for SJR 28 of Wednesday, May 6th, at 5 PM and set the bill aside for a future hearing. Thank you to our invited testifiers, and thank you very much, Mr. Mason, for being here. Thank you very much. Have a great afternoon. Thank you.

Okay, we're going to transition to the fourth item on our agenda, which is SB 35, Transportation and Delivery Network Companies Senator Bjorkman. Senator Bjorkman is on his way, and we have his trustee aide here to help present SB 35. And thank you, Senator Bjorkman, for being here, and for Sylvia Bieber as well. Would you please put yourself on the record and provide a brief recap of SB 35? Thank you, Madam Chair.

For the record, my name is Senator Jesse Bjorkman. I represent the the northern and central portions of the Kenai Peninsula. SB 35, insurance carriers for delivery network companies and drivers for transportation network companies have certain protections and insurance coverages that are provided by the companies. Drivers and couriers for digital network delivery network companies currently operate in a coverage gap, leaving them vulnerable and unprotected. This bill requires delivery network companies to provide necessary insurance coverage to couriers while they are providing delivery services.

My staff, Ms. Sevea Beaver, is here to go through the sectional at the will of the committee. Excellent. Ms. Beaver, would you please proceed with the sectional? And as we go through the section, I think it might be important to talk about other items that we're considering as far as changes to the bill and how we refine this, just to make sure that the policy we adopt here in Alaska is going to work and be as utilitarian— utilitarianly applicable for our drivers. Senator Bjorkman, that latitude makes sense to me, and please feel free.

Thank you. Thank you.

Thank you, Madam Chair and members of the House Labor and Commerce Committee. For the record, my name is Sevea Bieber, staff to Senator Bjorkman. Section 1 of the bill allows an individual insurer to issue group or blanket occupational accident insurance. Section 2 allows personal vehicle insurers to exclude certain coverages to the owner or operator of a vehicle while a TNC driver is logged on to the digital network or providing a prearranged ride, or while a DNC courier is providing delivery services. Section 3 makes conforming changes and provides circumstances in insurer may provide or deny coverage.

Section 4 refers definitions for the section— for that section to definitions established in AS 2823.180. Section 5 adds delivery network company couriers to the list of individuals not covered by the Alaska Workers' Compensation Act.

Section 6 adds delivery network couriers to the section. This now requires delivery and transportation network companies to provide primary automobile insurance to a driver or courier. We can stop right there for a minute. And one thing I think you might benefit from hearing from Mr. Brad Nail with Uber and clarifying is there, there is some disagreement amongst the apps within this industry about whether or not they want to provide service while people are logged on to the digital network or not. And this is the one one thing that committee members and, and I should talk with the Division of Insurance about, about whether it is appropriate if drivers' personal insurance cover them while they are logged on to the digital network for DNCs, or if it is more appropriate that their personalized insurance, as the bill reads now, covers them while they're logged on to that network, and then the company insurance kicks in when they enter into a prearranged ride.

They have accept— essentially accepted a delivery job. Okay, thank you, Senator Bjorkman. Ms. Beaver. Section 7 makes conforming changes and adds language to disallow a transportation network company from waiving uninsured, underinsured coverage. Section 8 makes conforming changes to add couriers providing delivery services to the statute.

This now requires delivery and transportation network companies to provide $1 million of coverage for primary automobile liability insurance and a minimum of $1 million for uninsured/underinsured motorist coverage. For a point of clarification here, and relating to questions from Member Colon during our last meeting. The Enquail Model Act provides for a million-dollar coverage for accident and liability coverage. However, the, the model points to other requirements for personal autos when it comes to underinsured and under— underinsured and uninsured motorist coverage. So It's our desire in future iteration of the bill that the amount of underinsured and uninsured motorist coverage come down and that it be applied uniformly to commercial carriers.

So as we look at then what the impacts of that would be across a, a broader scope, coverage that is for underinsured motorists as well as uninsured motorists would, um, would be below what I think the industry standard is for many of our large tour lines, as well as what I understand from others the expectation is for other commercial carriers. And that again would be a great conversation to have with the Division of Insurance as well as DOT. Can I ask a question? Representative Kollom. Through the chair, so, okay, so your intent is that the number, the million dollars, would come down and then you would add commercial carriers?

That's your—. Through the chair to Representative Kollom, for the underinsured and uninsured motorist coverage requirement only, the million-dollar coverage for liability would remain.

Okay, follow-up. So, um, maybe this is a question for insurance, but does commercial carriers— do they— are they required to— like tour bus, those kind of things— are they required to carry this insurance, uninsured, um, uh, insurance? Through the chair to Representative Colon. I don't know a solid answer from the Division of Insurance in answer to your question. I have heard from a tour— a large tour company in Alaska that they carry a significantly larger amount of, uh, UM/UIM coverage for their carriers.

And I also heard reference from that same carrier that there was a mandate, but I had not checked that with All right. Thank you.

Representative Freer. Thank you. Through the chair to Senator Bjorkman. So for commercial carriers, would that include folks that are— that are— so I live in rural Alaska. We don't have access to goods and services.

A lot of the times we rely on folks that are in Anchorage or Fairbanks that go and pick stuff up from, you know, maybe it's a refrigerator, maybe from Home Depot, or maybe it's furniture or groceries, and they pick it up from the store as a pickup and drop it off at Wrights or Alaska Airlines cargo. Would that include them as well? I mean, these are smaller smaller businesses that are, you know—. Through the chair to Representative Freer, that's a good question. The bill's intent is to not implicate those, certainly in the requirement for underinsured and uninsured motorists.

That would only apply to transportation network companies as they're delivering people, and that coverage— excuse me— is designed to protect the passengers in those vehicles. Yes. Thank you. Okay. Commissioner Fields.

Yeah, I just want to ask my staff to follow up with Ledge Legal. I think the intent is clearly not those people who are more traditional couriers, but we can get affirmation of that. Yes, that's correct. Okay, great. Thank you.

Ms. Beaver.

Section 9 adds delivery network couriers to the statute addressing when a personal insurer may deny a claim. Section 10 adds delivery network couriers to the statute regarding always carrying proof of insurance with the driver or courier. Section 11 adds delivery network companies to the statute addressing an insurer making payment for a claim for physical damage to a personal vehicle subject to a lien. Section 12 adds delivery network couriers to the statute regarding disclosures to drivers before accepting a ride. Drivers must be made aware of their insurance coverage, that the policy might not provide coverage at certain times, and that if the vehicle has a lien against it, using it for transportation network services or delivery services may violate terms of the contract with the lienholder.

Section 13 requires companies to maintain group or blanket occupational accident insurance while a driver is engaged in a prearranged ride or while a courier is providing delivery services. The section also sets statutory requirements for insurance benefits and requires at least a combined single limit of $1 million per each accident and payment of benefits based off of average weekly earnings that include medical expenses, coverage for disability, accidental death insurance for the benefit of spouses and dependents, and burial expenses. Section 14 makes conforming changes to add a statutory reference for occup— sorry, occupational accident insurance coverage disclosures to be included in the certificate of insurance that delivery and transportation network companies are required to file with the Director of the Division of Insurance. Section 15 makes conforming changes to add delivery network companies to the statute establishing that companies are not employers of drivers or couriers. Section 16 adds to the definition of digital network to include delivery network companies.

Section 17 defines company, delivery network company, delivery network company courier, or courier delivery services and offer. And Section 18 repeals AS 2823.050D, which requires the transportation network companies to cover insurance claims for drivers if their insurance has expired or doesn't meet standard levels. Thank you, Ms. Bieber. Are there questions from the committee?

Okay, seeing and hearing none, we noticed public testimony, so I intend to open public testimony. Public testimony is now open. Is there anybody in the room who would like to provide public testimony?

Thank you for joining us. Please put your name on the record, identify identify yourself and provide your testimony. Thank you, uh, Chair Hall, uh, Co-Chair Fields, members of the committee. My name is Brad Nail, uh, here on behalf of Uber. Uh, thank you for the opportunity to talk to you today about this.

Uh, and thanks to Senator Bjorkman for his work on this. This is a, uh, an— it's a really interesting and kind of complex topic, I think, uh, and it's become a bigger bill and become an even more interesting bill, uh, and there are multiple issues. I have worked on these issues and similar issues across the country and that I hope I can provide some explanation and some perspective for you. There are 5 main areas for discussion, and I'll just try to be brief on these. The first is the occupational accident insurance that was— is in Sections 1 and 13 of the bill.

That is an additional coverage for driver protection. It is— it is not workers' comp, but it is not unreasonable to compare it to workers' comp for independent contractors, specifically written for independent contractors. To provide similar protections. We— Uber has wanted to offer this coverage for years, but we, in working with the Division of Insurance, even almost a decade ago, we've— they felt that we needed a statutory change to authorize insurers to be able to sell this on a group basis, and this bill does accomplish this. So we are supportive.

It is different from other states. We currently offer occupational accident and over 40 states. It's a little different here because it's going to be provided on a blanket basis to all drivers, where in most states it's provided on an optional basis—drivers opt in—but here it will be on a blanket basis. The second area is around delivery network company, or DNC, language in Section 15 addressing independent contractor status. We support the consistent treatment of TNC ANC and DNC drivers when it comes to that independent contractor status, so we're very supportive of that as well.

The third area is DNC insurance requirements, which is most of the bill, most of the sections of the bill. And, you know, those of you who are familiar with NCOIL, the National Council of Insurance Legislators, know that NCOIL developed the TNC model law in 2015 that that later was adopted here as your TNC law and in most states. In 2023, developed a DNC model law. The key elements are very similar. This— we're trying to identify situations where an individual is an independent contractor, is going to provide work using their personal auto, and how do they do that in a way where that auto is insured?

Because the personal auto is often— coverage is excluded when they are engaged in commercial activities, or particularly delivery activities. So the point of the model is to ensure there is no gap in coverage and to place requirements on a DNC like Uber Eats to provide coverage and ensure that there's no coverage gap there. We're very supportive of the model. This bill differs from the ENCOIL model in one important way. Senator Birkman was referencing referencing, uh, in that the, uh, the, the in-coil model identifies a delivery available period when the driver has logged on to the app, has indicated that they are available.

Uh, their personal auto policy might exclude coverage at that point, and so the model calls for the DNC to carry coverage as well during that point. And the bill right now does not address that, so we would recommend conforming that to the incoyel model. We also recommend reconsidering the $1 million limit that is in the bill right now for the DNC activity. We think it probably merits a lower limit, even though we carry that coverage today. What we think the statute should— could call for less.

And also, protecting the personal lines insurers' ability to exclude coverage is important, to make sure that that is enshrined. The fourth area is the TNC/UMUIM requirement that was just discussed, Sections 7 and 8 of the bill. The encoil model approach, Senator Bjorkman laid it out correctly, and we advise staying with the model language currently in statute. I can go into more detail on that if there are questions on it, but that's our position on the UMUIM. And then the last part, uh, also in Sections 7 and 8, is, uh, the bill currently strikes from the current statute the ability for these insurance requirements to be satisfied by either the driver, the TNC or the DNC, or a combination of the two.

That's part of the model language. We think it makes sense to leave that in. So I, without taking too much time, I can conclude there, Madam Chair, and happy to answer any questions. Thank you, Mr. Nale. Do committee members have any questions?

Representative Kolum. Through the chair, thank you for being here. It's good information. So one easy thing is on your fourth point of issue with the bill, can you repeat that? I think it was sections 7 and 8, but I can't—.

I couldn't write fast Yes, through the chair, thank you for the question. It's the TNC uninsured and underinsured motorist requirement is in Sections 7 and 8. The NCOIL model calls for that to be consistent with what the current statute calls for, for either personal autos or limousines. And the Alaska statutes are silent on limousines. The personal auto requirement is for 50/100/25 coverage that is a mandatory offer that can be rejected.

Okay. And the bill in its current form would require that TNCs not be able to reject it and to carry that coverage at $1 million. Okay. Follow-up? Follow-up?

So through the Chair, so both Senator and you said that that million-dollar coverage needs to come down. Do we have a number for that? How far down does it need to come down? Through the Chair, I don't have a number for that. You know, our recommendation is that it comport with the model law, which would remain at the 50/125 and rejectable.

If there is— if the consensus of the policymakers is that that needs to change, for example, Senator Bjorkman Department has talked about broadening this to all transportation carriers, which in that case, that would not be the TNCs being singled out. And so that's easier for us to work with, and then we can have the discussion around what those limits should be. Um, follow-up, follow-up. Can you clarify 50, 100, 25? Sure.

Through the chair, uh, split limits, uh, the first number is the amount of coverage for bodily injury per person, so $50,000 per person for bodily injury. The second number is 100. That's $100,000 for bodily injury total for all injured people in the accident. And then the 25 at the end is the property damage, $25,000 in property damage. Okay, so the— follow-up, follow-up.

So the NCOIL model, that, that's what they recommend, the 50, 100, 25? Through the chair, for UM-UIM, they recommend simply cross-referencing the existing statute in whatever state, because the model law is generic. So it's whatever statute in your state, what it calls for for personal autos or limousines. Okay, and one more question. Yes, so I was curious on your input.

Maybe you don't have the input, but to Rep. Freer's question earlier about couriers, I mean The, the bill has definition of a courier. It sounds like what exactly what she said those people do. I'm not sure is you can eliminate that situation and keep people in an urban area with the requirement. Do you have any input on that?

Through the chair, I don't have anything specific there. I mean, generally when I read the laws, they apply broadly to people who are engaged in the similar activity. And so I— but I guess we can write things, we can write whatever we want, right, as long as it passes legal muster. Right, right. Okay, thank you.

Okay, Coach Airfields. Yeah, elaborate on that. I think that what Representative Freer was talking about was more informal arrangements to do courier work versus necessarily through an app, but maybe I misunderstood that. Representative Freer. Yeah, thank you.

Uh, through the chair, what I was referring to is small companies, like one that I'm familiar with, that there was a young man who is from Utqiagvik who moved down to Eagle River with his wife, and he started a small business, very small business, to try to get, you know, to connect people with goods and services. And so it's not on an app. It's just a small business with a, you know, a van that he uses or may use to pick up stuff from Fred Meyer or from Best Buy and then transport to Alaska Airlines. Coach Airfields? Yeah, so I think that would not fall within the category of a DNC and therefore would not be implicated by the law.

That's how it would differentiate. Mr. Neal. Oh, thank you. Uh, through the chair to Representative Freer, uh, I think that, uh, what, uh, uh, Co-Chair Fields described is accurate in the way the bill reads now. It's really, uh, any insurance requirements in this bill are limited to people who are connecting through a digital network.

Um, and but if we're contemplating new language that we haven't seen yet that would expand it to multiple transportation commercial aviation carriers. That's what I— that's what I don't really know what that's going to look like. Coach Airfields. Uh, we can see it when Ledge League writes it, but there's taxi-specific statute in Alaska, and I believe it will fall— the insurance requirements will fall within the taxi-specific statute and therefore continue to not affect small businesses shipping things through rural Alaska. So can I get clarification maybe from Rep Fields?

So, but if it expands to all the commercial vehicles. So we talked about tourism buses. They're not necessarily connected with an app. Through the— Co-chair Fields? Through the chair, it won't, because the way the statutes are constructed, there's a bunch of taxi-specific exemptions.

And I believe the way that if we're going to extend this insurance coverage, it'll be crafted as referencing those taxi-specific statutes. It's just a historic anomaly in the way our statutes are drafted. I don't know if other states are the same, but there's a lot specifically about taxis. Taxis. So are you, are you saying you would use those statutes to exempt what Rep.

Freer was talking about? Through the Chair, I don't think we have to exempt anything if we're talking about extending insurance coverage consistent with TNCs and DNCs. We're going to say they also apply to taxi services, which are defined in statute and already have their own set of weird exemptions, like for minimum wage law. So it's, it's actually easy in our statutes to have consistency across taxis and TNCs. Taxi companies, taxis and DNCs, and we just apply the insurance coverage to taxis.

So structurally, it's easy. And it does not include a bus driver for a tourism company or a courier for a rural community or any of that. [Speaker:COMMISSIONER TREGONING] Yeah, I guess I would— I'm just really concerned about the potential language to put it on all commercial vehicles. I think that would have to be really carefully drafted if you're going to do that. [Speaker:COMMISSIONER TREGONING] With that, I want to be mindful of the time, and we are still in public test testimony.

So, Mr. Nail, I believe you're going to be sticking around if there are additional questions. So thank you very much for your testimony. Thank you. Is there anybody else in the room who would like to provide public testimony on SB 35?

Seeing none, I will turn online, and I see two people online. And we will start with Francisco Avalos with Lyft calling from Phoenix. Would you please put yourself on the record and begin your testimony? Thank you for being here.

Absolutely. Good afternoon. Confirming you guys can hear me? Yes, we can hear you. Excellent.

Good afternoon, Co-Chairs Fields, Co-Chair Hall, and members of the committee. Thank you for the opportunity to testify on SB 35. My name is Francisco Avalos, and I'm the Senior Public Policy Manager at Lyft, the transportation network company operating in Alaska. NIST respectfully opposes SB 35 as currently drafted. NIST supports the core purpose of the bill, providing a clear independent contractor framework for workers on digital platforms.

This is good policy, and we appreciate the attention given by the legislature to worker flexibility. Our opposition is specific to the insurance provisions added by the amendment, specifically the $1 million UM/UIM mandate. The amended bill requires TNCs to carry $1 million in UM/UIM coverage and prohibits any waiver of that requirement only for TNCs. UM/UIM coverage only applies when a driver outside of our platform causes an accident. Our internal analysis indicates that this mandate would increase the insurance cost of each ride by over 50%.

The cost does not disappear. It is passed along to riders in the form of higher fares. For Alaskans who rely on rideshare as their primary form of transportation, this bill makes an essential service materially less accessible. When fares rise, ride volume falls, and when ride volume falls, driver earnings follow. Alaska drivers value the flexibility and earning opportunity the platform provides.

A mandate that suppresses demand does not protect drivers, it reduces their income. In a smaller market like Alaska, that dynamic is particularly pronounced. And I'll just re— re-share with this committee that drivers are currently earning over $38 an hour pre-tips on the Lyft platform per engaged hour in Alaska. TNC drivers already operate under robust insurance requirement under Alaska law, including a $1 million policy in third-party liability coverage when drivers are en route to pick up passengers passengers or during the rides. SB 35 layers on additional duplicative mandates, and notably, the bill already includes occupational accidental insurance requirements that are intended to cover driver injuries.

The UM/UIM provision is unnecessary on top of that. This asks the committee to remove the $1 million UM/UIM provision from SB 35. We are supportive of the independent contractor certainty framework and are committed to working constructively with the sponsor in the committee on the version of this bill that works for drivers, riders, and the platforms they serve. Thank you for your consideration this afternoon. Happy to answer any questions.

Thank you, Mr. Avalos. Do committee members have questions for Mr. Avalos? Seeing none, thank you for your testimony. We will move on to Deborah Herron, um, calling from Walmart in Anchorage. Ms. Herron, would you please put yourself on the record and begin your testimony?

Yes, good afternoon. This is Deborah Herron with Walmart Stores. I'm the Director of State and Local Government Affairs. Can you all hear me? Yes, we can, Miss Herron.

Thank you, Chair. I appreciate that, and I'll keep my comments rather brief this afternoon since many of the points were already raised by the prior two testifiers, and I just want express that while Walmart does support the policy goals of SB 35 and the independent contractor classification framework, we do have concerns about the insurance amendments, as have been mentioned, um, just in much detail by the prior two testifiers, as they've broken parity with the TNC model and can impose some disproportionate costs on delivery network companies. The reason why that's important to us is not only because of our partnerships with delivery network companies to make sure that Alaskans can have their goods delivered to them and take advantage of our online pickup and delivery services, but also for the reasons that have been mentioned before. The disproportionate million dollars really puts Alaska out of sync with many other states. And this is an issue that is of utmost importance, that there be parity across all states and for our drivers.

So hope that you could consider returning the bill to its original form, or if there are ways that we could sit with you and with other interested parties to find ways to make it palatable for all parties, we would greatly appreciate it. I appreciate the opportunity. Thank you. Thank you, Miss Heron. Do committee have questions for Miss Heron?

Okay, I am seeing none, and I don't see anybody else online. One last call, anybody in the room to provide public testimony? Not seeing any, I will close public testimony. Public testimony is now closed. Are there additional questions or committee discussion for the bill sponsor or anyone else?

Okay. I would also like to note that we have the Division of Insurance Director Heather Carpenter here in the room, as well as Mr. Chuck Collins, who's the Director of Workers' Compensation, if any committee members have questions related to their specialties.

Okay. Representative Colon. I'm not sure who to ask this to, but it— do we know how many accidents have happened where the coverage didn't cover the underinsured? What's the genesis of the— I'm trying to figure out what's the problem we're trying to solve. Is this a major issue that happens all the time and uninsured motorists are running into these TNCs?

Is it one accident accident and you don't want any more to happen? Can you kind of give me a context of what the problem we're trying to solve? Because it does seem like the $1 million coverage is going to increase the rates, which we just had another bill that increased the rates for Uber and Lyft, and there's a lot of, a lot of people rely on these services. So I'm just trying to get some context. Senator Bjorkman.

Thank you. Through the chair to Representative Calhoun, um, I know that co-chair Fields can speak to the UM/UIM coverage for TNCs. I'll specifically talk about the changes to the mandating coverage in Period 2 for DNCs. You heard testimony from Walmart. They operate a DNC.

The UM/UIM coverage would not touch their services. Um, in the Senate Labor and Commerce Committee, we heard from a DNC delivery driver who works for Walmart Spark, and I've heard this concern from other people as well, is that Walmart Spark does not cover people with insurance when they have accepted a ride and they are on their way to Walmart to pick up stuff. This is a significant problem because their personalized insurance drops them as well, so they're left uncovered. So, um, maybe If the chair likes, for the next committee, we could have Mr. Desjardins, or Desjardins, I guess, come before this committee and tell you his story about the accident that he had and how he found himself without coverage because Walmart Spark chooses not to cover their drivers when they essentially are doing a job for them. And let Co-Chair Fields talk about the TNC provision for UM/UIM.

Coach Airfield. Yeah, through the chair, I've had constituents share that they suffered extremely debilitating, expensive injuries while riding in a TNC vehicle. Um, it is important to note that people who have a car may have uninsured motorist coverage while they're riding in TNC, so perhaps they have coverage. But there is a large percentage of Anchorage residents certainly who don't own a car, So they're uncovered when they ride in a TNC vehicle. And of course, a lot of people in rural Alaska don't own a car for obvious reasons.

And when they're, say, in Anchorage, they would be similarly exposed to an uncompensated injury that could be, you know, hundreds of thousands of dollars in the hospital. So that's the gap. But I have heard about it from constituents. So, so to clarify, so if I have UM and UIM insurance on my vehicle, I get into another vehicle My coverage still covers me. Okay.

So there is some coverage. I'm just trying to figure out— it feels like a really extreme solution to maybe something that's happening not all the time. It's not that I don't want people to be covered, but I am trying to balance just how that's going to affect the cost of Uber or any TNC. So thanks. Senator Bjorkman.

Thank you. Through the chair to Representative Calom, um, I think really what the TNCs want out of the policy we create is parity for them along with taxis, is what they're looking for. And so the, the gap in coverage is real. Um, what I'm interested in learning more about is the— as it appears to me that TNCs are concerned about the cost of uninsured and underinsured motorist coverage, comparing it to other states that have a much higher rate of uninsured motorists than Alaska does. So Alaska, our uninsured motorists, according to the Insurance Institute, is about like 11% or something.

In other states where they have much higher costs for UM/UIM coverage, their uninsured motorist rate is double or sometimes more than that. We're kind of right in the middle. So it'd be interesting to know what the costs would actually be for additional UM/UIM coverage. That would be, that would be worthwhile knowing. But I think mostly what I've heard from these TNCs is they want parity, and I think I think that's probably okay, um, especially if we, we were able to adjust those limits down a little bit from what they currently are for UM/UIM.

Yeah, may I respond? Follow-up? Yeah, I think the cost is, is key. We can't move forward, we need to know how much this is going to cost and then model that out, what that does to the fare, to the chances of that happening. I mean, it sounds like we're middle of the pack or low, 11%.

It's not a 30% number or something. So yeah, I would definitely want to know the cost to the companies, even if it's parity. I mean, then you're— now you're putting it on taxis and everybody else. So I'd like to know how that's going to impact the fare, basically. Yeah.

Through the chair to Representative Klum. Yeah, I think that's, that's a fair point. I think also the alternative opportunity cost is you go and you put people at risk who expect themselves to be covered when they take a ride in a TNC. And then if they do have an accident, like happened with folks who have reached out to us, is you have an accident where this person has medical bills of over $600,000 and there's no payer to cover that loss. That's a big deal.

And yeah, it doesn't happen all the time, that's good. That means the coverage shouldn't really be that much money. So I think that's, that's a trade-off there that I certainly am willing to, to take to make sure that people who have an expectation of there being an insurer to cover a loss that's no fault of their own, probably a good policy to protect Alaskans. That's how I'm thinking about it. Yeah.

So if I could respond, I just want to clarify. So they, there is coverage, correct? Not, not in this So this, just to clarify, the bill is about a TNC that is covered, possibly the passenger's covered if they have that insurance personally, that coverage goes with them. But you would need a passenger that doesn't have that insurance on their own auto insurance or maybe they don't have a car and they have an accident with an underinsured or uninsured motorist. It's a very specific, I just want to be clear with the public, it's not that TNCs are driving around with no insurance.

This is a very specific situation, which is terrible if it happens, but it is very specific situations. And I just want to clarify that they do have insurance and there is a lot of care taken for the car, the driver. So I understand the gap, but I just— I wanted to make it clear, it's not that we're requiring insurance, they are insuring their drivers. So Senator Bjorkman, okay, Co-Chair Fields. That is true on the TNCs, Representative Kalem.

There is some, I think, clarification we'll have to do in the CS for the DNCs about duration of insurance coverage, namely around the period when they're logged on, so you don't have major periods when they're working but not covered. That is definitely an issue. So yes to what you just said, but Looking broader at the bill, there's, I think, some more details to iron out on coverage for workers. Okay. Director Carpenter, are you available to help answer questions?

I have a question for you, and I'm sure others may also have questions or clarifying thoughts for you.

Thank you for being here.

Director Carpenter, I'm wondering, how do costs for UM and UIM in Alaska compare to other states such as California or Florida? For the record, Heather Carpenter, Director of the Division of Insurance. I don't have that information with me today. I can see if we have access to that, but I don't know if we do on average. Okay, thank you.

And then I have another question, which is When it comes to occupational accident insurance, can you— can you give the committee a little bit of information as far as, like, my understanding is that Alaska has not had that before. Can you speak to that?

Chair Hall, what is envisioned in this bill would be a new product, and that is fine. We bring in new insurance products When Senator Bjorkman contemplated this, we looked at did we have a way to map it and tell our insurers how to file it. We do. So we don't have any concerns about the product as it is specified in the current bill. It would just be a new offering, and if this bill became law, we would just issue guidance to the insurers on how to file it with us.

[Speaker:Q] What happens after that? I guess, like, it— I guess it— does it open the floodgates for more insurers to come in and offer this product? Or like, how does that work? Uh, Co-chair Hall, it would work like any product that is filed in Alaska. So if an insurer wants to offer it, they need to file it with us, get approval before they offer it.

Um, so it would go through the normal checks and balances that any insurance product is being offered in the state. Okay. Okay, thank you.

Do other committee members have questions for Ms. Carpenter? Okay, Representative Colon. Yeah, through the chair. So I, I was just looking through your fiscal note, they're all zero. So I mean, if there's a new offering, it seems like there would be more work around that.

Is that because you just won't— you don't think there'll be that many people participating, or—. Through the chair to Representative Colon, we feel pretty confident we can absorb this work with our current workload. It would— we already have a line, we know where we would file it with, so it'd be pretty minimal for bringing in a new filing. We get filings throughout the year. Our team is always reviewing filings, so it would just go with our normal workload.

Okay, thank you. Okay, thank you, Ms. Carpenter. Um, Mr. Nail, I have a question for you.

And I might have missed this during your public testimony, and if I did, I apologize, but could you talk about when it's appropriate to provide insurance with P1, P2, and P3? And could you maybe walk through P1, P2, P3 for the committee? Thank you, Co-chair. Brad Nail here on behalf of Uber. So in the TNC context and in the DNC context, they're very similar.

I'll describe them similarly. The period 1 is when the driver has logged on to the application and has indicated they are available to receive requests. So in a TNC context, request for rides, and a DNC context, request for delivery, but they have not yet received any requests. Period 2 is when they have accepted a request and are on the way to pick up either the person or the good to be delivered. And period 3 is when they have that person in the vehicle or that good in the vehicle being transported to its destination.

Okay, thank you, Mr. Nail. When it comes to insurance having to do with those different periods, can you please walk through the appropriate limits again? Yes, thank you, Co-Chair. The period 1 limits are in the model law and the existing Alaska statute are set at $5,125.

The periods 2 and 3 limits for liability are $1 million for TNCs. There's currently no requirement in the statute for DNCs. This bill would establish a requirement. Just so everyone knows, Uber Eats does carry coverage for all those periods, so there's no coverage gap. Concerned for Uber Eats without a statutory mandate.

We do it anyway, but I think it's important to put it in the statute to make sure everyone complies with that as well. Thank you, Mr. Nail. Thank you. Okay, are there additional questions from the committee? Okay, seeing and hearing none, I will try to find myself back on script and I'm not.

Thank you, Senator Bjorkman and Ms. Bieber, for your time today and for presenting SB 35. We're going to set it— set the bill aside for now. I believe next on our agenda we have— yes, we have HB 386, which is gaming and electronic pull tabs. By Representative Fields, but Senator, Senator Bjorkman's office along with Conrad Jackson has been taking the lead and walking us through the sectionals. So Mr. Jackson, if you could please come to the table, identify yourself for the record, provide a very brief bill recap, and continue on with the sectional.

I believe we're about one-third of the way through the sectional analysis. Thank you for being here again.

For the record, again, Senator Jesse Bjorkman representing the northern and central portions of the Kenai Peninsula. A brief recap of the bill is this bill modernizes our charitable gaming statutes to allow for electronic pull tabs played on tablets. It does not expand where pull tabs can be sold or who they can be sold to, but merely allows those pull tabs to be played on a tablet screen. It also makes additional changes to modernize some prize limits for bingo halls, as well as reporting requirements and cleanup language to allow the Department of Commerce to better enforce our charitable gaming laws. Thank you, Senator Bjorkman.

With me is my staff, Mr. Conrad Jackson, who will continue our mutual journey through this bill sectional. We're so glad to have you back again, Mr. Jackson. Thank you, Madam Co-Chair. For the record, Conrad Jackson, staff to Senator Bjorkman. Appreciate your time this afternoon.

Excuse me, this afternoon. If I could, Madam Chair, I'd like to start off with a section that we I guess we skipped over this last meeting, Section 15. We had a question from Representative Sadler, and it just— we appreciate the opportunity to get back to the committee. Section 15 deals with some changes to the operator and the adjusted gross income, and Representative Sadler asked what we were doing, why we were doing it. And really, it's very similar to some other sections in the bill.

We're leveling the playing field between an operator and a multiple beneficiary permit holder. This would require an operator to pay the permittee at least 30% of the adjusted gross income, which is an increase from 15%. For the members' information, The definition of multiple beneficiary permit is defined in 0515-100D.

And the goal here for the members is to increase the revenue to the entities, the permittees. Representative Colon. Just a clarification. You said 30% to the permittee? Yes, ma'am.

Representative Kolumb, through the chair, that is correct.

Madam Chair, simply, this change provides equal treatment to the multi-benefit— multi-beneficiary permittees or multi-permit beneficiaries and operators, treats them the same so that someone running an MBP cannot essentially eat up more of the charity's share of the earnings with admin costs. It treats MBPs and operators the same. Thank you, Senator Bjorkman. Okay, Mr. Jackson. Oh, Co-Chair Fields has a question.

Um, thanks to the chair. I don't think I'm missing anything. Nothing in the bill diminishes the share of revenue to charities. Right? So this change increases it relative to MBPs.

Operators stay the same, vendors stay the same, but nowhere in the bill does the share going to charities diminish. Am I understanding that correctly? Through the chair to Representative Fields, that's correct. Okay. Okay.

Mr. Jackson. Thank you, Madam Chair. For the record, again, Conrad Jackson, staff to Senator Bjorkman. Where we left off was on Section 21, which is found on page 9. And page— this amendment in Section 21 amends the limitations on authorized activities.

And in this section, we are increasing the maximum monthly and annual value of door prizes. This would be double the current statutory limits.

In Section 22, we're amending Limitations on authorized activities of bingo. This will change the requirement and require the government or the department adopt regulations setting bingo sessions and bingo game prize limits. We're increasing that maximum monthly and annual value of the door prizes which may be offered in a bingo hall or bingo parlor to double the current statutory inventory limit. We're also establishing that an operator may offer progressive bingo games and establishes how those bingo games' gross receipts and prizes may be carried over to another game. Question.

Coach Airfield has a question, Mr. Jackson. Through the chair, what is a progressive bingo game? Thank you. Mr. Chairman, Madam Chair, uh, Representative Fields, I am not a bingo expert. My limited information is— I'm going to hand it off to the senator.

Through the chair to Representative Fields, progressive bingo typically is a person has to get a bingo in a certain number of draws, a certain number of numbers. If no one gets a bingo, the pot rolls over to the next game and then you get continues to get bigger. Or it's Democrats playing bingo. Either one, I suppose. Thank you, Senator Bjorkman.

I'd like to play bingo with you sometime.

Mr. Jackson. Thank you, Madam Chair. For the record, Conrad Jackson. Again, Section 22, there are some additional changes in the those prizes as you see on line 10 and 11. We are doubling both the monthly maximum prize and the annual prize.

There are also some changes you'll see in paragraphs 1, 2, and 3, and these are drafting changes, just cleanups as Ledge Legal does when they go through a piece of legislation. Section 23, is some changes to the authorized activity. And in that section, we are removing the $500,000 prize cap for municipalities and qualified organizations who contract with an operator. This excludes electronic pull tabs from the provisions of this subsection as well. Mr. Jackson, I have a question.

Why remove the $500,000 prize cap? What is the intent behind that.

Madam Chair, so oftentimes when these price caps are in place, it puts a limit on how much these permittees— how much money they can raise. Throughout our charitable gaming statutes as well, in Title V, you'll see a people that might talk about this as well in terms of raffles or other charitable events. When you have a prize limit, you would have an event that could only give away a certain value of stuff. So let's say you have a banquet like Ducks Unlimited or Safari Club International, or, or any group that does a lot of, a lot of raffle tickets. They are, because of inflationary pressures and other things, they're bumping up against those prize limits.

And so it complicates and limits their ability to raise money. Just simply modernizes it. Thank you, Senator Bjorkman. Okay, Mr. Jackson. Thank you, Madam Chair.

For the record, Conrad Jackson. Section 24 in Section 24.05.15.180, found on page 11, We're adding two new subsections, new subsection I and J. And in the I, we are adding in language to set the maximum award for— or maximum prizes for municipality and a qualified organization at $4 million for electronic pull tabs in each year. The multiple beneficiary permit is also set at $4 million. $10,000 Times the number of permit— the holders of the permits for activities authorized in this chapter.

New J, beginning in 2030, the department may by regulation increase those amounts by up to 10%, rounded up to the nearest $10,000. Just a simple adjuster as time goes on for inflation. It seemed like an appropriate place to put that. Section 25. In Section 25, we are amending some language in— under pull-tab manufacturers.

In this, we're clarifying that a pull-tab manufacturer may distribute pull-tabs only to a licensed pull-tab distributor.

Section 26, we're amending a number of— by adding a number of sections, new sections to 0515.1.81. Again, Section 26 begins on page 11. I'll just run through those new subsections. First, we're prohibiting a pull-tab manufacturer from modifying or paying for modification of a building to accommodate gaming activities. Activities.

Secondly, we're prohibiting a manufacturer, an owner or an employee of a manufacturer, or the immediate family member of a manufacturer, parent, sister, subsidiary company, from giving or receiving gifts or other things of value from a vendor. An operator a permittee or a qualified organization. Similar to what was mentioned a week ago, just trying to reduce the possibility of inducements going either direction. The next section— subsection, rather— subsection H requires a pull tab manufacturer to have a separate endorsement on their license prior to distributing electronic pull tabs— I'm sorry, to distributing electronic pull tab system in the state. It also requires that electronic games be tested and certified by an independent game testing laboratory prior to distribution.

Representative Kolumb. Yeah, so through the chair, what endorsement— what is this, some like additional training or money, or what's the separate endorsement? What does that entail? Through the chair, Representative Kolumb. This would be an endorsement on top of their permit.

The current permits, since we're adding electronic pull tabs to the, the options, it's just adding an endorsement to allow for that sale. Similar to a driver's license where you would have a motorcycle endorsement, it allows you to do that as well as what you're currently doing. Thank you.

Going on with subsection (i), uh, we're prohibiting a manufacturer from distributing pull tabs if the manufacturer is an owner or employee of a manufacturer, close family member, uh, in short, holds an interest in the distributor, uh, that they would be distributing, uh, those pull tabs to. Uh, subsection (j) establishes criteria under which a manufacturer may refuse to sell gaming equipment or paper pull tabs to a licensed distributor.

In subsection K, we're establishing that subsection J is not applicable to application software or computer programs or equipment used in the production of— or playing or reporting of approved pull tab games.

Subsection L requires a manufacturer provide the same prices and quantity requirements for pull tabs to each distributor. And this, similar to other pieces of the legislation, we're trying to reach a parity. If one, one entity buys 100 games and another entity wants to buy 100 games, they would be at the same price. There's no preferential treatment.

Representative Kulum. Yeah, so through the chair, but there's shipping when that's— and so it's not really parity because if you're in rural Alaska, it's going to be more expensive to get them, right? Through the chair, Representative Kulum, absolutely. But the price of the item, it would be the same. Okay, so this doesn't affect shipping costs?

Okay, no, ma'am. Okay. Thanks.

The next subsection— excuse me— subsection M clarifies the terms under which a manufacturer may restrict the sale of exclusive pull-tab games.

Subsection N requires a manufacturer submit to the Department a copy of each contract with the distributor within 7 days of signing that contract.

Subsection— new subsection O restricts the point-of-sale data from paper tickets and bingo.

New subsection P prohibits the issue— oh boy, it's going to be one of those days— the issuance of a manufacturer's license to a person otherwise prohibited from receiving that particular license.

Subsection Q prohibits connection of the price or availability of paper pull tabs to an electronic pull tab game and vice versa.

Can I ask, Representative Kalem? Thank you, Chair. So, um, can you go back to I? Can you give me a— what is that situ— I don't understand that situation. Why are we prohibiting that?

Can you kind of give me an idea of what that means?

Through the chair, Representative Kollum, let me get back to that piece.

Ah, yes. Through the chair, Representative Kollum, this is an attempt at limiting or stopping vertical integration between a manufacturer and a distributor for the purposes of selling electronic pull tabs. Okay, so they can't— this is an owner or employee of the manufacturer or close family member of an owner or employee, so I guess just because they're family members they can't do it either. Through the chair, yes, ma'am, that is correct. Okay.

From there, we move on to Section 27, which you'll find at the top of page 14.

And in Section 27, we are amending AS 0515.183(a) dealing with pull-tab distributors. And again, similar to the manufacturer, it requires requires a distributor have a license to distribute electronic pull tabs. Again, this is an addition similar to the endorsement for a manufacturer to distribute electronic pull tabs in addition to what they're already doing. This does also prohibit the issuance of a distributor's license by the Department if a person is— if the person licensed as an operator participates in another aspect of the manufacture or sale of pull tabs. Again, trying to avoid that vertical integration and the connectivity.

From there, Madam Chair, we continue on. We prohibit the issuance of an electronic pull tab endorsement to a distributor's license should an ownership interest be held by a matter manufacturer. So we're, we're looking at this from the other direction as well, from a distributor going up to a manufacturer.

Section 28 of ANSI O515.183, again pull-tab distributors, adding that an electronic pull-tab system may only be distributed from a location within the state.

Section 29 allows that a distributor may distribute— may deliver an electronic pull-tab series directly to a vendor on behalf of a permittee. This would allow for that distributor to make that delivery directly Currently, paper pull tabs are delivered to a vendor by the permittee. In an electronic pull tab situation, that gets a little cumbersome. The distributor would simply make that transition to the vendor for— into their gaming system for them to be able to continue or to begin selling that game.

Section 30, we are adding 8 new subsections. To 0515.1.83 dealing with pull tab distributors.

New subsection F establishes that a distributor must have an electronic pull tabs endorsement prior to distributing the pull tab system. New G prohibits issuance of a distributor's license if a person is otherwise prohibited under 0515.105. This is a case of if a person has a felony conviction, that type of thing, they don't, they don't get the license.

New subsection H has a number of pieces to that, and in this we're establishing some, some restricted actions of a distributor. First of all, we prohibit gifts and compensation of other things of value greater than $25 to a municipality or qualified organization. Again, minimizing, reducing inducements or the potential for inducements. Next, we're prohibiting modification of a building for the purposes of accommodating a gaming system, very similar to what we saw previously in the manufacturer. So these are— we're just talking about the distributor side of the business.

Next, we're prohibiting giving things— giving compensation or a thing of value to an owner or lessor of gaming premises. We continue prohibiting the participation in gaming activities at a premises using equipment from that same distributor. Next, we prohibit alteration or modification of gaming equipment except to add a last sale sticker.

From there, we also prohibit obtaining or using point-of-sale information, again similar to what you've heard before. Next, we're prohibiting connection or the— of the price or availability of a paper pull tab to an electronic pull tab game and vice versa. We're also prohibiting a distributor from being an owner of shareholder or shareholder of a manufacturer. Next, we're restricting distribution of electronic pull tabs from a manufacturer described in 0515.181(i) who holds an ownership interest in the distributor. Next, we're restricting the distribution of a pull tab game to a permittee or owned or managed by a person within 2 degrees of consanguinity— there's a mouthful— to the owner or employee of a distributor.

Again, limiting those familial connections between a manufacturer and a distributor.

From there, Madam Chair, we move on to the next subsection that's being added in, uh, 0515.183, and that would require that electronic pull tabs meet the requirements in 0515.186, which is added in Section 33 of the bill.

New J allows up to $250 per year of marketing or promotional materials, uh, can be provided to a qualified permit holder. But we're also requiring that reporting of this material by the distributor, which would include the value and the location, physical location where the materials are to be used. I have a question. Representative Kolumb, through the chair, so who, who are they reporting to? Is this—.

They're reporting the department through the chair, Representative Kolumb? Yes, they would be. Issuing reports to the department. Okay, so you're talking about—. Oh, through the chair, uh, you're talking about like cardboard signs, e-pull tabs here, or any kind of promotional thing about the tablets?

That's what we're talking about, and they would have to itemize all that? Representative Colon, through the chair, yes, that's exactly what we're talking about. Okay, thanks.

Again, I guess I'll add to that, we're limiting the opportunity for gifts, but promotional and marketing materials make sense to promote a game, that type of thing. But again, to reduce and eliminate enticements, we want to make sure that that information is available. Well, $250 gets you not much marketing, so I don't think it'll be too much.

Uh, following that, uh, new subsection K being inserted, requires a distributor submit copies of contracts with a permittee, multiple beneficiary permittee, vendor, or operator to the department.

Next, in L, we're requiring the department provide serialized stamp to a distributor and requires tablets be stamped. If anyone here is familiar with paper pull tabs, the games have serial number to be uniquely identified. So there's similarity there. Uh, from there we insert, uh, new M, which requires contracts between a distributor and a permittee allow for termination by either party without penalty with 30 days' notice. We're also prohibiting incentive or signing bonuses as well as penalties based on the term of the contract.

Mr. Jackson, I think that is probably a good stopping point for the day, taking into consideration the time. We made it through sections 21 through 30, and we only have 28 more to go.

And I look forward to picking this up again next week when we will We're also planning on hearing invited testimony as well. Do you have any closing thoughts or comments, Senator Bjorkman?

Thank you, Co-chair Hall. We appreciate the committee's patience with the detailed committee work that we have undertaken today. We're glad to be with all of you and very thankful for your time and consideration. Sometimes this gets a little thick, right? But it does matter.

All these things matter. Great greatly to making sure the charities and nonprofits that benefit from charitable gaming actually get the money that they're supposed to. And so it's, uh, it's important work, and we appreciate your perseverance. Likewise, Senator Bjorkman, and especially Mr. Jackson. Okay, with that, that concludes our business for today.

The House Labor and Commerce Committee will meet next on Monday, May 4th at 3:15 PM. This meeting is adjourned at 5:11 PM.