Legislature(2003 - 2004)

05/15/2003 08:07 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 272-MOTOR VEHICLE DEALERS                                                                                                  
                                                                                                                                
Number 0685                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  announced that  the next  order of  business was                                                               
HOUSE BILL NO. 272, "An Act relating to motor vehicle dealers."                                                                 
                                                                                                                                
Number 0699                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  asked if there  was any objection  to rescinding                                                               
the motion made [during the  5/14/03 House State Affairs Standing                                                               
Committee]  to report  CSHB  272(L&C) out  of  committee.   There                                                               
being none, HB 272 was once again before the committee.                                                                         
                                                                                                                                
CHAIR  WEYHRAUCH  mentioned  that  there  would  be  a  committee                                                               
substitute and an amendment forthcoming.                                                                                        
                                                                                                                                
Number 1011                                                                                                                     
                                                                                                                                
The committee took an at-ease from 8:20 a.m. to 8:30 a.m.                                                                       
                                                                                                                                
Number 1018                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON  moved  to adopt  the  proposed  committee                                                               
substitute  (CS)  for  HB 272,  Version  23-LS0975\H,  Bannister,                                                               
5/14/03, as a work draft.                                                                                                       
                                                                                                                                
Number 1027                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH asked Representative  Crawford if he would object                                                               
for the purpose of discussion.                                                                                                  
                                                                                                                                
Number 1048                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD said, "Yes."                                                                                            
                                                                                                                                
Number 1153                                                                                                                     
                                                                                                                                
The committee took an at-ease from 8:33 a.m. to 8:35 a.m.                                                                       
                                                                                                                                
[Back on record, there was  some discussion between the chair and                                                               
a forthcoming  testifier regarding  transmission of Version  H by                                                               
facsimile.]                                                                                                                     
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
Number 1188                                                                                                                     
                                                                                                                                
TED  POPELY,  Majority  Counsel, Majority  Legal  Office,  Alaska                                                               
State  Legislature, told  the committee  that he  has been  asked                                                               
about  this  legislation  throughout   "its  course  through  the                                                               
House."   He  mentioned  seeing "two  amendments  that have  been                                                               
offered."  He stated that  his concern, from a legal perspective,                                                               
is  whether Section  1  is a  good idea  for  the legislature  to                                                               
pursue.   He said that  he would  be interested in  continuing to                                                               
hear from the  attorney general's office about whether  or not it                                                               
is 100 percent  comfortable with the position the  state would be                                                               
in if it adopted "this language."                                                                                               
                                                                                                                                
MR. POPELY  explained that, as he  has studied the topic,  he has                                                               
become  increasingly aware  of a  substantial number  of lawsuits                                                               
that  are currently  pending against  a variety  of defendants  -                                                               
including  the large  automobile  manufacturers -  for doing  the                                                               
exact thing  that the  sponsor is now  asking the  legislature to                                                               
do,  which   is:     to  cease   honoring  warranties   from  the                                                               
manufacturers;   to  allegedly   conspire  together   to  prevent                                                               
competition from  selling current-model  used cars; and  "a whole                                                               
host of other claims that I  continue to read about, that give me                                                               
cause for concern."                                                                                                             
                                                                                                                                
MR. POPELY  mentioned a forthcoming amendment  that would address                                                               
Section 1 and a concern  for consumer protection.  That amendment                                                               
would  permit the  sale  of current-model  used  vehicles by  any                                                               
licensed  auto   dealer,  but  "it   would  require  a   host  of                                                               
precautionary prophylactic measures that  would require people to                                                               
disclose -  prior to purchase  and sale -  that it is  a Canadian                                                               
vehicle, that it's  been bought at auction, [and] that  it is not                                                               
a new vehicle ...[but] ... a used vehicle ..., [for example]."                                                                  
                                                                                                                                
MR. POPELY stated the following:                                                                                                
                                                                                                                                
     The alternative  to make it ...  permanently illegal in                                                                    
     this  state to  sell current-model  used vehicles  - at                                                                    
     least from  my brief  perspective - has  some potential                                                                    
     legal  pitfalls   that  I'm   not  sure   the  attorney                                                                    
     general's  office  has  clearly satisfied  itself  that                                                                    
     it's prepared to advocate in light of that.                                                                                
                                                                                                                                
Number 1424                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  asked Mr. Popely  if he was looking  at [Version                                                               
H], and if there is any language in it that gives him pause.                                                                    
                                                                                                                                
MR.  POPELY said  that his  interpretation of  the exceptions  in                                                               
Section 1, Version  H, amending AS 08.66.015, is  that they would                                                               
not  allow  for independent  auto  dealers  in Alaska  to  resell                                                               
Canadian-acquired vehicles  in a current-model year.   He stated,                                                               
"That's what the bill stands for."  He continued:                                                                               
                                                                                                                                
     Conceptually, the  idea being, in Section  1, "Will the                                                                    
     bill permit or prohibit  the sale of current-model-year                                                                    
     used vehicles?"   I think that's the crux  of the issue                                                                    
     that this committee is here to discuss.                                                                                    
                                                                                                                                
MR.  POPELY,  in  response  to a  question  by  Chair  Weyhrauch,                                                               
offered his understanding of the definition of "current-model-                                                                  
year" as follows:                                                                                                               
                                                                                                                                
     As we  sit here in 2003,  a 2003 vehicle is  a current-                                                                    
     model-year  used car.    That's  my lay  understanding.                                                                    
     I'm not in the auto  business, but the way I understand                                                                    
     it,  the auto  dealers  would like  to see  legislation                                                                    
     that  prohibits   people  from  selling   vehicles  ...                                                                    
     [where]  the model  year is  the same  as the  calendar                                                                    
     year - the very latest model used car you could have.                                                                      
                                                                                                                                
Number 1580                                                                                                                     
                                                                                                                                
MR.  POPELY, in  response  to questions  by Representative  Lynn,                                                               
said he thinks  that, according to the language [in  Version H] a                                                               
person could sell a vehicle back  to a dealer, either as a trade-                                                               
in or a lease buy-back, through the normal course of business.                                                                  
                                                                                                                                
REPRESENTATIVE LYNN asked what the  used-car dealer would do with                                                               
a vehicle  that is a  current-model used vehicle if  he/she wants                                                               
to sell it.                                                                                                                     
                                                                                                                                
MR. POPELY  stated that  he thinks this  bill would  permit that.                                                               
He pointed  to [paragraph] (3)  in Section 1 to  illustrate that.                                                               
He reiterated  that what the  bill specifically precludes  is the                                                               
acquisition  of vehicles  through  the  Canadian market,  through                                                               
auction -  a legal acquisition by  itself - to then  be resold in                                                               
Alaska by a dealer.                                                                                                             
                                                                                                                                
Number 1703                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  suggested that  Mr. Popely's  concern with                                                               
[Section 1] as written is that  "our action might be in restraint                                                               
of trade."                                                                                                                      
                                                                                                                                
MR. POPELY  responded that there  are two kinds  of conspiracies:                                                               
one  is ideological,  regarding  whether or  not the  legislature                                                               
wants to  inhibit this kind  of competition in the  market place;                                                               
two  is  legal,  regarding  whether  or  not  there  is  a  legal                                                               
impediment  to pursuing  these kinds  of "prohibitions  on sale."                                                               
The latter,  he said,  is a question  for the  attorney general's                                                               
office.                                                                                                                         
                                                                                                                                
Number 1785                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD stated  that he would like to  be fair to                                                               
both sides in  this issue.  He stated his  understanding that the                                                               
bill would limit the sale  of cars "manufactured for sale outside                                                               
the United States."  He asked  Mr. Popely to share what he thinks                                                               
about the franchised dealers' contention  that many of them don't                                                               
have the same  access to "these cars, due to  their deal with the                                                               
manufacturer,"   and  are   thereby   being   undersold  in   the                                                               
marketplace, and that  it's unfair competition for  them that the                                                               
used-car dealers are able to "go  over and acquire these cars" at                                                               
a much lower price.                                                                                                             
                                                                                                                                
Number 1866                                                                                                                     
                                                                                                                                
MR.  POPELY  replied  that  he  has  heard  and  understood  that                                                               
argument.    He  confirmed  that   there's  a  private  franchise                                                               
agreement between the manufacturers  and each of their franchises                                                               
that limits certain activity.   Conversely, he noted that there's                                                               
also the notion  of free competition, which  has been globalized.                                                               
Many  of  the manufacturers  are  manufacturing  the vehicles  in                                                               
Canada  - taking  advantage  of the  difference  in economies  of                                                               
scale and  the market  place and using  less expensive  labor and                                                               
parts, for example  - for sale both  in the U.S. and  Canada.  He                                                               
added, "The  same cars you  and I  are buying at  the dealerships                                                               
are being  built in  Canada, but then  ... they're  attempting to                                                               
preclude  the  same  consumers from  taking  advantage  of  those                                                               
market  differentials   when  it  comes  time   to  purchase  the                                                               
vehicle."                                                                                                                       
                                                                                                                                
MR.  POPELY   said  that  there   certainly  are   some  problems                                                               
ideologically  with  manipulating  the markets  for  purposes  of                                                               
manufacture,  [while]  at the  same  time,  weighing the  law  to                                                               
prohibit the  same manipulation of  the marketplace  for purposes                                                               
of purchase.  He said that it is  a concern that he has heard and                                                               
raised;  however, he  stated  that  he is  not  certain that  his                                                               
opinion is really  relevant to that discussion.   He added, "It's                                                               
something  that [U.S.]  Congress has  not seen  fit to  preclude;                                                               
there's no federal law that prohibits what's going on."                                                                         
                                                                                                                                
MR.  POPELY noted  that  the only  illicit  acquisition of  these                                                               
vehicles  that he's  heard about  through  committee hearings  is                                                               
illicit from  the viewpoint and  standpoint of  the manufacturer,                                                               
because  they don't  want the  competition.   They would  like to                                                               
produce  vehicles for  sale in  certain markets  in the  northern                                                               
hemisphere that stay in those  market places and are purchased by                                                               
a particular group  of people, because they  can maximize profits                                                               
if those same  people buy them here,  he said.  He  added, "If we                                                               
put cars in  this marketplace and those people buy  them here and                                                               
these   people  buy   them   here,  it's   very   good  for   the                                                               
manufacturers' bottom  line - it's  very bad for  the free-market                                                               
competition."  He said, "It's  a legal activity that these people                                                               
are participating in."   He revealed that he  has received enough                                                               
phone calls over the last two weeks  to know that there are a lot                                                               
of people  who are scared about  their businesses in Alaska.   He                                                               
indicated  that  those  people  sell  a  lot  of  these  Canadian                                                               
vehicles,  and  he  said  there [would  be]  a  "ripple  effect,"                                                               
[because] they employ a lot of people.                                                                                          
                                                                                                                                
CHAIR  WEYHRAUCH expressed  a  concern as  follows:   "If  you're                                                               
coming to us as a majority  counsel, who have you talked with and                                                               
do you have any conflict in doing all this?"                                                                                    
                                                                                                                                
MR. POPELY  listed the names of  those who have contacted  him by                                                               
phone as follows:                                                                                                               
                                                                                                                                
     Mr.  Lyberger  that I  met  yesterday;  the woman  from                                                                    
     Canada  - Lori  [Urban]  - from  the  auto dealers  has                                                                    
     called me several times; people  from Budget Rental Car                                                                    
     have  phoned  me  from  Anchorage;  a  couple  of  auto                                                                    
     dealerships   in   Fairbanks   have  called   me;   all                                                                    
     independents ...                                                                                                           
                                                                                                                                
CHAIR  WEYHRAUCH asked  Mr. Popely  if he  is representing  those                                                               
people here in his testimony.                                                                                                   
                                                                                                                                
MR. POPELY answered no.                                                                                                         
                                                                                                                                
CHAIR WEYHRAUCH asked who else Mr. Popely spoke with.                                                                           
                                                                                                                                
MR. POPELY said he would have to  go to his office to look up the                                                               
names.                                                                                                                          
                                                                                                                                
CHAIR WEYHRAUCH  stated his  concern that  when someone  from the                                                               
majority counsel comes to testify  that they have at least talked                                                               
to "the other side," for example.                                                                                               
                                                                                                                                
MR. POPELY responded  that no one from  the "dealers association"                                                               
spoke with him.  He added, "And  my door is open to everybody who                                                               
wants to come and yak at me.  It always has been."                                                                              
                                                                                                                                
Number 2060                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG stated for the  record that he had asked                                                               
Mr.   Popely   to   come   forward   to   discuss   this   issue.                                                               
Representative Gruenberg  noted that he  himself is not  a member                                                               
of the (indisc.).                                                                                                               
                                                                                                                                
Number 2079                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  stated that it  is not his  intention to                                                               
put  anybody in  a competitive  advantage,  nor does  he want  to                                                               
disadvantage  independents.    Furthermore, he  doesn't  want  to                                                               
disadvantage  "our  own  franchised dealers  here,  because  they                                                               
certainly serve  a place in the  marketplace here, as well."   He                                                               
said his aim  is to find a  balance that both can live  with.  He                                                               
said  he was  not  happy yesterday  [when HB  272  passed out  of                                                               
committee] because  he thought it  was unbalanced, and he  is not                                                               
happy  [with  the  legislation]  yet.   He  said  he  thinks  the                                                               
committee  needs  to  address   whether  franchised  dealers  can                                                               
acquire "these vehicles" if they are  going to be able to compete                                                               
in the marketplace.                                                                                                             
                                                                                                                                
Number 2127                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  referred   to  "the  Holm  Amendment,"                                                               
labeled   23-LS0975\D.2,  Bannister,   5/14/03,  which   read  as                                                               
follows:                                                                                                                        
                                                                                                                                
     Page 2, lines 2 - 3:                                                                                                       
          Delete "received as a trade-in"                                                                                   
          Insert "manufactured for sale in the United                                                                       
     States and acquired by the dealer"                                                                                     
                                                                                                                                
     Page 2, line 6:                                                                                                            
          Delete ";"                                                                                                        
          Insert "; or"                                                                                                     
                                                                                                                                
     Page 2, lines 7 - 10:                                                                                                      
          Delete all material and insert:                                                                                       
          "(3)  the vehicle is a current model used vehicle                                                                 
     not  manufactured for  sale in  the United  States, the                                                                
     dealer  acquired the  vehicle in  the normal  course of                                                                
     business, and the dealer complies with AS 45.25.470."                                                                  
                                                                                                                                
     Page 5, following line 19:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec. 5.  AS 45.25.470 is amended to read:                                                                        
          Sec. 45.25.470.  Sales of vehicles manufactured                                                                     
     for sale  in a foreign country.   Before sale of  [,] a                                                              
     motor vehicle  not manufactured for sale  in the United                                                                
     States, a  motor vehicle dealer  shall disclose  to the                                                            
     consumer  in   writing,  in   addition  to   any  other                                                            
     disclosures required for the sale  of a used [WHETHER A                                                                
     MOTOR] vehicle,  [WAS ORIGINALLY MANUFACTURED  FOR SALE                                                                
     IN CANADA OR ANOTHER FOREIGN COUNTRY]                                                                                      
               (1)  that the vehicle was originally                                                                         
     manufactured for  sale in  Canada or  another specified                                                                
     foreign country;                                                                                                       
               (2)  if applicable, that the vehicle was                                                                     
     originally sold  new in  the specified  foreign country                                                                
     identified under (1) of this  section and imported into                                                                
     the United States;                                                                                                     
               (3)  that the vehicle's odometer was                                                                         
     converted from  kilometers to miles, and  shall provide                                                                
     the consumer  with a legal  vehicle title,  an odometer                                                                
     verification  certificate,  or  another  document  that                                                                
     verifies the mileage reading after the conversion;                                                                     
               (4)  if applicable, that the vehicle does                                                                    
     not have a manufacturer's warranty; and                                                                                
               (5)  any other information required by                                                                       
     regulations adopted by the attorney general."                                                                          
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
REPRESENTATIVE GRUENBERG  said that  "the Holm Amendment"  uses a                                                               
slightly different  approach, which is  one of disclosure.   "The                                                               
Holm Amendment," he explained, would  divide "these vehicles into                                                               
two  categories."   He noted  that the  amendment says  that it's                                                               
okay  to sell  "these vehicles"  if they're  manufactured in  the                                                               
United States for sale.   He continued outlining the amendment as                                                               
follows:                                                                                                                        
                                                                                                                                
     And it  would eliminate these various  sources, because                                                                    
     of the  theory, "as  long as  it's manufactured  in the                                                                    
     U.S.,  we don't  care whether  it was  directly from  a                                                                    
     consumer  acquired,   or  from   a  rental   fleet,  or                                                                    
     repossessed, or  in any other  manner [acquired].   The                                                                    
     key thing is it has met the federal requirements.                                                                          
                                                                                                                                
     And then,  what it  does in the  rest of  the amendment                                                                    
     ... is to say that if  it was not manufactured for sale                                                                    
     in the United  States, ... the dealer  must comply with                                                                    
     AS  45.25.470  ....   And  the  rest of  the  amendment                                                                    
     amends that  statute to simply  require that  the used-                                                                    
     car  dealer or  the  new-car dealer  -  whoever is  the                                                                    
     dealer  -   must  completely   disclose  that   it  was                                                                    
     imported,   that  the   odometer  was   converted  from                                                                    
     kilometers  to miles,  and a  legal  vehicle title,  et                                                                    
     cetera ....                                                                                                                
                                                                                                                                
     So, it's a disclosure-type of  thing, but it's a little                                                                    
     bit different approach  than we have in  the bill, even                                                                    
     if we  were then to  engraft "the Holm  Amendment" onto                                                                    
     the current language  in Section 1 of the bill.   And I                                                                    
     think, if we took "the  Holm Amendment" and put it into                                                                    
     the bill, that might simplify things."                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG asked Mr. Popely  if he had any comments                                                               
on that suggestion.                                                                                                             
                                                                                                                                
Number 2314                                                                                                                     
                                                                                                                                
MR. POPELY responded  that the way he reads the  amendment is the                                                               
same way  Representative Gruenberg  just related it  to him.   He                                                               
stated  that  it would  effectively  permit  the sale  of  "those                                                               
vehicles"  by auto  dealers, provided  they  meet the  disclosure                                                               
requirements as the sponsor has laid them out.                                                                                  
                                                                                                                                
CHAIR WEYHRAUCH  commented that  he doesn't  know if  that really                                                               
deals with Representative Crawford's issue.                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD said no.                                                                                                
                                                                                                                                
Number 2332                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON   proffered  that   it  would   deal  with                                                               
Representative  Crawford's  issue  in  that the  state  would  be                                                               
allowing  either a  new-car dealer  or a  used-car dealer  to buy                                                               
these Canadian vehicles  at auction, "or any  other country," for                                                               
sale as used cars "as long  as they had full disclosure on that."                                                               
He added  that if those dealers  have a private agreement  with a                                                               
manufacturer that prevents them from  doing that, "that's kind of                                                               
outside  our realm."   He  stated  his belief,  based on  hearing                                                               
previous testimony,  that Ford [Motor  Company] has  already done                                                               
away with  the requirement that  "their dealers cannot  buy those                                                               
vehicles," which would allow those  dealers to purchase [Canadian                                                               
cars] at the  same competitive rate and auctions  as the used-car                                                               
dealers.                                                                                                                        
                                                                                                                                
Number 2394                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  responded that Representative  Seaton is                                                               
absolutely right; however, those  dealers who are [restricted by]                                                               
their   deals   with  their   manufacturers   are   still  in   a                                                               
noncompetitive position.  He stated  that he doesn't know what to                                                               
do about that.  Representative Crawford continued as follows:                                                                   
                                                                                                                                
     I was never  a proponent of [North  American Free Trade                                                                    
     Agreement] (NAFTA); I thought it  was a bad deal in the                                                                    
     first place.   I think  it's a  bad deal that  they can                                                                    
     make  cars for  the  American market  in  Canada at  30                                                                    
     percent  or 40  percent less,  because of  the exchange                                                                    
     rate.   But, be that as  it may, we have  our homegrown                                                                    
     automobile dealers here in Alaska  that we have to -- I                                                                    
     mean, if  we don't  keep them  in business,  then we're                                                                    
     going to lose the benefits  of the shops that they have                                                                    
     ... that a lot of the independents don't have.                                                                             
                                                                                                                                
REPRESENTATIVE  CRAWFORD reiterated  his  desire to  see a  level                                                               
playing field in the market.                                                                                                    
                                                                                                                                
Number 2485                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH announced  that  "the Holm  Amendment" would  be                                                               
called  Amendment 1.   [This  Amendment 1  was never  adopted and                                                               
another  amendment in  the ensuing  hearing on  HB 272  was named                                                               
Amendment 1, ultimately.]                                                                                                       
                                                                                                                                
Number 2520                                                                                                                     
                                                                                                                                
CLYDE  (ED)  SNIFFEN,  JR.,   Assistant  Attorney  General,  Fair                                                               
Business   Practices   Section,   Civil   Division   (Anchorage),                                                               
Department Of Law, first addressed  "some comments that were made                                                               
about lawsuits  in other parts of  the country."  Although  he is                                                               
not familiar  with all of  those lawsuits,  he noted that  he has                                                               
reviewed some of the information sent  to his office by the North                                                               
American Auto Trade Association, by way  of Ms. [Lori] Urban.  He                                                               
stated that  he doesn't think  those lawsuits have  any relevance                                                               
to  this  legislation, for  the  fact  that they  involve  claims                                                               
against  private car  manufacturers  and  dealers for  conspiring                                                               
with  each other  to violate  anti-trust laws.   He  continued as                                                               
follows:                                                                                                                        
                                                                                                                                
     What we're  dealing with  here is  proposed legislation                                                                    
     that  the State  of  Alaska would  like  to advance  to                                                                    
     address issues  that have a  competitive impact.   But,                                                                    
     there is  nothing in any  of these lawsuits that  I can                                                                    
     see   that   would   implicate   the   [Alaska]   State                                                                    
     Legislature in any  way, shape, or form.   And whatever                                                                    
     this committee decides  to do, I think it  should do so                                                                    
     without considering  any of  those ramifications.   The                                                                    
     legislature  does have  immunity for  its actions.   If                                                                    
     you  do something  that turns  out  later to  implicate                                                                    
     some illegal anti-trust  behavior, then the legislation                                                                    
     will simply  be unenforceable.   So,  I just  wanted to                                                                    
     make  it  clear that  it  is  the Department  of  Law's                                                                    
     position that  those issues really shouldn't  drive the                                                                    
     considerations by this committee or this legislature.                                                                      
                                                                                                                                
Number 2585                                                                                                                     
                                                                                                                                
MR. SNIFFEN referred to Amendment 1  - "the Holm Amendment" - and                                                               
stated  that he  thinks Representative  Crawford "really  hit the                                                               
nail on  the head" when  he said there is  a conflict here.   Mr.                                                               
Sniffen  opined  that  there  are   two  ways  to  approach  this                                                               
conflict:  proceed  with the approach that's  been recommended by                                                               
the  franchised auto  dealers, Mr.  Alwine, and  the Alaska  Auto                                                               
Dealers  Association, to  effectively  stop  the importation  and                                                               
sale  of  current-model  used  Canadian  vehicles,  unless  those                                                               
vehicles are required  in the ordinary course of  business in the                                                               
exceptions  in [Section  1]  of  Version H;  or  [use] the  other                                                               
approach  recommended by  Representative Gruenberg,  to not  stop                                                               
the sale, but  to let it go forward, while  warning the consumers                                                               
about the  possible (indisc.)  of the  sale, thereby  letting the                                                               
consumers take  the risk and  decide for themselves if  they want                                                               
to do  this.   The theory there,  he added, is  that if  there is                                                               
full disclosure,  another option  is placed into  the marketplace                                                               
for the consumers.                                                                                                              
                                                                                                                                
MR. SNIFFEN stated that the department really doesn't have a                                                                    
"big stake in how this committee decides which way to proceed on                                                                
that."  He continued as follows:                                                                                                
                                                                                                                                
     Our concern  is at many  levels.  Initially, it  is for                                                                    
     the consumer.  And we have  seen a few problems.  And I                                                                    
     want to emphasize  "few," because this is  not a really                                                                    
     ... huge problem in Anchorage as  far as we know.  But,                                                                    
     we do  see a  couple of issues  that come  up regarding                                                                    
     the sale of these current-model Canadian vehicles.                                                                         
                                                                                                                                
     And, for the  record too, I'd like to  clarify a little                                                                    
     bit  about  when  we use  this  terminology,  we  mean:                                                                    
     there  are new  cars  and  there are  used  cars.   And                                                                    
     everyone knows what  a new car is; it's a  car that has                                                                    
     not been  titled, and it's  come from  the manufacturer                                                                    
     with a manufacturer's statement of origin.                                                                                 
                                                                                                                                
     A used  car is a  car that  has been titled  to someone                                                                    
     and has  lost the  manufacturer's statement  of origin,                                                                    
     which is usually  given out the first  time the vehicle                                                                    
     is titled into someone's name.   Now, you can have used                                                                    
     cars  that are  still in  the current-model  year.   It                                                                    
     could be  one you buy today  - a 2003 -  that you drive                                                                    
     off a lot  and bring back tomorrow.  It's  still a used                                                                    
     car, even  though it's the  current-model year.   And I                                                                    
     think  everyone understands  that,  but  I didn't  want                                                                    
     there  to be  any confusion.   When  we say,  "Current-                                                                    
     model used  vehicle," we mean  a used car, it's  just a                                                                    
     used car that's still  within the current-model year of                                                                    
     production,  so  the  next-model   year  has  not  been                                                                    
     delivered yet by the manufacturers.                                                                                        
                                                                                                                                
MR. SNIFFEN noted that the  issues revolving around current-model                                                               
used  vehicles  in Anchorage  that  have  come from  Canada  are:                                                               
warranty issues, odometer-swap issues, and  lemon law issues.  He                                                               
continued as follows:                                                                                                           
                                                                                                                                
     We've  had  consumers complain  to  us  that they  have                                                                    
     purchased these  current-model used vehicles,  tried to                                                                    
     make lemon  law claims, and  were unable to do  so, and                                                                    
     we had  to tell  them, "That's  correct, our  lemon law                                                                    
     does  not apply  to  these now-used  vehicles; our  law                                                                    
     only applies to new cars."                                                                                                 
                                                                                                                                
     The  second  issues  involves odometer  swaps,  and  we                                                                    
     haven't investigated extensively  how these swaps occur                                                                    
     [or] whether  they're done  in accordance  with federal                                                                    
     regulations, but we have heard  that sometimes they are                                                                    
     not.  And the consumer  will sometimes not know whether                                                                    
     or not  the mileage  indicated on  the odometer  is, in                                                                    
     fact, correct.   And I'm not aware of  any positive way                                                                    
     to verify that.                                                                                                            
                                                                                                                                
     And  then,  the  last  issue  deals  with  manufacturer                                                                    
     warranties.   We've  had some  consumers complain  that                                                                    
     they  thought   they  were  getting   a  manufacturer's                                                                    
     warranty, when  in fact some  of the  manufacturers are                                                                    
     now  declining to  honor those  warranties.   And we've                                                                    
     heard testimony from Mr. Lyberger,  who ... does a good                                                                    
     job in  Anchorage with his  business, and we  know that                                                                    
     he  sells  what he  calls  a  "warranty" with  his  new                                                                    
     vehicles  - these  Canadian  vehicles.   It's  probably                                                                    
     better  characterized as  a service  contract, but  ...                                                                    
     the  terminology  isn't  too   important.    And  those                                                                    
     warranties do come with the vehicle.                                                                                       
                                                                                                                                
     [On] some  [occasions], I  think, consumers  think when                                                                    
     they  get  those warranties  that  they  can take  this                                                                    
     vehicle  back  to  the  local   Chevy,  ...  Dodge,  or                                                                    
     Chrysler dealer and  have them do the work  on it, when                                                                    
     in fact  these franchised  dealers are not  required to                                                                    
     honor those  types of warranties, and  the consumer has                                                                    
     to go  to an independent  mechanic and have  work done.                                                                    
     And that  mechanic may or  may not have the  tools, ...                                                                    
     equipment, and  training to  do the  same kind  of work                                                                    
     that  the franchised  and  authorized  dealer would  be                                                                    
     able to do.   So those, from  the consumer perspective,                                                                    
     are  the issues  that we  are faced  with when  selling                                                                    
     these current-model used Canadian vehicles.                                                                                
                                                                                                                                
     Now,  will those  issues be  taken care  of through  an                                                                    
     amendment  like  number  one  here,  by  informing  the                                                                    
     consumer that:   "Here are the risks, you  need to know                                                                    
     these things, if  you're willing to take  those risks -                                                                    
     hey,  buy this  car?"    ... They  might.   Who  knows?                                                                    
     Consumers sometimes understand  these things, sometimes                                                                    
     they don't.  The law  actually focuses on what we call,                                                                    
     "the least  sophisticated consumer test."   Whenever we                                                                    
     review a  potential consumer protection  Act violation,                                                                    
     you have  to imagine  the least  sophisticated consumer                                                                    
     on the planet going into  the transaction, and then ask                                                                    
     yourself,  "Well,  does  this  protect  that  level  of                                                                    
     consumer?"    And  these   disclosure  laws,  I  think,                                                                    
     certainly will  protect the average consumer  [and] the                                                                    
     consumer who's  really on the  ball and has  done their                                                                    
     research.   The  less sophisticated  consumers who  are                                                                    
     even  told  these things,  may  or  may not  understand                                                                    
     their implications.                                                                                                        
                                                                                                                                
     So, with  that we  would leave it  to the  committee to                                                                    
     decide  which  way  they'd  like  to  proceed.    I  do                                                                    
     understand the concerns of  the franchised car dealers,                                                                    
     and I agree  with Representative Crawford:   there is a                                                                    
     competitive  disadvantage here  when a  segment of  the                                                                    
     car-selling  community  -  these  independent  used-car                                                                    
     dealers  - can  obtain vehicles  in a  manner that  the                                                                    
     franchised car  dealers simply cannot,  without risking                                                                    
     loss of their franchise agreements.                                                                                        
                                                                                                                                
     And  we've  also  heard   testimony  that,  "Well,  the                                                                    
     franchised dealers  have all kinds of  other incentives                                                                    
     that  they can  use to  compete with  these independent                                                                    
     dealers."   This  is a  relatively new  market and  new                                                                    
     competitive structure we're seeing  here.  Twenty years                                                                    
     ago we  had used-car  dealers selling  used cars.   And                                                                    
     everyone  knew  what  a  used  car  was,  it  was  your                                                                    
     neighbor's  '56 Chevy  that  he wanted  to  get rid  of                                                                    
     [and] ... took down [to] the used-car lot.                                                                                 
                                                                                                                                
     Well,  now  used  car dealers  are  becoming  ...  more                                                                    
     sophisticated and  they have  access to  more products,                                                                    
     and this new market  for low-mileage, imported Canadian                                                                    
     vehicles is  a market  that they've  tapped into.   And                                                                    
     it's an issue  that we just haven't had  to really deal                                                                    
     with in  recent years,  that's now come  to light.   So                                                                    
     there are some competitive concerns there.                                                                                 
                                                                                                                                
     I don't  know that  whatever this committee  does, it's                                                                    
     going to  be an illegal  action.   I think if  you take                                                                    
     either approach,  there are going to  be good arguments                                                                    
     to support  your decision.   But, bear in mind  that we                                                                    
     already  have  - and  I  know  this has  been  repeated                                                                    
     several  times -  ... a  statute that's  been in  place                                                                    
     since  1993;  a statute  that  was  in place  when  Mr.                                                                    
     Lyberger opened  up his lot  [and] when  Budget started                                                                    
     selling their cars.   And at that time,  they knew they                                                                    
     were unable to sell these vehicles ...                                                                                     
                                                                                                                                
TAPE 03-64, SIDE B                                                                                                            
Number 3002                                                                                                                     
                                                                                                                                
MR. SNIFFEN stated that it's not  a real genuine argument to say,                                                               
"Well,  HB 272  is going  to do  something that  we haven't  been                                                               
faced with  in the past," because,  for the last ten  years, [car                                                               
dealers]  should already  have been  aware that  the law  already                                                               
prohibits these  kinds of  sales.  From  a legal  perspective, he                                                               
said, there  is not really much  that can be changed,  other than                                                               
to  repeal the  law.   However, Mr.  Sniffen opined  that if  the                                                               
legislature wants  to make  amendments to the  law, or  "do other                                                               
things  to  it,"  it  will  certainly be  no  worse  than  it  is                                                               
currently.                                                                                                                      
                                                                                                                                
Number 2953                                                                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN  commented  that   the  committee  has  been                                                               
addressing HB 272 for two days  and many members of the committee                                                               
have had trouble understanding the  bill.  He remarked, "It seems                                                               
to  me  that  we  must  be  less  than  the  least  sophisticated                                                               
potential buyer,  because we're  having trouble  with it,  and we                                                               
... aren't  even in the  heat of trying to  buy that car  that we                                                               
just really  have to have ...."   He questioned how  much trouble                                                               
someone just coming in off the street would have.                                                                               
                                                                                                                                
Number 2907                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked  Mr. Sniffen  where in  statute is                                                               
the language that presently prohibits "the sale."                                                                               
                                                                                                                                
MR. SNIFFEN  answered that it is  in Title 8, and  is the statute                                                               
that Section 1 of HB 272 proposes to amend:  AS 08.66.015.                                                                      
                                                                                                                                
Number 2873                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG said  it strikes him that  the lemon law                                                               
in Title 45 doesn't apply to the purchase of any used car.                                                                      
                                                                                                                                
MR. SNIFFEN said that is correct.                                                                                               
                                                                                                                                
REPRESENTATIVE GRUENBERG  noted that  there is  nothing currently                                                               
in [HB  272] that requires a  disclosure of that fact.   He asked                                                               
Mr.  Sniffen if  he would  support an  amendment to  HB 272  that                                                               
would require that disclosure.                                                                                                  
                                                                                                                                
MR. SNIFFEN responded  that [the department] is in  favor of more                                                               
disclosures to consumers; however,  he explained that there comes                                                               
a  point where  it is  necessary  to assume  that the  reasonable                                                               
consumers understand  the law, or  the list of  disclosures would                                                               
become   so  numerous   that  they   would  become   meaningless.                                                               
Notwithstanding that, he posited that disclosure that a current-                                                                
model used vehicle  may not have lemon law protections  is a good                                                               
idea.   He  indicated that  he would  not limit  it to  "current-                                                               
model" used car, but to any used car.                                                                                           
                                                                                                                                
REPRESENTATIVE  GRUENBERG  referred  to  Mr.  Sniffen's  previous                                                               
testimony that  some vehicles -  whether they're  manufactured in                                                               
Canada  or  not -  may  not  have  coverage by  a  manufacturer's                                                               
warranty.   He referred to [Amendment  1] and said that  it would                                                               
require "that to be disclosed for  a foreign vehicle."  He stated                                                               
that he doesn't  see in HB 272 "anything that  would require that                                                               
to be  disclosed for a  domestically manufactured car,"  which he                                                               
said he thinks  would be an important  disclosure, if applicable.                                                               
He asked Mr. Sniffen if he agrees.                                                                                              
                                                                                                                                
MR. SNIFFEN replied  that he doesn't know that there  is really a                                                               
problem  with the  warranty issues  on vehicles  manufactured for                                                               
destination in  the United States.   Regarding all manufacturers'                                                               
warranties that come  with the vehicles for sale in  the U.S., he                                                               
stated that he  thinks all of the franchised dealers  in the U.S.                                                               
are obligated by contract to  provide service for those vehicles.                                                               
He  added, "It's  only the  vehicles that  were manufactured  for                                                               
sale in Canada or a foreign  country."  As soon as those vehicles                                                               
are no longer registered in  that country, he explained, then the                                                               
U.S. dealers are not obligated to honor those warranties.                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG  commented  that  he  thought  previous                                                               
testimony had  revealed that "some  of these dealers in  the U.S.                                                               
are not honoring  warranties when the used  vehicle was purchased                                                               
not from  them, but from  an independent [used-car]  dealer, even                                                               
though the  vehicle was manufactured  in the United States."   He                                                               
said he assumed that to be the  case, and he asked Mr. Sniffen if                                                               
he agrees that that should also be disclosed.                                                                                   
                                                                                                                                
Number 2610                                                                                                                     
                                                                                                                                
MR. SNIFFEN replied that if  it's a disclosure that would correct                                                               
an otherwise common  misperception, he thinks it would  help.  He                                                               
offered an example where a  current-model new vehicle might leave                                                               
a consumer  with the impression that  he/she is buying a  new car                                                               
that the  manufacturer is going to  stand behind, and if  that is                                                               
not the case, then that type of disclosure would be helpful.                                                                    
                                                                                                                                
Number 2518                                                                                                                     
                                                                                                                                
LINDA  SYLVESTER,  Staff,   to  Representative  Bruce  Weyhrauch,                                                               
Alaska State  Legislature, indicated  that she would  discuss two                                                               
sources  of  information  for  the  committee  to  consider  when                                                               
deciding "whether  ... full disclosure  ... would be  an adequate                                                               
remedy  to  this problem."    She  added,  "I'm speaking  to  the                                                               
consumer  protection issue  of  the  impediments Canadian  market                                                               
vehicles have."                                                                                                                 
                                                                                                                                
MS. SYLVESTER  referred to  the first source  of information:   a                                                               
letter from  the office of  the attorney general [to  Lori Urban,                                                               
included in  the committee  packet], in response  to a  letter of                                                               
complaint by  Jesse B.  Waldrop [included on  the fourth  page of                                                               
the same handout].   The complaint was filed  after [Mr. Waldrop]                                                               
had  purchased a  "Canadian-market vehicle"  and took  it to  the                                                               
Jeep dealer  to have some work  done.  He expected  that the Jeep                                                               
dealership would  honor his "replacement" Heritage  warranty, but                                                               
the dealership  is not  allowed to honor  that type  of warranty,                                                               
because  of  its  franchise  agreement.   Ms.  Sylvester  read  a                                                               
portion   of   the   letter,  which   described   Mr.   Waldrop's                                                               
disappointment  in his  dealings.   She related  how Mr.  Waldrop                                                               
went  back to  Lyberger's [Auto  &  Truck Sales,  LLC], where  an                                                               
employee called  the Jeep  dealership to offer  to write  a check                                                               
for  the  cost of  any  repairs  for  the vehicle;  however,  the                                                               
warranty was not accepted for  that particular year/model Jeep at                                                               
that Jeep dealership.                                                                                                           
                                                                                                                                
MS. SYLVESTER  noted that Mr.  Sniffen [addressed  Mr. Waldrop's]                                                               
consumer  complaint   [in  his  letter   to  Ms.  Urban].     She                                                               
paraphrased a  portion of [the  third paragraph of  that letter],                                                               
which read as follows:                                                                                                          
                                                                                                                                
     The State of Alaska has  been monitoring this issue for                                                                    
     a couple  years.  Alaska  statute 09.66.015  was passed                                                                    
     in 1993 to  stop this practice.  ...   We have declined                                                                    
     to   enforce   this   statue,   however,   because   it                                                                    
        unnecessarily prohibits the sale of any [current-                                                                       
         model] vehicle by anyone, including franchised                                                                         
     dealers.                                                                                                                   
                                                                                                                                
Number 2366                                                                                                                     
                                                                                                                                
MS. SYLVESTER turned to the  second source of information she had                                                               
distributed:   a [three-page handout  beginning with  a newspaper                                                               
article  and  followed  by  a] press  release  by  Senator  Robin                                                               
Taylor.   She told the  committee that this  is in regard  to the                                                               
1993 statute [previously referred to  by Mr. Sniffen].  The press                                                               
release,  Ms.  Sylvester   noted,  [announces]  Senator  Taylor's                                                               
[proposal] of [Senate Bill 105  in 1993], which she explained was                                                               
a consumer  protection bill.  She  added, "And that is  what this                                                               
was about."                                                                                                                     
                                                                                                                                
MS. SYLVESTER  indicated that she  is sure that Mr.  Lyberger and                                                               
other people  who sell Canadian-market  vehicles are  very honest                                                               
and considerate; however, she suggested  that it is possible that                                                               
not all people are as ethical and helpful as Mr. Lyberger.                                                                      
                                                                                                                                
MS.  SYLVESTER, regarding  disclosure,  listed  the following  to                                                               
consider:   What would happen  [to the consumer] if  Mr. Lyberger                                                               
and  his  business "goes  away";  what  happens if  Mr.  Lyberger                                                               
"doesn't have someone  who is going to be willing  to step up and                                                               
assist him and pay cash  when the manufacturer's franchise cannot                                                               
honor the  substitute warranty"; and  what happens "when  they go                                                               
out  of  state"?    She   noted  that  it's  a  serious  consumer                                                               
protection  issue.   She added,  "It's not  a small-ticket  item;                                                               
it's a $40,000 vehicle."                                                                                                        
                                                                                                                                
MS. SYLVESTER  indicated that the sponsor  initially thought that                                                               
proposing a full-disclosure  amendment might be a  good idea, but                                                               
then considered,  "When you're  doing a  car deal  ..., (indisc.)                                                               
amount of  forms that you're  signing - that  you're processing."                                                               
She  said the  question arose  as to  how the  consumer would  be                                                               
aware of  a full disclosure about  all of the impediments  that a                                                               
Canadian-market vehicle might have,  noting that Mr. Sniffen, "in                                                               
his  testimony and  his  experience, ...  is  doubtful that  that                                                               
would happen."  She added,  "And Mr. Alwine, who's experienced in                                                               
...  processing   the  paperwork,   ...  also  feels   that  it's                                                               
doubtful."  Even  with a cash sale, Ms.  Sylvester explained, the                                                               
amount of  paperwork that a  person signs is  daunting, including                                                               
financing  paperwork.   She added,  "How important  is one  extra                                                               
piece  of paper  when  you're talking  about 20  or  30 pages  of                                                               
paperwork when a person is signing to close the deal?"                                                                          
                                                                                                                                
Number 2240                                                                                                                     
                                                                                                                                
MS.  SYLVESTER, in  response to  a question  by Chair  Weyhrauch,                                                               
said  that she  believes  the  article in  the  handout was  most                                                               
likely released in  1992, because it [is in regard  to] the event                                                               
that triggered  [SB 105].  She  said that there was  a legitimate                                                               
consumer  protection issue;  unfortunately, [SB  105] was  poorly                                                               
drafted and had "the unintended  consequence of making it illegal                                                               
for anyone  to sell current-model  vehicles."  The [intent  of SB                                                               
105] had  been to  control who  was selling  the vehicles  and to                                                               
"prevent the fraud that occurs."                                                                                                
                                                                                                                                
Number 2200                                                                                                                     
                                                                                                                                
MS.  SYLVESTER,  in  response   to  questions  by  Representative                                                               
Gruenberg,  noted  that an  example  of  a Heritage  warranty  is                                                               
included in  the back  [of the handout  that includes  the letter                                                               
from the  AG's office].   Certain  manufacturers, she  said, will                                                               
not warranty the Canadian-market vehicles  that are being sold in                                                               
the U.S.   To compensate, there are  replacement warranties [such                                                               
as  the  one   from  Heritage].    She   compared  [the  Heritage                                                               
replacement  warranty]  to  an insurance  card.    Ms.  Sylvester                                                               
confirmed  that  although  Lyberger's offers  the  warranty,  the                                                               
Heritage  [Administration Services,  Inc.] is  the company  [that                                                               
offers the warranty].                                                                                                           
                                                                                                                                
Number 2054                                                                                                                     
                                                                                                                                
MR.  SNIFFEN,  in response  to  a  request for  clarification  by                                                               
Representative   Gruenberg   and   Chair   Weyhrauch,   explained                                                               
[regarding  the previously  mentioned case  of Mr.  Waldrop] that                                                               
that consumer purchased  a vehicle from Mr.  Lyberger, which came                                                               
with  a   "Heritage  after-market  service  contract"   that  was                                                               
purchased by  Mr. Lyberger and was  included in the price  of the                                                               
car.   The  local  Jeep dealership  in  Anchorage, he  continued,                                                               
"declined on  that warranty."   He  explained that  it was  not a                                                               
factory warranty  and there is no  law that requires a  dealer to                                                               
honor after-market  service contracts.   He  added, "And  I think                                                               
that was the situation that went on in that case."                                                                              
                                                                                                                                
Number 2007                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  if either  Ms. Sylvester  or Mr.                                                               
Sniffen knows  the reason that  the Jeep dealership  involved did                                                               
not  honor  [the Heritage]  warranty.    He asked  whether  there                                                               
perhaps  should  be  a  law  requiring  [dealers]  to  accept  [a                                                               
warranty such as  the one from Heritage].  He  remarked that this                                                               
seems  to be  a different  issue than  the one  addressed in  the                                                               
proposed legislation.                                                                                                           
                                                                                                                                
Number 1995                                                                                                                     
                                                                                                                                
MR. SNIFFEN replied  that he is not entirely sure  why the [Jeep]                                                               
dealership declined to honor the  warranty.  He suggested that it                                                               
could  have  been a  directive  from  the manufacturer  that  the                                                               
dealership would  no longer honor  these kinds of  warranties, or                                                               
it [may  have been] a  local dealer decision.   In any  event, he                                                               
opined, it  would be a  fundamental violation of contract  law to                                                               
require  a dealership  to accept,  essentially, any  after-market                                                               
warranty that came  to its shop for work on  one of its vehicles.                                                               
He added that that would be a difficult thing to do.                                                                            
                                                                                                                                
REPRESENTATIVE GRUENBERG said that  this issue would mean getting                                                               
into the relationship between a  garage or service dealership and                                                               
a third party - in this case - the Heritage company.                                                                            
                                                                                                                                
MR. SNIFFEN  answered, "That is  exactly correct."   He clarified                                                               
that  the issues  that arose  regarding [Mr.  Waldrop] and  these                                                               
warranty  issues are  far  removed from  the  questions that  are                                                               
before  the committee  in HB  272, other  than the  fact that  it                                                               
serves to  highlight one of  the problems  that can arise  in the                                                               
sale of  these current-model used  vehicles.  He stated  that the                                                               
AG's office responded to that  consumer complaint on the basis of                                                               
the  warranty claim,  and it  really  isn't an  issue before  the                                                               
committee.                                                                                                                      
                                                                                                                                
Number 1905                                                                                                                     
                                                                                                                                
STEVE ALWINE,  testifying on  behalf of  the Alaska  Auto Dealers                                                               
Association,  explained that  he,  as a  vendor, has  established                                                               
credit policies.   He opined that  it would not be  right for the                                                               
legislature to  dictate who he  opens an  account with.   He said                                                               
that  that is  the underlying  philosophy regarding  many service                                                               
contracts.                                                                                                                      
                                                                                                                                
MR. ALWINE noted  that Mr. Sniffen had commented  that this issue                                                               
[of  the Jeep  dealer  not honoring  the  Heritage warranty,  for                                                               
example] is far removed  from HB 272.  He stated,  "It is, but it                                                               
does demonstrate the  pitfalls and the issues  we've talked about                                                               
having  to do  with manufacturer's  warranty, or  the absence  of                                                               
that  warranty."   He remarked  that this  [example] demonstrates                                                               
that the  big losers  [in this  issue] are  the consumer  and the                                                               
dealer.                                                                                                                         
                                                                                                                                
MR.   ALWINE  offered   his   interpretation  of   Representative                                                               
Gruenberg's  understanding  of  previous  testimony,  that  if  a                                                               
vehicle was manufactured for sale in  the U.S., and was perhaps a                                                               
current-model vehicle,  a dealer  did not  have an  obligation to                                                               
honor  that   manufacturer's  warranty.     He  said,   "That  is                                                               
incorrect."    He continued,  "We  have  an obligation  with  our                                                               
manufacturers  ... to  honor that  manufacturer's  warranty.   He                                                               
offered an example.                                                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked, "Even  if it was  purchased from                                                               
[Lyberger's Car & Truck Sales, LLC] or somebody else?"                                                                          
                                                                                                                                
MR. ALWINE answered,  "Absolutely."  He revealed that  he and his                                                               
wife have a Subaru dealership in  town.  He noted that his market                                                               
place includes Skagway and Haines,  yet occasionally, people from                                                               
those areas  will go to Whitehorse  and buy a used  Subaru.  That                                                               
used  Subaru still  has the  manufacturer's warranty,  he stated.                                                               
He  added, "And  I still  take  care of  that Subaru  as I  would                                                               
anything else."                                                                                                                 
                                                                                                                                
REPRESENTATIVE  GRUENBERG commented  that  [Mr. Alwine's  answer]                                                               
was helpful.                                                                                                                    
                                                                                                                                
Number 1730                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON asked  if the  same would  hold true  [for                                                               
other makes  of cars.]   For  example, if someone  were to  buy a                                                               
Toyota in  Whitehorse, would  the Toyota  warranty be  honored in                                                               
the U.S. as well as in Canada?                                                                                                  
                                                                                                                                
MR. ALWINE  responded as follows:   "I'm  not clear on  that, but                                                               
I'll  say   it  this   way:     some  manufacturers   still  have                                                               
manufacturers' warranties.  I do  not believe Honda or Toyota do,                                                               
but  I  could be  wrong  on  that.   I  can  only speak  with  my                                                               
experience  in  my franchises  and  some  of the  other  domestic                                                               
franchises."                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON asked  Mr. Alwine  to confirm  that Subaru                                                               
does  have  a manufacturer's  warranty,  and  "it doesn't  matter                                                               
where you are, they honor the warranty."                                                                                        
                                                                                                                                
MR. ALWINE replied, "That is absolutely correct."                                                                               
                                                                                                                                
Number 1686                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON surmised  that,  regarding "this  warranty                                                               
problem," the  situation exists where different  companies decide                                                               
to do  different things.   Some may offer warranties  on vehicles                                                               
no  matter where  those vehicles  are, and  others may  decide to                                                               
honor warranties  only in certain places.   Representative Seaton                                                               
stated  that  he  is  having a  difficult  time  "following  this                                                               
argument."  He said that it  is only current-model used cars that                                                               
are  being restricted  [in the  proposed  legislation], yet  "the                                                               
same thing applies  to something that's two-years old,  as far as                                                               
a warranty goes."                                                                                                               
                                                                                                                                
MR.  ALWINE  explained  that  the  majority  of  the  new-vehicle                                                               
manufacturers that do business in  the U.S. "eliminate warranties                                                               
when vehicles move in this manner from one country to another."                                                                 
He clarified as follows:                                                                                                        
                                                                                                                                
     The vehicles we're talking about  are not used vehicles                                                                    
     in  the   normal  course  of   business.     These  are                                                                    
     manufactured used vehicles.   They go out, they acquire                                                                    
     these things  through a fraudulent  means.  They  use a                                                                    
     surrogate buyer.   They don't  -- the  importers aren't                                                                    
     buying   these  things   direct  from   these  dealers.                                                                    
     They're  hiring people  or  they're  paying people  and                                                                    
     using that person's  name.  And that's fraud.   And the                                                                    
     whole  transaction starts  as fraud.   These  vehicles,                                                                    
     when they hit Mr. Lyberger's  lot, have 7 miles on them                                                                    
     or 20  miles on them;  you have a document  that proves                                                                    
     that.                                                                                                                      
                                                                                                                                
     ... I'm  hard-pressed to  get a  vehicle on  the ground                                                                    
     from  the  manufacturer that  has  seven  miles on  it.                                                                    
     These  are not  used vehicles.   These  come under  the                                                                    
     guise  of a  used  vehicle; these  are a  "manufactured                                                                    
     used vehicle."  That's how that transaction starts.                                                                        
                                                                                                                                
Number 1525                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  Mr.  Alwine  to clarify  "what's                                                               
going on in Canada."  He asked  Mr. Alwine if he was saying that,                                                               
for example, a vehicle is  manufactured at a Ford [Company] plant                                                               
in Canada not as a new vehicle, but as a used vehicle.                                                                          
                                                                                                                                
MR. ALWINE answered as follows:                                                                                                 
                                                                                                                                
     I misspeak,  but I've now  coined a phrase that  I seem                                                                    
     to  be  very comfortable  using.    These vehicles  are                                                                    
     manufactured by  the manufacturers for sale  in another                                                                    
     country.  They  are distributed to the  dealers in that                                                                    
     country,  and  that's  where  the  legitimacy  in  this                                                                    
     transaction stops.                                                                                                         
                                                                                                                                
     What happens then  is:  someone, who is  on the payroll                                                                    
     of an importer, makes a  purchase from that dealer, and                                                                    
     then turns  around and gives  the car to  the importer.                                                                    
     The importer imports  the car to the  United States and                                                                    
     may sell it through an auction  - and in a lot of cases                                                                    
     that happens.   By the way, auctions  do disclose that.                                                                    
     They  sell them  through the  auctions.   And when  Mr.                                                                    
     Lyberger   buys  that   vehicle,  it   already  has   a                                                                    
     fictitious name as the owner from Canada.                                                                                  
                                                                                                                                
     And  in my  research  with our  vehicles,  when I  have                                                                    
     encountered Canadian  vehicles, they  have run  all the                                                                    
     way to Toronto.   This is a rampant thing.   These cars                                                                    
     -- I  cannot believe that  there's this many  people in                                                                    
     the world,  but right  now I  think the  statistic that                                                                    
     was in testimony was there's  a quarter of a million of                                                                    
     these  cars out  there, where  a quarter  of a  million                                                                    
     Canadians went  out and bought  these cars and  one day                                                                    
     later decided they just didn't like them.                                                                                  
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked,  "What's wrong  with that?"   He                                                               
said  that he  realizes  that, technically,  "this  may not  have                                                               
belonged to  'Joe Canadian';  and it may  be, essentially,  a new                                                               
vehicle that's been  auctioned in the United States."   But, from                                                               
the consumer's point of view, he asked, "So what?"                                                                              
                                                                                                                                
MR.  ALWINE asked,  "How do  you  justify a  transaction when  it                                                               
begins with fraud?"                                                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG explained that he  is "going to the meat                                                               
of this thing."   He said that, in fact,  the consumer is getting                                                               
what is  being sold  through a used-car  dealer, but  is getting,                                                               
essentially, a new car.                                                                                                         
                                                                                                                                
MR.  ALWINE responded  that the  problem is  that the  consumer's                                                               
perception is  that he/she  is getting a  new car.   Furthermore,                                                               
that consumer is expecting all of  the benefits that go with that                                                               
new car, and ultimately, he/she is not receiving those benefits.                                                                
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  that  the consumer  is maybe  not                                                               
getting a  warranty, but is  getting a car  that may only  have a                                                               
couple of  miles on it and  paying less for it  than he/she would                                                               
pay a  new-car dealer in  the U.S.   He posited that  that sounds                                                               
like a good deal.                                                                                                               
                                                                                                                                
MR. ALWINE  commented that  that consumer  might be  paying less,                                                               
but  noted that  if  the selling  price in  Anchorage  of a  Ford                                                               
vehicle, for example, is a  certain price, than his "colleague in                                                               
Anchorage" is [not pricing much lower than that].                                                                               
                                                                                                                                
Number 1290                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH asked,  "If they're  buying the  car in  Canada,                                                               
then   ...  they'll   have  titled   it,  and   they'll  have   a                                                               
manufacturer's statement of origin.  Is that correct?"                                                                          
                                                                                                                                
MR.  ALWINE answered,  "That  is correct.   It  will  not have  a                                                               
manufacturer's statement  of origin; it  will have a title."   In                                                               
response  to   a  follow-up  question  by   Chair  Weyhrauch,  he                                                               
clarified, "It  will have  a title  that will  be titled  to that                                                               
original owner."                                                                                                                
                                                                                                                                
MR. ALWINE, in  response to a request for  clarification by Chair                                                               
Weyhrauch, stated the following:                                                                                                
                                                                                                                                
     The  means by  which it's  accomplished  is:   it is  a                                                                    
     retail purchase at an  automobile dealership in Canada.                                                                    
     At  that point,  that vehicle  would be  titled to  the                                                                    
     "surrogate" ... purchaser.  So  there's your title, and                                                                    
     at that  point, the manufacturer's statement  of origin                                                                    
     has gone away.                                                                                                             
                                                                                                                                
     Then  that would  be turned  to the  importer, and  the                                                                    
     importer would  bring it to  the United  States market,                                                                    
     and they would ultimately convert  that title to a U.S.                                                                    
     title, in some form.                                                                                                       
                                                                                                                                
CHAIR WEYHRAUCH brought the focus back to Section 1 of HB 272.                                                                  
                                                                                                                                
Number 1166                                                                                                                     
                                                                                                                                
MR. SNIFFEN said  that he thinks Mr.  Alwine adequately described                                                               
some of  the problems that  the franchised car dealers  are faced                                                               
with.  He added, "And  those are consistent with our observations                                                               
that ...  consumers are in  a situation where sometimes  they may                                                               
not  understand  that  the  purchase   of  these  vehicles  don't                                                               
necessarily come with  all the accoutrements that  a typical new-                                                               
vehicle  purchase  would  have."   He  said  he  understands  the                                                               
comment  previously made  by Representative  Gruenberg [regarding                                                               
looking at  the issue of Canadian  vehicles from the eyes  of the                                                               
consumer].  He said it's a  powerful statement to the extent that                                                               
the consumer has  another choice and another option.   He offered                                                               
the following response  as follows:  "But for the  things that we                                                               
have already  described, the problems  that come along  with some                                                               
of these  new-vehicle purchases - and  some of them may  be cured                                                               
through disclosure - those are the consumer fall-backs."                                                                        
                                                                                                                                
MR.  SNIFFEN stated  that the  other  question that  needs to  be                                                               
resolved is in regard to  the competitive disadvantage that "this                                                               
might place some  of the new-vehicle dealers in."   He reiterated                                                               
that the AG's  office has not taken a position  on whether or not                                                               
that  is occurring,  but  it is  an issue  for  the committee  to                                                               
consider.                                                                                                                       
                                                                                                                                
CHAIR WEYHRAUCH apologized  for the record for not  being able to                                                               
hear  Mr.  Lyberger's testimony  yesterday,  and  invited him  to                                                               
speak.                                                                                                                          
                                                                                                                                
Number 1060                                                                                                                     
                                                                                                                                
JOHN LYBERGER,  Lyberger's Car &  Truck Sales, LLC,  told members                                                               
he'd presumed  that people  who come  before the  legislature [to                                                               
testify] would tell the truth.   Indicating that hadn't happened,                                                               
he suggested the need for a  sworn oath and asked how legislators                                                               
can  make  a proper  judgment  if  they  aren't told  the  truth.                                                               
Referring to testimony  by [Mr. Alwine], he noted  that more than                                                               
31 new-car dealers  are registered this year in  Alaska, and said                                                               
there are hundreds of used-car dealers.   He asserted that only a                                                               
few dealers came up with this  bill, and questioned the number of                                                               
dealers actually  being represented  by [Mr. Alwine  as president                                                               
of the Alaska Auto Dealers  Association].  He suggested that this                                                               
bill  [would] make  the  wealthy people  even  wealthier, to  the                                                               
detriment of others, and proposed  that this isn't something that                                                               
members or others want for the United States.                                                                                   
                                                                                                                                
MR.  LYBERGER  mentioned a  warranty  and  Jeep dealer  discussed                                                               
earlier, saying he knew that gentleman.  He explained:                                                                          
                                                                                                                                
     We  knew  that the  Jeep  place  would not  honor  that                                                                    
     warranty.  The customer knew  that.  The customer knows                                                                    
     the gentleman  there.   He does not  care, most  of it.                                                                    
     He was bled.  He took  the vehicle down there, and they                                                                    
     got the head  man out there and really ...  put the law                                                                    
     down.  You  see, this Heritage warranty,  they can call                                                                    
     on the  telephone and they  can receive a  credit card.                                                                    
     Say they're  short on money  or something and  need the                                                                    
     money  to pay,  or doubt  they'll ever  get the  money.                                                                    
     They can  get their  money immediately -  immediately -                                                                    
     by  credit card  ...  on it.   So  we  know there's  no                                                                    
     problem there.   But ...  why he was there  was because                                                                    
     of bad  things with them  ... previously.  I  could see                                                                    
     it's  gone, and  I  see  it was  sent  to the  attorney                                                                    
     general; I  see the  ... statements  that he  made that                                                                    
     was the wrong  thing of me to do, to  ask him or permit                                                                    
     him to ... go ahead with that.  But my goodness ...                                                                        
                                                                                                                                
Number 0701                                                                                                                     
                                                                                                                                
MR. LYBERGER  brought attention to  "lemons" and  recalls, noting                                                               
that  this  isn't   his  field  with  regard   to  importing  and                                                               
"transferring."   He  told of  reading that  the time  period for                                                               
response  is  10 years  if  there  is  a  recall.   He  mentioned                                                               
shipping in [automobiles] from the  Lower 48 because people could                                                               
buy for  less there than in  Anchorage.  He indicated  owners [of                                                               
dealerships] don't like that, however.   He also indicated it may                                                               
be weeks  or months before a  vehicle is taken care  of [if there                                                               
is a  problem].  He pointed  out that repair shops  are repairing                                                               
new vehicles, which he said the factories honor and pay for.                                                                    
                                                                                                                                
Number 0449                                                                                                                     
                                                                                                                                
MR.  LYBERGER stated  that he  is familiar  with the  terms "used                                                               
cars,"  and  "new  cars,"  but  not with  the  use  of  the  word                                                               
"current," as it [applies to  cars].  He mentioned the factories'                                                               
bringing cars across the line,  and emphasized that the factories                                                               
do this  themselves and sell them  at auctions.  He  continued as                                                               
follows:                                                                                                                        
                                                                                                                                
     Even  his company  ..., his  warranty  said they  would                                                                    
     bring it  here -  it would  not be  good at  his place,                                                                    
     right?  But still, you go  to this auction sale and buy                                                                    
     that  that  the  factories brought  that  vehicle  over                                                                    
     there - and  I'm not saying always or at  all of them -                                                                    
     but  possibly, at  that  sale, at  that  time, on  that                                                                    
     group of  vehicles they have, they  will honor warranty                                                                    
     on  those  vehicles  that the  factory  has  sold  that                                                                    
     they've brought across.                                                                                                    
                                                                                                                                
MR.  LYBERGER  said  that  he  was  not  talking  about  any  one                                                               
particular company or factory.  He continued as follows:                                                                        
                                                                                                                                
     In fact, the new car dealers  up here go over there and                                                                    
     purchase these  vehicles also.   I can also  prove that                                                                    
     they have been sold as  new vehicles, which they cannot                                                                    
     be sold  as new.  Any  time that the vehicle  comes out                                                                    
     of  Canada and  has an  MSO [manufacturer  statement of                                                                    
     origin], like  [they] mentioned here  about a  title in                                                                    
     Canada, that's  impossible.  Why?   Because  they don't                                                                    
     even  have a  title in  the state  - it's  a non-titled                                                                    
     state.   So,  don't  tell  me they  have  a title  over                                                                    
     there.   You follow me?   They  don't even have  one in                                                                    
     the state, how can they have one?                                                                                          
                                                                                                                                
Number 0312                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH acknowledged  that  this issue  is a  passionate                                                               
concern  of  Mr. Lyberger's.    He  told  Mr. Lyberger  that  the                                                               
committee is considering the issue  as a policy matter and trying                                                               
to strike  a balance  between protecting  the used-  and current-                                                               
auto dealers.   He asked  Mr. Sniffen to distinguish  between the                                                               
terms current and new for Mr. Lyberger's benefit.                                                                               
                                                                                                                                
Number 0262                                                                                                                     
                                                                                                                                
MR. SNIFFEN defined a new vehicle  as one that has been delivered                                                               
by  the  manufacturer to  a  franchised  car  dealer that  has  a                                                               
relationship with the manufacturer.  He continued as follows:                                                                   
                                                                                                                                
     And once  that vehicle  is sold -  it is  either titled                                                                    
     or,  perhaps if  it's in  a state  that's a  non-titled                                                                    
     state,   as  Mr.   Lyberger   suggests   -  the   first                                                                    
     transaction  involving  that  vehicle ...  changes  its                                                                    
     character from  a new  vehicle to a  used vehicle.   So                                                                    
     you can  have used  vehicles of all  model years.   You                                                                    
     can have ... current-model-year  used vehicles, you can                                                                    
     have next-model-year  used vehicles, we  have ten-year-                                                                    
     old-model used  vehicles, but they  are all used.   The                                                                    
     problem with  the current-model used vehicle  is that's                                                                    
     the particular niche of the franchised car dealer.                                                                         
                                                                                                                                
MR.  SNIFFEN   noted  that  the   franchised  car   dealers  have                                                               
agreements with  the manufacturers that, within  their territory,                                                               
they will be  the only ones authorized to sell  "these new cars."                                                               
Therefore, he  pointed out, a current-model  used-car salesperson                                                               
is  competing directly  with the  franchised car  dealer who  has                                                               
that   promise   with  the   manufacturer.      He  offered   his                                                               
understanding from what he's heard  from the new-car dealers that                                                               
once the  car is no  longer of  the current-model year,  they are                                                               
not  as  concerned, because  they  are  not competing  with  last                                                               
year's-model new cars.  He added,  "And then you can still have a                                                               
new car that's last-year's model;  that's not a current-model new                                                               
car, but it's still a new car, because it hasn't been titled."                                                                  
                                                                                                                                
Number 0091                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  noted that the  2004 [cars] will  come out                                                               
in  August or  September.   He asked  what the  current-model car                                                               
will be in September 2003.                                                                                                      
                                                                                                                                
MR. SNIFFEN  answered that  in August  2003, when  the 2004-model                                                               
year [cars] come  out, then all of the  2003-model-year cars will                                                               
not be current-model year anymore, even though it is still 2003.                                                                
                                                                                                                                
TAPE 03-65, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
MR. SNIFFEN clarified that, in  August, when the 2004 [cars] come                                                               
out and  become the current-model-year vehicles,  the 2003 [cars]                                                               
will still be new vehicles,  but they won't be current-model-year                                                               
new vehicles.                                                                                                                   
                                                                                                                                
MR. SNIFFEN announced that he had  to leave to testify at another                                                               
meeting,  but  would be  available  to  the committee  later  for                                                               
questions.                                                                                                                      
                                                                                                                                
Number 0129                                                                                                                     
                                                                                                                                
MR. LYBERGER remarked  that there are actually  2004 vehicles out                                                               
already that have been out for  a while.  He referred to previous                                                               
discussion regarding dealers' savings  and the Canadian [exchange                                                               
rate].   He mentioned [an  article] in  what he believed  was the                                                               
Automotive News in the past 1-2  months, which showed a number of                                                             
vehicles  from  different  manufacturers, that  were  identically                                                               
equipped.  He continued as follows:                                                                                             
                                                                                                                                
     And like  our colleague  here, Mr. [Alwine],  you know,                                                                    
     his vehicle that has the largest  on it of any of them.                                                                    
     The vehicles  that are  not selling.   That's  why that                                                                    
     they  took these  rebates  on in  (indisc.).   ...  The                                                                    
     Caravan is  very high  - rebates -  yes.   However, the                                                                    
     Durango, it  will be the  highest at this moment.   Now                                                                    
     last  year they  went to  $7,000, and  then it  went to                                                                    
     $10,000 on  that Lincoln, see,  for the dealer  here in                                                                    
     the U.S.  Now like  whenever they receive these dollars                                                                    
     here in the U.S., that  rebate's subject to the public,                                                                    
     and/or even the dealer.   This is something that's very                                                                    
     misleading  to all  public.   You  know  they think  of                                                                    
     rebate,  and  the rebate's  on  and  the rebate's  off.                                                                    
     Well, it may  be, and that's what  ... they're printing                                                                    
     at  the  time;  however, possibly  they're  showing  no                                                                    
     rebate,  or   showing,  say,  maybe  $1,000   ...  [for                                                                    
     example].                                                                                                                  
                                                                                                                                
     Say, like you take one of  these vehicles - a Durango -                                                                    
     ... [with a $4,500 rebate],  and then they have another                                                                    
     $1,000 on  top of that  for loyalty, see.   Or possibly                                                                    
     for  receiving  another   customer  over  from  another                                                                    
     company, to  get them on  their line.  Plus  they still                                                                    
     have their  holdback, you know, that  the factory gives                                                                    
     them ...  at the end  of the year -  February, usually.                                                                    
     You know  what, they  owned the  vehicle ...  way, way,                                                                    
     way back.   At the same  time -- that's the  extreme of                                                                    
     them now, this year.  Like  I say, Lincoln was the high                                                                    
     one last year, but this  Durango at this moment anyway,                                                                    
     as far  as I know,  ... [is]  the highest this  year up                                                                    
     ... [to]  this point  - on the  rebates and  the dealer                                                                    
     participation.                                                                                                             
                                                                                                                                
     But most  of the vehicles,  as I noticed, will  be very                                                                    
     few  dollars difference  in  Canada and  here.   ...  I                                                                    
     mean,  considerably  less  than $1,000  -  maybe  $400,                                                                    
     $300, $200,  or $57,  or something that  way.   So that                                                                    
     they're just about the same there  as here.  ... I wish                                                                    
     I had those  figures with me to show  you accurately on                                                                    
     each  of them.   ...  See,  they have  the rebates  and                                                                    
     things going  on here in  the U.S.  and in Canada.   It                                                                    
     may be  here that they  have so much rebate  on, and/or                                                                    
     dealer participation - ...  whichever way the factory's                                                                    
     going at  that given  moment - and  there [may]  not be                                                                    
     any in  Canada, or  there might be  just a  little bit.                                                                    
     However, it  is always  [that] the  U.S. has  more than                                                                    
     they do in Canada.                                                                                                         
                                                                                                                                
MR. LYBERGER  admitted he just  made a broad statement,  but told                                                               
the committee that  he feels his statement  is "pretty" accurate,                                                               
or he wouldn't have made it.                                                                                                    
                                                                                                                                
Number 0614                                                                                                                     
                                                                                                                                
MR. LYBERGER referred to  Representative Lynn's mention yesterday                                                               
of a  young man, and he  said, "You see, I'm  not perfect either,                                                               
but still again,  as I said earlier, I wish  to be different than                                                               
all other  dealers -  not different,  but as  close to  the exact                                                               
opposite."  He noted that he  has managers and salesmen that have                                                               
been  with him  for years.   He  commented that  he has  very low                                                               
turnover.   He said  he hires  more people  because he  does more                                                               
business.  He emphasized that  he does not seek out professionals                                                               
to hire,  but, for example, he  hired an engineer who  is now one                                                               
of his managers.   He met the man when he sold  a vehicle to him,                                                               
he added.   He gave  another example  of an employee  who started                                                               
out as a  customer.  He indicated  this may or may  not have been                                                               
the man to whom Representative  Lynn had referred in his previous                                                               
testimony.   He  pointed out  that [no  one gets  where they  are                                                               
overnight].                                                                                                                     
                                                                                                                                
Number 0849                                                                                                                     
                                                                                                                                
MR. LYBERGER continued as follows:                                                                                              
                                                                                                                                
     As  I  mentioned the  other  day,  I  do not  want  any                                                                    
     customer at  any time  taking one  dollar out  of their                                                                    
     pocket.   If  they have  taken  a dollar  out of  their                                                                    
     pocket, or it's necessary, like  it would have been for                                                                    
     this  gentleman here,  which he  offered to  pay, would                                                                    
     not  receive, and  come  back down  there  and Bubba  -                                                                    
     Bubba's one  of my sons -  he offered to pay,  he would                                                                    
     not except  the money  either.   Which is  the customer                                                                    
     knows.   He  would prefer  taking  it to  one of  these                                                                    
     other  places and  have them  to fix  it anyway.   Why?                                                                    
     Because he says is  they have better equipment, they're                                                                    
     more knowledgeable  than they  are there.   But  he was                                                                    
     just "jackin'"  with him, whenever he  took the vehicle                                                                    
     there to  him, and figured  that it would  be something                                                                    
     this way, that's why.                                                                                                      
                                                                                                                                
MR. LYBERGER referred  to "that dollar thing  there between those                                                               
vehicles"  and  said he  should  bring  that information  to  the                                                               
committee.  He continued as follows:                                                                                            
                                                                                                                                
     Like anything that we redid,  it would be 'x' amount of                                                                    
     dollars, it'd  be [$1,000] on this  particular vehicle.                                                                    
     However, we will never see  - here I'm sticking my neck                                                                    
     out again,  right? - we  will never see there  be three                                                                    
     or four of  them - different makes or kinds,  or what -                                                                    
     with that great big  difference between there and here.                                                                    
     It'll be just a little bit ....                                                                                            
                                                                                                                                
MR. LYBERGER solicited questions from the committee.                                                                            
                                                                                                                                
Number 0970                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG referred  to  the Heritage  [warranty].                                                               
He asked  if he  is correct  in his  understanding that  a dealer                                                               
could simply  have called Heritage, which  would have ascertained                                                               
what the work was going to be  and then would have given "them" a                                                               
Heritage credit  card, and they could  have done the work  and it                                                               
would have been "done by that credit card."                                                                                     
                                                                                                                                
MR. LYBERGER responded, "Immediately, right there, not later."                                                                  
                                                                                                                                
REPRESENTATIVE  GRUENBERG  commented  that  it is  too  bad  that                                                               
Mr.Sniffen is not  present.  Notwithstanding that  he stated that                                                               
he thinks  it is illegal  not to  accept payment in  that manner.                                                               
He clarified  that that has nothing  to do with the  vehicle laws                                                               
that are elsewhere in the statutes.                                                                                             
                                                                                                                                
MR.  LYBERGER  stated  that   he  concurred  with  Representative                                                               
Gruenberg.   He added that  although he  could impose a  limit on                                                               
the credit card, he must accept it.                                                                                             
                                                                                                                                
Number 1075                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON said  he thinks this subject is  not to the                                                               
point of the legislation being discussed.                                                                                       
                                                                                                                                
CHAIR WEYHRAUCH  agreed and said he  would like to try  [to focus                                                               
on] the  bill.   He thanked  Mr. Lyberger for  his comments.   He                                                               
asked the committee if they had any more comments on Section 1.                                                                 
                                                                                                                                
Number 1173                                                                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN  asked  Mr.  Alwine if  "all  these  things"                                                               
wouldn't violate franchise law, if there is such a thing.                                                                       
                                                                                                                                
MR.  ALWINE  answered that  there  is  franchise law,  there  are                                                               
franchise  agreements, and  "we  are required  in our  agreements                                                               
with the manufacturers to honor  those agreements."  He mentioned                                                               
a  bill that  had been  sponsored last  year by  now-Senator Lisa                                                               
Murkowski,  which dealt  with manufacturer  and dealer  relations                                                               
and the obligations [between them].                                                                                             
                                                                                                                                
Number 1253                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  asked if the  "Canadian situation"  would be                                                               
coming  in   from  the   outside  and   interrupting  established                                                               
franchise law.  He added, "Is  the franchise law only between the                                                               
franchiser and  the franchisee,  or does  that effect  people who                                                               
are totally outside the franchise?"                                                                                             
                                                                                                                                
MR. ALWINE  answered that the  franchiser and the  franchisee are                                                               
the people  directly impacted  by that  contract, not  the people                                                               
outside of that distribution chain.                                                                                             
                                                                                                                                
REPRESENTATIVE LYNN  asked if  that meant that  a dealer  such as                                                               
Mr. Lyberger would not be liable  in any way to the franchise law                                                               
itself.                                                                                                                         
                                                                                                                                
MR.  ALWINE replied  that  [Mr. Lyberger]  has  no obligation  or                                                               
responsibility whatsoever,  save the  sale of  that current-model                                                               
used vehicle.                                                                                                                   
                                                                                                                                
Number 1336                                                                                                                     
                                                                                                                                
MS. SYLVESTER,  regarding the bill  that passed last  year, noted                                                               
that the state regulates by  statute how close a manufacturer can                                                               
establish a  second franchise.   She  stated that  that's clearly                                                               
protecting  the   interest  and  the  relationship   between  the                                                               
manufacturer  and the  franchisee.   She  noted that  there is  a                                                               
loophole  by which  secondhand car  dealers are  able to  get new                                                               
stocks and come  in under that law and put  themselves right next                                                               
to another  franchised dealer, which  she stated is a  concern to                                                               
the state [and the reason for HB 272].                                                                                          
                                                                                                                                
REPRESENTATIVE  LYNN commented  that that  is very  illuminating.                                                               
He compared the situation to McDonald's franchises.                                                                             
                                                                                                                                
MS. SYLVESTER  said that  one important  distinction is  that the                                                               
state does not, by law,  regulate where McDonald's franchises can                                                               
come in, while it does  regulate where these motor vehicle dealer                                                               
franchises can be.                                                                                                              
                                                                                                                                
Number 1446                                                                                                                     
                                                                                                                                
MR.  LYBERGER referred  to large,  multi-million dollar  lawsuits                                                               
against  factories  and  dealers.   He  noted  that  recently  in                                                               
Europe, Chrysler  Corporation and General Motors  were fined over                                                               
$73  million [for]  "doing what  we're trying  to do  now between                                                               
Canada and  the U.S./Alaska."   He told the committee  that there                                                               
is a new Dodge "place" to the side  of his own business.  He said                                                               
that his  business was there  prior to  that.  He  mentioned "the                                                               
other  Dodge place"  that was  there years  ago, which  was there                                                               
just over 10  years.  Regarding the rules of  proximity, he said,                                                               
"That  store there  had  the  area for  a  whole  bunch of  miles                                                               
around, I mean, more than 100  miles.  But regardless, they built                                                               
that new  one right  there."   He said he  thinks they  cannot do                                                               
that.  He continued as follows:                                                                                                 
                                                                                                                                
     But see,  it's factory, factory, factory;  ... it isn't                                                                    
     people.  What I  think it is:  we need  to take care of                                                                    
     John Doe  consumer.  John  Doe consumer's the  one that                                                                    
     all of us [need] to be thinking about.  Gee whiz...                                                                        
                                                                                                                                
CHAIR  WEYHRAUCH asked  Mr. Lyberger  if he  feels like  he's had                                                               
enough  time to  talk  about  his feelings  and  views about  the                                                               
issue.   He added,  "I don't  want you to  feel like  you've been                                                               
shut down."                                                                                                                     
                                                                                                                                
MR. LYBERGER complimented Chair  Weyhrauch and all his colleagues                                                               
as "the greatest in the world," and thanked them.                                                                               
                                                                                                                                
Number 1586                                                                                                                     
                                                                                                                                
SPENCER ALEXANDER,  General Sales  Manager, Budget Car  and Truck                                                               
Sales, Fairbanks,  opined that  a decision  must be  made whether                                                               
the  focus is  to protect  consumers or  franchised dealers.   He                                                               
said it  seems to him that  the issue of the  "Canadian thing" is                                                               
something   between  the   manufacturers  and   their  franchised                                                               
dealers, and he said he doesn't  see why the legislature needs to                                                               
get involved  in helping those  dealers fight that battle  if the                                                               
manufacturer is unwilling to.                                                                                                   
                                                                                                                                
MR. ALEXANDER,  in regard to current-model  vehicles, stated that                                                               
as the  [proposed legislation] is  written, it would  prevent him                                                               
from  buying  same-model-year  bank repossessions,  for  example.                                                               
Regarding the broader issue of  Canadian vehicles, he asked, "Are                                                               
we protecting  the consumer from  paying less for vehicles?"   He                                                               
said that is really what is being talked about here.                                                                            
                                                                                                                                
MR. ALEXANDER referred  to the issue of  franchise agreements and                                                               
what they will and won't allow  their dealers to do.  He revealed                                                               
that 18 months ago he worked  for the Jeep dealer in Anchorage as                                                               
a sales manager, and unless  that dealer's agreement has changed,                                                               
the  dealer can  take  any  warranty it  wants  and  work on  any                                                               
vehicle it wants, and the  manufacturer doesn't prevent them from                                                               
doing so.   He added that  that's a decision that's  made on site                                                               
by the general manager.  He continued as follows:                                                                               
                                                                                                                                
     When  we're talking  about  these franchise  agreements                                                                    
     and  what they  are or  are not  allowed to  do by  the                                                                    
     manufacturer,  I think  we need  some  real clarity  on                                                                    
     that,  because all  the new  car dealerships  that I've                                                                    
     worked for didn't prevent us  from doing anything.  So,                                                                    
     you know,  we sold Canadian  vehicles off the  Jeep lot                                                                    
     in Anchorage  and, unless something's  changed, they're                                                                    
     probably still doing it.                                                                                                   
                                                                                                                                
     If  I'm a  ... franchised  janitor service  and ...  my                                                                    
     competition  ...  is going  to  Canada  and buying  his                                                                    
     brooms and soaps  and buckets and coming  over here and                                                                    
     beating my prices, as a  business owner I have a choice                                                                    
     to make whether  I want to continue to  be a franchised                                                                    
     cleaning   business,   or   whether  I   want   to   go                                                                    
     independent.                                                                                                               
                                                                                                                                
     So, if  we're after consumer protection,  I think maybe                                                                    
     some disclosure  would solve  it.   ... If  we're after                                                                    
     protecting  the  dealers -  I  don't  [know] if  that's                                                                    
     necessarily the right thing to  do.  I mean, I've heard                                                                    
     the word  loophole for the used-car  dealers mentioned,                                                                    
     ...  that  they have  a  loophole  that they  can  sell                                                                    
     current-model-year  vehicles.    I don't  call  that  a                                                                    
     loophole,  I  call that  a  free  market, and  I  think                                                                    
     that's  a  ...  good   thing,  because  ultimately  the                                                                    
     consumers end up winning.                                                                                                  
                                                                                                                                
Number 1814                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON said  that,  unfortunately, the  committee                                                               
has had to deal quite a lot with warranty issues.                                                                               
                                                                                                                                
MR.  ALEXANDER,  in  response   to  questions  by  Representative                                                               
Seaton,  confirmed his  previous testimony  that he  was a  sales                                                               
manager at the Chrysler dealerships  Jeep store in Anchorage, and                                                               
the manufacturer  allowed him to  honor whatever  warranties that                                                               
that local dealership decided upon.                                                                                             
                                                                                                                                
Number 1869                                                                                                                     
                                                                                                                                
The meeting was recessed at 10:22 a.m. to a call of the chair.                                                                  
                                                                                                                                
[A new tape was inserted at this point.]                                                                                        
                                                                                                                                
TAPE 03-66, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  called the  meeting back to  order at  9:48 p.m.                                                               
Present  at   the  call  back   to  order   were  Representatives                                                               
Dahlstrom,    Lynn,   Crawford,    Gruenberg,   and    Weyhrauch.                                                               
Representative  Seaton   rejoined  the  meeting  as   it  was  in                                                               
progress.                                                                                                                       
                                                                                                                                
The committee took an at-ease from 9:49 p.m. to 9:50 p.m.                                                                       
                                                                                                                                
Number 0245                                                                                                                     
                                                                                                                                
PHIL HAWES,  Phil Hawes Auto  Outlet, testified that he  has been                                                               
listening to  much of the  previous testimony  regarding Canadian                                                               
vehicles, and he told the committee  that he sells quite a few of                                                               
them himself.  He stated that  he goes to the auctions and stands                                                               
side by  side with [new-car]  dealers, who are buying  "them" all                                                               
the time.  He indicated  he doesn't understand why when [used-car                                                               
dealers] buy those cars, the  customers are punished.  [Regarding                                                               
the new-car  dealers], Mr. Hawes  said, "Don't let them  kid you,                                                               
they're  [placing warranties  on]  Canadian cars;  they buy  them                                                               
right here at  the auction."  Mr. Hawes said  that he's seen them                                                               
do it, and he added that they can warranty any vehicle.                                                                         
                                                                                                                                
MR. HAWES  said that maybe  half of the  60-70 cars that  he sold                                                               
last month  were Canadian vehicles  that are all  under warranty,                                                               
and they are "2002s."  He continued:                                                                                            
                                                                                                                                
     If they want to warranty them,  they can.  And they get                                                                    
     paid for  that.  But  they're (indisc.) the  public and                                                                    
     telling you guys  that that's not happening?   They can                                                                    
     warranty  any of  those cars.    They're franchised  --                                                                    
     what  they're doing  is punishing  the customer.   I've                                                                    
     had  some of  them I've  had  to call  over there,  and                                                                    
     hassle  them  a  little  bit, and  they  go  ahead  and                                                                    
     finally  do it,  but they  were just  real rude  to the                                                                    
     customers.  And I'm a little fed up with that.                                                                             
                                                                                                                                
     ... There's a  couple of dealers here in  town that are                                                                    
     trying to run  the little dealers out of  town, and you                                                                    
     know, I put my whole life  in this thing.  All my money                                                                    
     that I've saved for years and years.                                                                                       
                                                                                                                                
     And  let  me   tell  you  this:    I   worked  for  Cal                                                                    
     Worthington for 17 years as  general sales manager, and                                                                    
     I ... did  all the buying for the store  for years, and                                                                    
     I  bought  a  lot  of Canadian  vehicles  -  all  under                                                                    
     warranty.  Just lately, just  this last year or so, ...                                                                    
     there's a lot of hassling,  and I don't understand what                                                                    
     the big deal is.  I  mean, they got dealers from out of                                                                    
     state - Dave  Smith Auto Sales - that are  taking a lot                                                                    
     of business,  selling brand new cars  advertised in our                                                                    
     newspaper, our [television], ...  [for example] here in                                                                    
     Anchorage, and stealing all  the new-car customers from                                                                    
     them.                                                                                                                      
                                                                                                                                
MR. HAWES  noted that many  of his customers are  frustrated new-                                                               
car buyers who do not want to  go through five hours of hassle at                                                               
the  new-car [dealership].   He  indicated  that he  has a  loyal                                                               
following;  many of  his  customers followed  him  over from  Cal                                                               
Worthington's when he  started his business.  He  added, "And the                                                               
same with Lyberger."                                                                                                            
                                                                                                                                
MR. HAWES  concluded by reemphasizing that  [new-car] dealers can                                                               
warranty Canadian vehicles,  and stating, "This bill  needs to go                                                               
away."                                                                                                                          
                                                                                                                                
Number 0600                                                                                                                     
                                                                                                                                
DIANA    PFEIFFER,   President,    Alaska   Automobile    Dealers                                                               
Association; President,  Alaska Sales & Service  in Anchorage and                                                               
Wasilla, noted that  the changes proposed in the  language [of HB                                                               
272]  pertain   to  better  consumer   protection,  as   well  as                                                               
enforcement.   She told the committee  that she is also  a dealer                                                               
who has invested  a great deal for the right  to sell new General                                                               
Motors automobiles in an area designated by the manufacturers.                                                                  
                                                                                                                                
MS. PFEIFFER indicated  that there are a lot  of used-car dealers                                                               
who are  selling used  automobiles [that  are] current-model-year                                                               
vehicles  that  "smell,  look,  and   have  mileage  like  a  new                                                               
automobile."  Ms. Pfeiffer described the process as follows:                                                                    
                                                                                                                                
     The  vehicles   are  coming   through  a   pipeline  of                                                                    
     individuals, where they're working  with a broker or an                                                                    
     importer.   They start out with  an illicit transaction                                                                    
     -  a  "straw"   purchase  of  a  new   vehicle  from  a                                                                    
     manufacturer in Canada.  They  sell them to a broker or                                                                    
     an  importer who  makes modifications  to the  odometer                                                                    
     and speedometer,  and then they resell  them through an                                                                    
     auction, or directly to the  dealers here in Alaska and                                                                    
     to other states.                                                                                                           
                                                                                                                                
     These vehicles  are current-model-year  vehicles, which                                                                    
     our current  statute, [AS] 08.66.015, says  can only be                                                                    
     sold  by a  dealer with  a manufacturer's  statement of                                                                    
     origin.                                                                                                                    
                                                                                                                                
MS.  PFEIFFER told  the committee  that new-franchised-automobile                                                               
dealers  like her  invest a  lot of  money to  buy the  exclusive                                                               
rights  to  sell  automobiles  within   an  area  assigned  by  a                                                               
manufacturer.    She noted  that  [AS]  45.25.180 says  that  the                                                               
manufacturers cannot establish a  new-motor vehicle dealer within                                                               
the  relevant market  area where  the same  line is  represented.                                                               
She explained that  relative market area is that  which is within                                                               
a 14-mile radius of any existing vehicle dealer.                                                                                
                                                                                                                                
MS.  PFEIFFER  noted  that,  in  the last  four  to  five  years,                                                               
thousands  of "these  automobiles," primarily  from Canada,  have                                                               
been  brought into  Alaska for  resale under  the guise  of being                                                               
used automobiles.  She pointed  out that those vehicles are often                                                               
marketed with very  few miles on them and with  a warranty, which                                                               
implies  to the  consumers  that  they are  new  vehicles with  a                                                               
manufacturer's warranty.   She said that,  essentially, the used-                                                               
car dealers have tried to set  themselves up as a new-car dealer,                                                               
but they only have a showroom.   What they don't have, she noted,                                                               
is:   the  rest  of  the investment  in  the facility;  personnel                                                               
training;  and tools  and equipment  to  service the  automobile.                                                               
She  opined,  "It's  more  or  less an  illicit  way  of  selling                                                               
current-model-year vehicles."   She added,  "A lot of  times they                                                               
can acquire new-model  vehicles before the dealers  in Alaska get                                                               
them."                                                                                                                          
                                                                                                                                
Number 0824                                                                                                                     
                                                                                                                                
MS. PFEIFFER  noted that in  Anchorage, a pawnbroker and  a used-                                                               
car dealer  with a display lot  have to have a  merchant license,                                                               
which  used to  be  known as  a  "second-hand" merchant  license.                                                               
Used merchandise,  including automobiles,  she said,  has obvious                                                               
signs of  wear and tear,  as well as  "distinct characteristics."                                                               
Ms.  Pfeiffer noted  that franchised  automobile dealers  are not                                                               
required to have a merchant license.                                                                                            
                                                                                                                                
MS. PFEIFFER  told the committee  that when  a person buys  a new                                                               
automobile, he/she has  a lot of expectations of  the benefits of                                                               
that new automobile.  [When  a consumer buys a current-model-year                                                               
used vehicle,  for example], Ms.  Pfeiffer listed all  the things                                                               
he/she does  not get  as follows:   a manufacturer's  warranty on                                                               
many of  the vehicles; the  protection of the state's  lemon law;                                                               
notification  by  the manufacturer  of  recall  notices or,  more                                                               
importantly, "stop-driving" or "return  to the dealer" [notices];                                                               
notifications to  the dealers to  stop delivery of a  new vehicle                                                               
that  has a  severe safety  defect; operational  training on  the                                                               
automobile by  a factory-trained sales representative  or service                                                               
technician; and  no assurance  that the vehicle  does not  have a                                                               
Canadian lien, because Canadian  titles apparently don't note the                                                               
liens on the title.                                                                                                             
                                                                                                                                
MS. PFEIFFER  said she  is aware  that [on  Canadian automobiles]                                                               
the lights  may have been disconnected,  because the illumination                                                               
is greater than is allowed in the  U.S.  In addition to that, she                                                               
noted,  there have  been a  lot of  documented cases  of odometer                                                               
fraud with  excessive mileage  rollback, [resulting  in] numerous                                                               
lawsuits in the last couple of years.                                                                                           
                                                                                                                                
MS. PFEIFFER concluded her testimony  by stating that the injured                                                               
parties are the consumers and  the franchised automobile dealers.                                                               
She  thanked  the  committee for  "the  additional  consideration                                                               
providing that  provision for the  rental cars."  She  noted that                                                               
she also has  a large rental fleet in Anchorage,  with over 1,000                                                               
automobiles that  will be  running this summer.   She  added that                                                               
with  the short  tourist season,  there will  be a  need for  the                                                               
outlet of some of those automobiles.                                                                                            
                                                                                                                                
Number 0996                                                                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN offered  his understanding  that a  previous                                                               
testifier  alleged that  Chevrolet  dealers, for  example, do  in                                                               
fact buy  Canadian vehicles.   Representative  Lynn said  that he                                                               
assumed "that's for the used-car lot."   He asked Ms. Pfeiffer if                                                               
he may have misunderstood.                                                                                                      
                                                                                                                                
MS.  PFEIFFER  replied that  she  believes  there [may  be]  some                                                               
franchised  automobile dealers  that are  "buying their  products                                                               
when  they  cannot get  them  through  the manufacturer  at  that                                                               
time."   She  added,  "I wouldn't  know that."    In response  to                                                               
follow-up questions by Representative  Lynn, she said that Alaska                                                               
Sales & Service does not do that.                                                                                               
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
Number 1087                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked Ms. Pfeiffer  if she is  aware of                                                               
any employees at  service centers who work on  a sales commission                                                               
and therefore  would earn  more depending  on how  many "repairs"                                                               
they sell.                                                                                                                      
                                                                                                                                
MS. PFEIFFER affirmed that that is a practice in the industry.                                                                  
                                                                                                                                
Number 1128                                                                                                                     
                                                                                                                                
JEANNE  KOSONEN,  testifying  on  behalf  of  herself,  told  the                                                               
committee that she  is a consumer who is addressing  Section 1 of                                                               
HB 272.  She told the committee  that she bought a vehicle from a                                                               
used-car salesperson  who told her  that the  car was used.   She                                                               
said  she  had comparison  shopped  and  had gotten  prices  from                                                               
various car  dealers.  She said,  "The price that we  were quoted                                                               
by the gentleman that we  purchased our car from was considerably                                                               
higher.  They did not have the  make that we wanted, ... with the                                                               
equipment that we wanted, but we bought the car."                                                                               
                                                                                                                                
MS.  KOSONEN said  that she  has another  car that  she purchased                                                               
from a  local new-car  dealer.   She noted that  she is  a repeat                                                               
customer of  that dealer.   She pointed  out that she  has bought                                                               
both new  and used, and  she remarked, "I  guess I don't  see the                                                               
difference."   She  said  she  thinks [HB  272]  is  bad for  the                                                               
economy  and bad  for the  consumer.   She opined  that consumers                                                               
should be able to buy vehicles  from any dealer they choose.  She                                                               
posited, "It shouldn't have to be  a [new-car] dealer or a [used-                                                               
car] dealer; if they  sell new and used cars, and  we find one we                                                               
like, and  they quote the price  that we like, we  should be able                                                               
to purchase that car."                                                                                                          
                                                                                                                                
Number 1255                                                                                                                     
                                                                                                                                
MEL BOWEN, testifying in opposition to  Section 1 of HB 272, told                                                               
the committee  that he  is a long-time  teacher in  the Anchorage                                                               
School District, who also sells  cars part-time at Lyberger's Car                                                               
&  Truck Sales,  LLC.   He opined  that consumers  should have  a                                                               
choice of where to buy  automobiles, and that choice should never                                                               
be legislated.  He said, "Mandating  this by law is only favoring                                                               
special-interest  groups, and  not the  public or  the consumer."                                                               
He added  that laws should  be passed  to make [Alaska]  a better                                                               
place, not to  limit consumer choices.  He said  he hopes that HB                                                               
272  fails, because  the  legislature should  be  voting for  the                                                               
public and not special-interest groups.                                                                                         
                                                                                                                                
Number 1322                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN commented that  his special-interest group is                                                               
called "the constituents of District 31,"  as well as the rest of                                                               
the state.                                                                                                                      
                                                                                                                                
Number 1364                                                                                                                     
                                                                                                                                
CHRIS  JOHNSON, Finance  Manager, Lyberger's  Car &  Truck Sales,                                                               
LLC, stated that he disagrees with  [Section] 1 of HB 272 for the                                                               
primary reason  that "people are  going to  buy cars and  want to                                                               
save money, no  matter what."  He clarified that  if those people                                                               
are not  going to [get  good deals  on vehicles] in  Alaska, then                                                               
they will  go to a  dealer in another  state.  Mr.  Johnson noted                                                               
that he as worked in the  car business for approximately 14 years                                                               
-  7 years  as  a salesman  and  7 years  as  a finance  manager.                                                               
People don't want  to pay $10,000 more for a  car that they could                                                               
buy,  for example,  out  of  state, or  from  Lyberger's or  Phil                                                               
Hawes, he said.   He referred to Dave  Smith [previously referred                                                               
to by  Mr. Hawes'  as an out  of state dealer].   He  asked, "You                                                               
know what you get  from him when you get the car?   Nothing.  You                                                               
get an  owner's manual, keys, and  less than one quarter  tank of                                                               
gas."  Lyberger's, he noted,  has devised checklists to check the                                                               
vehicle, and  has employees who  have "been  to every car  lot on                                                               
the planet"  and understand how  the cars operate.   He indicated                                                               
that people are  "getting gouged left and right" by  "all the big                                                               
car dealerships,"  whereas Lyberger's gives a  "personal touch in                                                               
customer service."                                                                                                              
                                                                                                                                
MR. JOHNSON  turned to  the issue  of a  competitive market.   He                                                               
noted  that  there  are  dealerships in  other  states  that  are                                                               
located  directly across  the  street from  each  other, where  a                                                               
customer can  cross the street  for a  better deal.   He compared                                                               
that to  [Alaska's] "silly  law" regarding 14  miles to  the next                                                               
dealership.                                                                                                                     
                                                                                                                                
Number 1513                                                                                                                     
                                                                                                                                
REPRESENTATIVE   LYNN   asked   Mr.  Johnson   if   the   $10,000                                                               
differential  he  previously  mentioned applied  to  vehicles  of                                                               
similar year and make that are also similarly equipped.                                                                         
                                                                                                                                
MR. JOHNSON  responded, "Almost  exactly equipped.   If  not, you                                                               
could  probably  put  them  side  by  side  [and]  not  tell  the                                                               
difference  ...."    In  response  to  a  follow-up  question  by                                                               
Representative Lynn,  he said  that this  usually applies  to the                                                               
more expensive cars.  For example,  he said that a $44,000 car at                                                               
Cal Worthington may be $34,800 at Lyberger's.                                                                                   
                                                                                                                                
Number 1591                                                                                                                     
                                                                                                                                
DOREEN McADAMS  (ph) told the  committee that  she is one  of the                                                               
sales managers at  Lyberger's Car & Truck Sales, LLC.   She noted                                                               
that, as  Mr. Lyberger had  previously testified,  the franchised                                                               
dealers  could sell  their vehicles  to  "very close  to what  we                                                               
can," but they  don't want to work on a  small profit margin like                                                               
Lyberger's does.   She noted  that Lyberger's doesn't have  a big                                                               
showroom, and  she said, "We  keep it simple."   Furthermore, Ms.                                                               
McAdams  revealed  that  [the   franchised  dealers]  mark  their                                                               
vehicles up  over and above  the manufacturer's  suggested retail                                                               
price.   She asked,  "Who are  they to say  they can  charge more                                                               
than what the manufacturer asks?"                                                                                               
                                                                                                                                
MS.   McADAMS   mentioned   that  [Lyberger's]   has   disclosure                                                               
statements that  she said  she knows  the committee  members have                                                               
seen.  She stated that when  she asks her customers to sign them,                                                               
most of them  are thrilled, because they don't have  to go to the                                                               
[franchised] dealers, but  instead can go to  "somebody that they                                                               
feel comfortable with."                                                                                                         
                                                                                                                                
MS. McADAMS opined  that HB 272 would be bad  for the economy and                                                               
the customer, [because] more and  more people would go Outside to                                                               
buy a  vehicle.  She  stated that  people will buy  vehicles from                                                               
people that  they like and  trust.   She added, "And  that's what                                                               
we're doing  here; it's people liking  us and trusting us."   Ms.                                                               
McAdams  concluded by  saying that  there are  only two  kinds of                                                               
vehicles:  new or used.                                                                                                         
                                                                                                                                
Number 1688                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  referred   to  Ms.  McAdams'  previous                                                               
mention  of  having customers  sign  disclosure  statements.   He                                                               
asked if  those are  statements that are  easily readable  by the                                                               
customer  and  are  clear,  or   if  they  are  buried  in  other                                                               
paperwork.   He surmised that  a number of the  committee members                                                               
strongly favor  disclosure statements, but  want to be  sure that                                                               
[consumers] can read them.                                                                                                      
                                                                                                                                
Number 1739                                                                                                                     
                                                                                                                                
MS.  McADAMS explained  that, before  customers sign  [disclosure                                                               
statements],  a salesperson  would  have already  told them  that                                                               
they were  buying a Canadian  vehicle and  that there would  be a                                                               
replacement warranty on  it.  After the  credit applications were                                                               
filled  out, she  said, the  paper that  the customer  would sign                                                               
would be the only piece of paper  at her desk, and she would have                                                               
spoken to them about it.   In response to a follow-up question by                                                               
Representative Gruenberg, she described  the [disclosure] as "one                                                               
paragraph on an 8 1/2 x 11 sheet of paper."                                                                                     
                                                                                                                                
Number 1826                                                                                                                     
                                                                                                                                
REPRESENTATIVE  LYNN  asked  Ms.  McAdams  to  clarify  when  the                                                               
customer is actually told that the vehicle is Canadian.                                                                         
                                                                                                                                
MS. McADAMS  replied that the  customer is told in  the beginning                                                               
by  the  salesperson, then  [sees  that  information again  when]                                                               
signing the form with the sales manager.                                                                                        
                                                                                                                                
REPRESENTATIVE GRUENBERG mentioned that  a copy of the disclosure                                                               
was available for Representative Lynn to view.                                                                                  
                                                                                                                                
REPRESENTATIVE  LYNN noted  that  he has  been  involved in  real                                                               
estate, and  disclosure forms  are not  done after  going through                                                               
"14 inches of other paper."                                                                                                     
                                                                                                                                
MS. McADAMS  reiterated that [Lyberger's disclosure  form] is the                                                               
only  form  the  consumer  signs at  the  sales  manager's  desk;                                                               
therefore,  it is  not  shuffled  around with  a  bunch of  other                                                               
signatures.                                                                                                                     
                                                                                                                                
Number 1900                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  asked Ms. McAdams  to clarify at what  point the                                                               
consumer is told if he/she is being shown a Canadian vehicle.                                                                   
                                                                                                                                
MS. McADAMS  answered that the  salespeople tell the  consumer on                                                               
the lot.                                                                                                                        
                                                                                                                                
CHAIR WEYHRAUCH  asked if  that was  part of  [Lyberger's] policy                                                               
manual.                                                                                                                         
                                                                                                                                
MS.  McADAMS responded,  "Well,  it's just  common knowledge,  so                                                               
they  tell everybody."   She  noted  that not  all of  Lyberger's                                                               
vehicles are  from Canada.   In response to a  follow-up question                                                               
by  Chair  Weyhrauch, she  said  that  the salespeople  tell  the                                                               
consumer about the replacement warranty up front.                                                                               
                                                                                                                                
Number 1933                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked  what  the  difference is  between                                                               
Canadian  cars  sold  at  Cal Worthington  [or]  Alaska  Sales  &                                                               
Service [and those sold at Lyberger's], for example.                                                                            
                                                                                                                                
MS. McADAMS  said [a Canadian  vehicle] from Lyberger's  would be                                                               
used.   In  response to  a follow-up  question by  Representative                                                               
Crawford, indicated that the car could  have a few too many miles                                                               
on it.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  CRAWFORD  asked, "And  how  many  miles would  an                                                               
Alaskan Sales & Service new vehicle have?"                                                                                      
                                                                                                                                
MS.  McADAMS answered  that it  depends on  how many  test drives                                                               
it's been on.                                                                                                                   
                                                                                                                                
REPRESENTATIVE CRAWFORD  said, "So,  they might  have 10,  20, or                                                               
100 miles, right?"                                                                                                              
                                                                                                                                
MS. McADAMS said, "Right, [or it] could have 200."                                                                              
                                                                                                                                
REPRESENTATIVE CRAWFORD said, "So, it's virtually the same car."                                                                
                                                                                                                                
MS. McADAMS concurred.                                                                                                          
                                                                                                                                
Number 2000                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  said, "So,  you know  that here  in this                                                               
state, for  a number  of years,  we've had  a franchise  law that                                                               
says that  ... another dealer  can't sell  new cars within  a 14-                                                               
mile radius of that franchise holder, right?"                                                                                   
                                                                                                                                
MS. McADAMS responded, "We're not selling new cars."                                                                            
                                                                                                                                
REPRESENTATIVE CRAWFORD  said, "But  it's virtually new  in every                                                               
respect, other  than it doesn't  have a ...  manufacturer's place                                                               
of origin."                                                                                                                     
                                                                                                                                
MS. McADAMS explained  that they're used vehicles  that have been                                                               
titled before.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked,  "That's  the  only ...  loophole                                                               
that you have going for you, right?"                                                                                            
                                                                                                                                
MS. McADAMS answered as follows:                                                                                                
                                                                                                                                
     It's  not a  loophole; it's  the  facts.   The fact  is                                                                    
     they're used  vehicles.  Now,  I could buy a  car today                                                                    
     down  at Alaska  Sales [&  Service] and  decide that  I                                                                    
     don't like it,  and sell it tomorrow.   What would make                                                                    
     that any different?   I buy a vehicle  and, God forbid,                                                                    
     my husband drops  dead.  I don't need a  truck.  I have                                                                    
     to go sell it.  What would make that different?                                                                            
                                                                                                                                
REPRESENTATIVE  CRAWFORD  said,  "You're  a  consumer,  and  then                                                               
that's selling it from a consumer.   What we're talking about are                                                               
dealerships here."   He clarified  that what he is  talking about                                                               
is [the difference  between] the spirit of the law  or the letter                                                               
of law.   He said,  "You may not be  violating the letter  of the                                                               
law, but it's  certainly the spirit of the law  if you're selling                                                               
a  car that's  virtually identical  to the  ... new-car  dealer's                                                               
car.  Nobody  can tell the difference looking at  it [or] driving                                                               
it.  They're all exactly the same, aren't they?"                                                                                
                                                                                                                                
MS. McADAMS said, "Except ours are used."                                                                                       
                                                                                                                                
REPRESENTATIVE CRAWFORD said that's what he calls a loophole.                                                                   
                                                                                                                                
MS. McADAMS  reiterated that  it's the  difference between  a new                                                               
and used car.                                                                                                                   
                                                                                                                                
REPRESENTATIVE CRAWFORD  suggested that  maybe the law  is fouled                                                               
up.                                                                                                                             
                                                                                                                                
MS. McADAMS said,  "This is a very simple bill.   You either have                                                               
a new car or a used car.  Our vehicles are used."                                                                               
                                                                                                                                
REPRESENTATIVE CRAWFORD responded, "That's  my contention:  it is                                                               
a very simple bill."                                                                                                            
                                                                                                                                
Number 2177                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG asked,  "Lyberger's isn't violating that                                                               
franchise law, is it?"                                                                                                          
                                                                                                                                
MS. McADAMS said, "Of course not."                                                                                              
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked Ms. McAdams to  confirm that that                                                               
franchise law only applies to holders of franchises.                                                                            
                                                                                                                                
MS. McADAMS answered  that [it applies to]  franchised people and                                                               
people that  are selling  new cars; however,  she added  that the                                                               
only people who can sell the new cars are franchised [dealers].                                                                 
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  that's right.   He  asked her  to                                                               
confirm  that [the  law] doesn't  prohibit used-car  dealers from                                                               
selling used cars.                                                                                                              
                                                                                                                                
MS. McADAMS answered, "Right."                                                                                                  
                                                                                                                                
Number 2190                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  suggested to  Representative  Crawford                                                               
that if he  has a problem with  that law, then the  remedy may be                                                               
to  [change the  law]  to  prohibit used  cars  from being  sold,                                                               
because it doesn't do that now.                                                                                                 
                                                                                                                                
Number 2200                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD   said,  "That's   what  the   law  that                                                               
Representative Weyhrauch  has here does."   He mentioned current-                                                               
model years.                                                                                                                    
                                                                                                                                
Number 2240                                                                                                                     
                                                                                                                                
JAMES  MOORE,  Owner, Jim's  Muffler  &  Auto Repair,  Anchorage,                                                               
Alaska, told  the committee that he  doesn't think [HB 272]  is a                                                               
fair bill,  and he said that  he thinks things should  be left as                                                               
is.   He opined that [HB  272] is bad for  business, economy, and                                                               
the  consumer.   He  commented that  everybody's  picking on  Mr.                                                               
Lyberger.  He noted that when  Mr. Lyberger moved [to his present                                                               
location] there was no Dodge Dealer or Tony Chevrolet.                                                                          
                                                                                                                                
MR. MOORE  noted that he has  been in the automotive  business in                                                               
Anchorage for  35 years and  has repaired every car  that's made.                                                               
He said,  "What I don't  understand is, Alaska Sales  [& Service]                                                               
is probably losing  a lot of business to  Tony Chevrolet, because                                                               
they sell  Chevrolets and Buicks,  and they sell Cadillacs."   He                                                               
said he  owns two Cadillacs, one  of which he bought  from Alaska                                                               
Sales & Service.   He noted the number of miles  that was on each                                                               
of the cars when he bought them.                                                                                                
                                                                                                                                
MR.  MOORE  said  he  fixes  cars for  Alaska  Sales  &  Service,                                                               
Chrysler, and Cal Worthington Ford.   He noted some of the places                                                               
he has  worked, including Alaska  Sales & Service  and Lyberger's                                                               
Car &  Truck Sales, LLC.   He vouched  for Mr. Lyberger  as being                                                               
the most honest businessman he's ever  seen in his life.  He also                                                               
noted   that  he   started  the   I/M  program   [inspection  and                                                               
maintenance  program   for  automobile  emissions]   with  former                                                               
Governor Tony Knowles.                                                                                                          
                                                                                                                                
MR. MOORE returned  to the subject of his Cadillacs  and told the                                                               
committee that one was made in  Texas and one was made in Mexico,                                                               
and they  both came through Canada  through an auction sale.   He                                                               
said, "So, somebody  down in some other part of  the country sold                                                               
these vehicles and then they went  into Canada, and then they got                                                               
out of Canada into Alaska."                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN recalled that it  was fairly recently that he                                                               
started noticing Lyberger cars and Mr. Lyberger's dealership.                                                                   
                                                                                                                                
MR. MOORE  said, "No, ... I've  been doing business with  him for                                                               
over, probably, three  or four years, and he  worked at Anchorage                                                               
Chrysler as a car dealer."                                                                                                      
                                                                                                                                
Number 2465                                                                                                                     
                                                                                                                                
RICHARD  HYATT,  Service  Manager,  Alaska  Sales  &  Service  in                                                               
Anchorage, said that the difference  between new and used cars is                                                               
the issue.   He said, "The  only way that they're  trying to call                                                               
this a  used car is  by finding a  fictitious owner in  Canada to                                                               
put on the title as the first owner,  so he can sign off and then                                                               
sell it as a used car."                                                                                                         
                                                                                                                                
MR. HYATT  opined that  there should be  a distinction  between a                                                               
car that has  never been used by  anybody and has 20  or 30 miles                                                               
on it, and a used car that has actually been out in service.                                                                    
                                                                                                                                
MR. HYATT noted that there is  a new Cadillac Roadster coming out                                                               
in the  fall, which is  called the  "XLR" Cadillac.   He revealed                                                               
that all  Cadillac dealers don't  automatically get to  sell that                                                               
car.   Before [Alaska Sales  & Service]  can get the  vehicle, it                                                               
will send its sales staff Outside  to train so that it will learn                                                               
how to sell the car.  Then it  will send its service staff out to                                                               
train  and learn  how to  diagnose and  repair the  vehicle.   He                                                               
noted that  the essential  tools have already  been ordered  at a                                                               
cost  of  approximately  $4,000.    The  company  has  signed  an                                                               
agreement to stock the parts that  may be necessary to repair it,                                                               
he said.   All of  this, he  explained, is in  preparation before                                                               
these vehicles are  even delivered.  He estimated  that if things                                                               
go as  they have in the  past with other vehicles,  he expects to                                                               
see this  vehicle in  a local  lot "long before  we ever  get the                                                               
vehicle."                                                                                                                       
                                                                                                                                
MR.  HYATT turned  to the  subject of  customer satisfaction  and                                                               
taking care of the customer.  He continued as follows:                                                                          
                                                                                                                                
     It's  simple:   If  you're  going to  sell  a new  car,                                                                    
     especially one ... that costs  as much as these do, you                                                                    
     need to  have the  facility and  the equipment  and the                                                                    
     training to take  care of the customer.   It's a simple                                                                    
     deal to take his money and  toss him his keys, and then                                                                    
     tell him to  go over to his dealer so  they can explain                                                                    
     how  to use  all  of the  features on  your  car.   And                                                                    
     frankly, that's what has been going on.                                                                                    
                                                                                                                                
     There's a service  that comes from the  dealer when you                                                                    
     buy  a car  that  isn't reimbursed  by  the factory  or                                                                    
     anybody else.   It's the service after  the sale, where                                                                    
     you  take the  customer out  and show  them how  to use                                                                    
     their [antilock  braking system]  (ABS) brakes,  or you                                                                    
     help them hook  up their OnStar.  You show  them how to                                                                    
     use the memory seats and  the memory mirrors.  You show                                                                    
     them  all  the  options  on the  car  and  how  they're                                                                    
     properly used.                                                                                                             
                                                                                                                                
     And this  is what we have  been doing as a  courtesy to                                                                    
     Mr.  Lyberger and  the customers,  because they're  not                                                                    
     being told.   They  buy a  car with  20 miles  [on it].                                                                    
     They don't know  how these things work,  or they're not                                                                    
     capable of programming them, or  using them.  So I meet                                                                    
     them  in the  service aisle.   And  it's a  courtesy to                                                                    
     them and  Mr. Lyberger and the  other used-car dealers,                                                                    
     as we're  calling them.   We  provide that  service for                                                                    
     the customers and properly instruct  them and show them                                                                    
     how they work.                                                                                                             
                                                                                                                                
     The matter  of fact is that  a car with 20  miles on it                                                                    
     is not  a used car.   Nobody has  used that car.   They                                                                    
     used  somebody's  name  so  they   could  turn  in  the                                                                    
     [manufacturer's statement  of origin]  (MSO) and  get a                                                                    
     title to  it; but everybody  knows it hasn't  ever been                                                                    
     used.                                                                                                                      
                                                                                                                                
Number 2632                                                                                                                     
                                                                                                                                
     Right  now  the  law  says you  cannot  sell  the  cars                                                                    
     without  the  manufacturer's   certificate  of  origin.                                                                    
     They're already is a law in  the books.  What is trying                                                                    
     to be done with this  amendment is make it possible for                                                                    
     them  to sell  legitimate used  cars that  are actually                                                                    
     taken in the  due coarse of business:   somebody trades                                                                    
     them in; they buy them  from a rental agency that turns                                                                    
     them in; or, like somebody  said just a minute ago, you                                                                    
     buy it  one day  and don't  like it  the next,  and you                                                                    
     sell it.  That's all  allowed in the amendments to this                                                                    
     bill.                                                                                                                      
                                                                                                                                
     It's just a  matter of somebody has gone to  the well a                                                                    
     few  too  many times.    This  thing started  out  very                                                                    
     slowly.  They saw how  they could make enormous amounts                                                                    
     of money by  selling the cars and not  providing any of                                                                    
     the  service or  facilities.   And now  businesses have                                                                    
     built  up  just  to  sell  these  particular  kinds  of                                                                    
     vehicles.                                                                                                                  
                                                                                                                                
Number 2683                                                                                                                     
                                                                                                                                
DAN  COFFEY, Lobbyist  for  Lyberger's Car  &  Truck Sales,  LLC,                                                               
referred to a [three-page] letter  sent to Chair Weyhrauch [dated                                                               
May 15, 2003  and included in the committee packet],  and he said                                                               
that  it outlines  what  he will  talk about.    He informed  the                                                               
committee that the methodologies by  which "these cars" come into                                                               
the country is established by  treaty with Canada and Mexico, and                                                               
then subsequently controlled by  the code of federal regulations.                                                               
He noted  that it's a  legal and lawful practice  associated with                                                               
NAFTA, and  the methodologies used are  prescribed by regulations                                                               
to  protect the  customer and  to ensure  the vehicles  meet U.S.                                                               
standards, for example.                                                                                                         
                                                                                                                                
MR.  COFFEY  referred  to   [Mr.  Hyatt's]  previous  description                                                               
regarding  the  practice  of acquiring  these  cars  and  stated,                                                               
"That's simply not what happens."  He continued as follows:                                                                     
                                                                                                                                
     These cars  are brought  into the  country by  what are                                                                    
     known as  "RIs" -  registered importers, which  have to                                                                    
     meet  a  certain level  of  standards  and criteria  in                                                                    
     order  to bring  these cars  in.   And  the mileage  on                                                                    
     these  cars   varies  from  very  low   to,  sometimes,                                                                    
     substantial miles, but needless  to say, they are these                                                                    
     Canadian cars that are brought in.                                                                                         
                                                                                                                                
     Once  they  get  here,  they've got  to  be  certified.                                                                    
     Bonds are  posted, [and] the  cars can't be  sold until                                                                    
     after all  the documentation  is done  and the  bond is                                                                    
     released.  Then the cars  are available for sale in all                                                                    
     50 states.   ...  So, what this bill  really does is it                                                                    
     creates  two classes  of persons;  it says,  basically,                                                                    
     that you will  not be able to sell these  kinds of cars                                                                    
     here  in Alaska,  unless  you're  a franchised  dealer.                                                                    
     And  that  doesn't apply  to  anyone  else, and  ...  -                                                                    
     although we haven't done the  legal research ... to the                                                                    
     "Nth" degree -  ... it appears to be  [in violation] of                                                                    
     the federal  law which allows  the cars to  be imported                                                                    
     and sold  in every state in  the union.  And  now we're                                                                    
     going  to  prohibit a  certain  class  of our  business                                                                    
     people here in Alaska from doing that.                                                                                     
                                                                                                                                
MR. COFFEY opined  that the proposed legislation  is not designed                                                               
so  much to  protect  the consumer  as it  is  [to protect]  "one                                                               
particular  aspect  of  business."   He  noted  that  his  letter                                                               
recommends  that  if the  committee  wants  to  make [HB  272]  a                                                               
consumer protection  bill, it should  include the  language found                                                               
in the  previously mentioned  Holm Amendment  [Amendment 1].   He                                                               
said  that  [similar  amendments]   have  been  adopted  in  many                                                               
jurisdictions, including  Utah, which mandates disclosure  of the                                                               
original origin  of the vehicle.   Then, he said, there  would be                                                               
no question  but that the consumer  is informed and can  make the                                                               
choice if he/she  wants to take the alternative  warranty, or buy                                                               
the car  that's used, for  example.   He emphasized that  then it                                                               
would be the consumer's choice, not  "one that's hoisted on us by                                                               
the government."                                                                                                                
                                                                                                                                
MR. COFFEY  told the committee  that Mr. Lyberger and  "the other                                                               
dealers" would  support a consumer  protection bill, but  not one                                                               
they view primarily as anti-competitive in nature.                                                                              
                                                                                                                                
Number 2831                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN asked Mr. Coffey  what steps he would have to                                                               
take to become a registered importer.                                                                                           
                                                                                                                                
Number 2846                                                                                                                     
                                                                                                                                
MR. COFFEY  answered that  Representative Lynn  would have  to be                                                               
qualified  through a  federal agency  that he  said he  could not                                                               
recall the  name of at the  moment.  He also  said Representative                                                               
Lynn would  have to put up  a $20,000 bond per  vehicle, and meet                                                               
other criteria, as well.  He  noted that neither Mr. Lyberger nor                                                               
any  of "these  300-and-some  dealers in  Alaska are  importers";                                                               
they buy from a registered importer.   In response to a follow-up                                                               
question  by Representative  Lynn,  Mr. Coffey  said he  believes                                                               
that  the  registered  importers are  just  independent  business                                                               
people and they do not work for the non-franchised dealers.                                                                     
                                                                                                                                
Number 2922                                                                                                                     
                                                                                                                                
DONALD WALKER,  Salesperson, Lyberger's  Car & Truck  Sales, LLC,                                                               
told the committee  that it seems that Section 1  of HB 272 would                                                               
not protect  the public, but  would allow the  franchised dealers                                                               
to "monopolize  on their brand  of vehicle,"  thereby eliminating                                                               
competition.                                                                                                                    
                                                                                                                                
TAPE 03-66, SIDE B                                                                                                            
Number 2953                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG   asked  Mr.  Coffey  if   HB  272,  as                                                               
currently written,  passes, would  Mr. Lyberger and  "people like                                                               
him" be able to continue their current business?                                                                                
                                                                                                                                
MR. COFFEY answered that they would  not be able to sell current-                                                               
model-year cars.  He stated  his understanding that the intent of                                                               
the bill is to stop them from  doing that.  He added, "Absent the                                                               
few exceptions."                                                                                                                
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked if  they would  have a  course of                                                               
action and be entitled to just compensation from the state.                                                                     
                                                                                                                                
MR.  COFFEY said  he hadn't  thought about  that [happening  as a                                                               
result of]  "the taking of  their business."   He said  that they                                                               
certainly would have  a cause of action to have  the law declared                                                               
illegal, because  of the commerce  clause, the  supremacy clause,                                                               
the fact  that "selling  automobiles is a  legal a  product," and                                                               
because  "they're creating  two classes  of dealers,  and they're                                                               
saying  that one  can  sell  them and  another  one  can't."   He                                                               
explained that  there's no rational basis  for the discrimination                                                               
between the two classes.  He said  he thinks there would be a lot                                                               
of legal problems associated with it.                                                                                           
                                                                                                                                
Number 2882                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG said this is  a serious legal issue that                                                               
should be looked into.                                                                                                          
                                                                                                                                
Number 2870                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH responded  that there  is no  time to  look into                                                               
that [issue].   He  added that  there is  a difference  between a                                                               
court order  and advocacy.   He remarked,  "... We all  know that                                                               
lawyers are  paid to raise issues,  too."  He said  Mr. Coffey is                                                               
doing a good job and he appreciates that.                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG  said that  the question is  whether the                                                               
issue is a valid issue and one that  has not been raised yet.  He                                                               
asked Mr.  Coffey, "If Mr.  Lyberger did  have a cause  of action                                                               
against the  state for taking  this ... portion of  his business,                                                               
do you have  any idea what his damages in  this one company alone                                                               
would be?"                                                                                                                      
                                                                                                                                
MR. COFFEY  said no, but  he added that  he thinks they  would be                                                               
fairly substantial.                                                                                                             
                                                                                                                                
Number 2803                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD asked Mr. Coffey  if he was aware that if                                                               
the  legislature doesn't  "pass  some law  here,  that all  these                                                               
folks would be breaking the law, under the current law."                                                                        
                                                                                                                                
MR.  COFFEY   said  that  he   disagrees  with   that  inaccurate                                                               
statement.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  CRAWFORD offered  his belief  that current-model-                                                               
year vehicles, under  the law, have been illegal  since 1993, but                                                               
the law has just not been enforced.                                                                                             
                                                                                                                                
MR. COFFEY  said he has had  discussions with Mr. Sniffen  of the                                                               
AG's office, and the problem that  existed in the past, as it was                                                               
presented to  him, was one  of advertising the vehicles  as "new"                                                               
or "like-new."  He explained as follows:                                                                                        
                                                                                                                                
     A  vehicle  is  used,  by state  law  definition,  when                                                                    
     there's no  longer a certificate  of origin,  when that                                                                    
     vehicle's been titled.  They  don't go by the number of                                                                    
     miles; they  go by the  status of the  vehicle relative                                                                    
     to its condition of title.                                                                                                 
                                                                                                                                
     So, if  you say  you cannot ...  advertise for  sale or                                                                    
     sell as current-model-year, in a  way that's saying you                                                                    
     can't  sell  a blue  car.    I  mean,  it either  is  a                                                                    
     current-model-year or  it isn't.   And it's  either new                                                                    
     or it's  used - one  or the  other.  So,  under current                                                                    
     law, you  can't sell  as new  a car  that's ...  used -                                                                    
     that ... has been titled ....                                                                                              
                                                                                                                                
     So,  that's what  we've got  here is  -- and  certainly                                                                    
     they're ... low mileage -  there's no question of that.                                                                    
     But what you'd  need to do if you wanted  to do that is                                                                    
     you'd need  to change the  definition of new  and used,                                                                    
     because these are clearly used vehicles.                                                                                   
                                                                                                                                
Number 2721                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  mentioned sovereign  immunity and  asked Mr.                                                               
Coffey if he was saying that the state could be sued.                                                                           
                                                                                                                                
MR. COFFEY said that sovereign  immunity applies, but it also has                                                               
to "fall to the idea of a  man's property."  He explained that if                                                               
the government takes  a man's property, it has  to compensate him                                                               
for it.   He surmised  that Representative Gruenberg's  theory is                                                               
that  preventing  this  kind  of business  for  Mr.  Lyberger  is                                                               
tantamount to taking  away a business right.  He  said he doesn't                                                               
know if  that's a valid legal  theory or not, because  he has not                                                               
looked at  that idea.   Regarding sovereign  immunity [as  it may                                                               
relate to  Mr. Lyberger's  business], he  added, "Now  whether or                                                               
not it's property, I don't know."                                                                                               
                                                                                                                                
Number 2650                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  referred to  [AS] 08.66.015,  which read                                                               
as follows:                                                                                                                     
                                                                                                                                
     Sec. 08.66.015.  Sale of motor vehicle.                                                                                    
          (a) A person who does business as a dealer in the                                                                     
     state may not offer to sell  or sell a motor vehicle as                                                                    
     a new or  current model motor vehicle  unless the motor                                                                    
     vehicle  retains  the   manufacturer's  certificate  of                                                                    
     origin.                                                                                                                    
          (b) A person who does business as a dealer in the                                                                     
     state may not offer to sell  or sell a motor vehicle as                                                                    
     a  new   or  current  model  motor   vehicle  having  a                                                                    
     manufacturer's warranty unless                                                                                             
          (1) the dealer has a current sales and service                                                                        
     agreement  with  the  manufacturer  and  the  agreement                                                                    
     requires the  dealer, upon demand of  the motor vehicle                                                                    
     buyer, to  perform or arrange for,  within a reasonable                                                                    
     distance  of  the dealer's  place  of  business in  the                                                                    
     state, the repair and replacement  work required of the                                                                    
     manufacturer under the warranty; or                                                                                        
          (2) the dealer offers to give the buyer a rebate                                                                      
     to  cover  the repair  and  replacement  work that  the                                                                    
     dealer  cannot   perform  or   arrange  for   within  a                                                                    
     reasonable distance of the dealer's place of business.                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD turned  to a sentence in  the fiscal note                                                               
analysis for  [CSHB 272(L&C)], which  read:  "Currently,  the law                                                               
prohibits the sale of any  current-model-used vehicles."  He said                                                               
he doesn't  know how to make  it plainer that unless  the present                                                               
law is changed, then "all these folks are breaking the law."                                                                    
                                                                                                                                
MR.  COFFEY  offered  his  understanding   that  "they  meet  the                                                               
qualification  relative  to  the   current-model  year  with  the                                                               
warranty   programs  that   are  available."     He   stated  his                                                               
understanding  that  the  proposed legislation  would  absolutely                                                               
prohibit  that, "unless  you're  a franchised  dealer," which  he                                                               
said is a substantial change.                                                                                                   
                                                                                                                                
REPRESENTATIVE  CRAWFORD responded  that that's  not exactly  how                                                               
it's  been explained  to  him.   He  noted  that  the reason  the                                                               
committee brought the bill back  after moving it out of committee                                                               
is that "we're all doing our best to try to understand this."                                                                   
                                                                                                                                
MR. COFFEY stated his belief  that there are very strong consumer                                                               
protection concerns  associated with this [issue].   He continued                                                               
as follows:                                                                                                                     
                                                                                                                                
     And I  think that if that's  ... our focus ...,  and we                                                                    
     put a bill out that  makes sure there's disclosure, and                                                                    
     if you're going to sell  these things there's a certain                                                                    
     type of vehicle - like  a current-model year - and make                                                                    
     them sound  like they're  ... something  different than                                                                    
     just a  used car, then  you've probably got  to provide                                                                    
     these  warranties and  these other  things that  are in                                                                    
     the current  law.   And ... we  don't have  any problem                                                                    
     with that.                                                                                                                 
                                                                                                                                
     It's the  question of  whether or not  a person  is ...                                                                    
     going to  be precluded in any  circumstances, no matter                                                                    
     what they do,  from being able to sell  these cars that                                                                    
     come in  from Canada, which  is really what  the source                                                                    
     of the automobile  is.  And I think the  problem I have                                                                    
     with it  is:   when you're  on the  consumer protection                                                                    
     side,  with disclosures  and  required warranties,  and                                                                    
     all  that, then  you're  on the  ... appropriate  side;                                                                    
     when  you're on  the anti-competitive  side that  says,                                                                    
     "Wait  a minute,  this class  of 320-some  dealers, you                                                                    
     can't sell these things at  all, period, no matter what                                                                    
     you do" - ... I think  that's the thing that runs afoul                                                                    
     of NAFTA.                                                                                                                  
                                                                                                                                
     Because we  clearly allow these  things to  be imported                                                                    
     into the country.  That  means somebody's going to have                                                                    
     to sell  them.  And every  state does allow them  to be                                                                    
     sold.     As  far  as   we  can  find,   only  Alaska's                                                                    
     considering  prohibiting  them.   So,  I  think  that's                                                                    
     going to cause  some problems with the federal  law.  I                                                                    
     think you've got the commerce  clause and the supremacy                                                                    
     clause, and  all that stuff.   And so I think  that's a                                                                    
     legal  problem.   And  then ...  just  the basic  anti-                                                                    
     competitive nature is problematic to me.                                                                                   
                                                                                                                                
     So I think  we ought to say, "Look,  disclose that it's                                                                    
     a Canadian vehicle ...."   And then, if you're going to                                                                    
     sell it in the  way you're going to sell it  - ... as a                                                                    
     current-model year - you've got  to offer this warranty                                                                    
     that's in  existing law.  And  then you've accomplished                                                                    
     your purpose, I think.                                                                                                     
                                                                                                                                
Number 2489                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  stated his  understanding that  it is  not a                                                               
warranty, but a service contract.                                                                                               
                                                                                                                                
MR. COFFEY  said he  thinks that's  semantics more  than anything                                                               
else, although he  added that he doesn't know  the particulars of                                                               
each  warranty.     In  response  to  a   follow-up  question  by                                                               
Representative Lynn,  he said,  "If it  breaks and  somebody else                                                               
fixes it  for you,  I don't  care whether you  call it  a service                                                               
contract  or a  warranty.   If  you  don't have  to  pay for  the                                                               
repairs, then ... I think that's probably okay."                                                                                
                                                                                                                                
Number 2390                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  referred to  the two kinds  of warranties:                                                               
a manufacturer's  warranty and [a  service contract such  as] the                                                               
Heritage warranty.   He  noted that they  are both  covered under                                                               
current  law;  however, the  second  kind  of warranty  would  be                                                               
eliminated by  the language on  page 2,  beginning line 3  of the                                                               
proposed  committee  substitute  (CS)  for HB  272,  Version  23-                                                               
LS0975\H, Bannister, 5/14/03, which read as follows:                                                                            
                                                                                                                                
[DEALER OFFERS  TO GIVE THE  BUYER A  REBATE TO COVER  THE REPAIR                                                               
AND REPLACEMENT  WORK THAT THE  DEALER CANNOT PERFORM  OR ARRANGE                                                               
FOR WITHIN A REASONABLE DISTANCE OF THE DEALER'S PLACE]                                                                         
                                                                                                                                
MR. COFFEY responded that that's also his understanding.                                                                        
                                                                                                                                
Number 2310                                                                                                                     
                                                                                                                                
CHRIS HESTER, Lyberger's  Car & Truck Sales,  LLC, testified that                                                               
last year  alone Lyberger's averaged  1,800 vehicles [sold].   He                                                               
said that it  surprises him that the issue  of odometer rollbacks                                                               
keeps  being brought  up, and  that [people  say] that  consumers                                                               
will  be hurt  by these  Canadian vehicles  because there  are no                                                               
warranties.  Out of those  1,800-plus vehicles sold last year, he                                                               
noted, the AG only received one complaint.                                                                                      
                                                                                                                                
MR.  HESTER  turned to  the  subject  of  price difference.    He                                                               
explained that  the reason  there is such  a price  difference on                                                               
Lyberger's vehicles  is because  they are used  cars.   He stated                                                               
that a person pays less for a  used car.  He said that franchised                                                               
dealers have made  Alaskans pay marked-up prices for  the last 20                                                               
years and  people are  sick of  paying those  higher prices.   He                                                               
posited that if consumers wanted  to pay those prices they would,                                                               
but instead "they come and  purchase used vehicles from our lot."                                                               
Mr. Hester  added that  if there  was such  a problem  with these                                                               
Canadian vehicles  he thinks  the AG would  be getting  more than                                                               
one complaint out of all the  cars Lyberger's sold last year.  He                                                               
stated that  HB 272 is  a simple interest  bill that is  "for the                                                               
franchised dealer" and does not help the consumer.                                                                              
                                                                                                                                
Number 2217                                                                                                                     
                                                                                                                                
CAROL LYBERGER,  testifying on behalf  of Lyberger's Car  & Truck                                                               
Sales, LLC,  stated that  there is a  difference between  new and                                                               
used [vehicles].   She surmised that Lori Urban  has been waiting                                                               
to testify and  probably wishes to talk about  "something that we                                                               
here in Alaska know nothing  about," which is importing vehicles.                                                               
Without further ado, she deferred to Ms. Urban.                                                                                 
                                                                                                                                
LORRI URBAN, Manager, Member  Services, North American Automobile                                                               
Trade  Association   (NAATA),  told  the  committee   that  NAATA                                                               
[serves] independent  importers and exporters of  motor vehicles.                                                               
Furthermore,  she noted  that  75 percent  of  its membership  is                                                               
comprised of  registered importers  who import  Canadian vehicles                                                               
into the United States.                                                                                                         
                                                                                                                                
MS. URBAN said she would address  what she called the "myths" and                                                               
"half-truths" that  the committee has  been hearing.   First, she                                                               
recalled  that Mr.  Aline previously  testified  that within  his                                                               
franchised  dealer agreement  there  is a  clause that  indicates                                                               
that he is prohibited from  selling Canadian motor vehicles.  She                                                               
remarked that she  wonders if the committee has [seen]  a copy of                                                               
that  [agreement].   The  very nature  of  that restriction,  she                                                               
noted, would be contrary to federal trade laws.                                                                                 
                                                                                                                                
MS. URBAN turned  to the next myth regarding  "the procurement of                                                               
Canadian motor  vehicles from  Canada into  the United  States by                                                               
college  students."   She noted  that  210,000 Canadian  vehicles                                                               
were legally  imported into the  United States last  year through                                                               
the  Registered  Importer  program,  which is  regulated  by  the                                                               
National Highway Traffic  Safety Administration (NHTSA), [within]                                                               
the [U.S.]  Department of Transportation.   The federal  laws and                                                               
regulations are in  place for consumer protection.   A registered                                                               
importer is licensed by that  department, she said, and no person                                                               
may  import a  motor vehicle  into the  U.S. for  the purpose  of                                                               
sale,  unless he/she  is contracted  with a  registered importer.                                                               
She  said, "210,000  motor vehicles  is a  lot of  cars; to  have                                                               
individuals  going  to  dealerships   [to]  purchase  this  [many                                                               
vehicles] is neither practical [nor] economical."                                                                               
                                                                                                                                
MS.  URBAN noted  that for  many years,  automobile manufacturers                                                               
have  used certain  sales and  marketing practices,  both in  the                                                               
U.S. and Canada, which are designed  to stimulate car sales.  She                                                               
said two  of those practices are  the use of fleet  subsidies and                                                               
consumer rebates.   Ms. Urban explained that  fleet subsidies are                                                               
subsidies  offered to  purchasers  of large  quantities of  cars,                                                               
such as  rental car companies  and large corporations.   She said                                                               
these discounts can  be larger than the discounts  offered to the                                                               
franchised  dealer, and  for many  years  the franchised  dealers                                                               
have been totally  against this.  She said  that fleet purchasers                                                               
often resell  fleet vehicles  directly to the  public or  to non-                                                               
franchised dealers who in turn sell them to the public.                                                                         
                                                                                                                                
MS. URBAN  referred the  committee to  United States  v. National                                                             
Automobile Dealers  Association for  that information.   She said                                                             
the [U.S.]  Department of Justice  found that the agreement  by a                                                               
trade association  or its members  not to do business  with other                                                               
competitors  or  customers  for   the  purpose  of  (indisc.)  is                                                               
(indisc.) violation of the Sherman Act.                                                                                         
                                                                                                                                
Number 1945                                                                                                                     
                                                                                                                                
MS. URBAN  turned to  the issue  of odometer  fraud.   She stated                                                               
that it's  not unique to Canadian  cars, but is a  North American                                                               
problem that  "we're all concerned  with."  However,  she offered                                                               
her understanding that  "there is an amendment on  the table that                                                               
would allow  daily rental  companies to  sell vehicles  after six                                                               
months,  including  Canadian  vehicles."   She  added,  "I'm  not                                                               
seeing the relevance of the  age difference in the motor vehicle.                                                               
I assume that at one time  that vehicle was a nearly-new Canadian                                                               
vehicle, so  I'm not understanding  the difference of  six months                                                               
for  nearly-new for  odometer fraud  situations, which  addresses                                                               
the public concern."                                                                                                            
                                                                                                                                
MS. URBAN reiterated that the  federal laws regulate a registered                                                               
importer.   She said,  "They take  on all  the liability  and the                                                               
responsibility  of a  manufacturer,  once that  motor vehicle  is                                                               
imported into the United States."   She noted that the registered                                                               
importer  "has certain  duties that  he has  to apply  to."   Ms.                                                               
Urban  said that  this is  in regard  to safety  recall, and  she                                                               
continued as follows:                                                                                                           
                                                                                                                                
     For the  next ten years  that that motor vehicle  is in                                                                    
     the   United  States,   the   registered  importer   is                                                                    
     responsible  for notifying  the  titled  owner of  that                                                                    
     vehicle.  There is a  $20,000 bond on that vehicle, and                                                                    
     it will remain on there for the next 10 years.                                                                             
                                                                                                                                
     ...  Also, it  should  be ...  noted  that even  though                                                                    
     manufacturers   are  currently   denying  warranty   on                                                                    
     Canadian  motor  vehicles,  they cannot  refuse  safety                                                                    
     recall work on the same vehicle.                                                                                           
                                                                                                                                
MS. URBAN  indicated that, regarding  noncompliance and  safety -                                                               
related defects,  there is  a safety net  of a  quarterly report.                                                               
She  also  mentioned a  duty  to  provide  and retain  copies  of                                                               
odometer disclosure.  When a  registered importer imports a motor                                                               
vehicle  into the  U.S., she  said,  he/she must  first obtain  a                                                               
service record  from a Canadian franchised  dealer that indicates                                                               
that Canadian  motor vehicle does  not have a Canadian  recall on                                                               
it.   The reason  for this,  she explained, is  that some  of the                                                               
data bases  from the manufacturer  do not correspond  from Canada                                                               
to  the U.S.;  therefore, in  order to  ensure that  there is  no                                                               
safety  recall solely  in Canada,  that registered  importer must                                                               
submit  a document  and  printout to  [NHTSA]  with a  compliance                                                               
package to ensure  that either there has been no  recall, or that                                                               
the  work has  already been  done.   She added,  "With that  work                                                               
order,  you would  find that  the dealership  would indicate  the                                                               
miles and kilometers at that particular instance."                                                                              
                                                                                                                                
Number 1741                                                                                                                     
                                                                                                                                
MS. URBAN noted that when the  vehicle is moved into the U.S. and                                                               
the  odometer  is  changed  by   the  registered  importer,  that                                                               
importer  must take  a photograph  of that  odometer "in  miles,"                                                               
submit an odometer  statement, and certify that  the odometer "is                                                               
true."                                                                                                                          
                                                                                                                                
MS. URBAN  revealed that  registered importers  face imprisonment                                                               
for up  to 20 years if  they're found guilty of  noncompliance of                                                               
any  of these  regulations.   She indicated  that there  are many                                                               
other  safety nets.    She  said, "It's  pretty  much covered  by                                                               
federal law that  would ensure that the consumer  is protected as                                                               
the  motor  vehicle  is  moving   into  the  United  States;  ...                                                               
therefore,  the Alaska  law is  not necessary."   She  noted some                                                               
additional  requirements,  including  that   a  vehicle  must  be                                                               
brought into  compliance within  120 days,  otherwise it  must be                                                               
exported back out of the U.S.                                                                                                   
                                                                                                                                
Number 1662                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH  asked  Ms.  Urban  to  clarify  how  broad  her                                                               
statement  was  meant  to  be  regarding  Alaska  law  not  being                                                               
necessary.                                                                                                                      
                                                                                                                                
MS. URBAN stated  her understanding that the  ultimate concern is                                                               
for the  consumer, regarding odometer  fraud, for example.   Full                                                               
disclosure  laws,  she  said,  are currently  in  place.    Other                                                               
states,  she  noted, have  other  laws  in  place to  keep  other                                                               
foreign  vehicles  out  that  don't  meet  the  U.S.  safety  and                                                               
emissions  standards.   However,  she pointed  out that  Canadian                                                               
vehicles are  almost identical  to U.S.  versions, "save  for the                                                               
odometer,"  and those  particular vehicles  are allowed  into the                                                               
state.   She concluded, "State  laws are changing to  ensure that                                                               
...  full disclosure  on Canadian  motor vehicles  is one  of the                                                               
laws."                                                                                                                          
                                                                                                                                
Number 1582                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  Ms.  Urban to  confirm that  the                                                               
odometer  law is  the  result of  the  [Magnuson-Moss Warranty  -                                                               
Federal Trade Commission Improvement Act].                                                                                      
                                                                                                                                
MS. URBAN said yes.                                                                                                             
                                                                                                                                
REPRESENTATIVE  GRUENBERG  noted that  that  has  been law  since                                                               
approximately 1972.                                                                                                             
                                                                                                                                
Number 1566                                                                                                                     
                                                                                                                                
GEORGE  CLARK, Salesperson,  Lyberger's Car  & Truck  Sales, LLC,                                                               
told the  committee that the primary  effect Section 1 of  HB 272                                                               
will  have is  to hurt  customers who  would like  to buy  "late-                                                               
model-year" cars.  He said he  thinks that it's important to have                                                               
competition and HB 272 doesn't support that.                                                                                    
                                                                                                                                
Number 1500                                                                                                                     
                                                                                                                                
DARRELL FRIESS, testifying on behalf  of Budget Car & Truck Sales                                                               
and Budget  Rental Car of Alaska,  told the committee that  he is                                                               
concerned about  Section 1.   He offered his  interpretation that                                                               
the effect  of the  bill would  be to only  allow someone  with a                                                               
manufacturer's okay or a new-car dealership to sell a current-                                                                  
model vehicle.                                                                                                                  
                                                                                                                                
MR. FRIESS  turned to the issue  of Canadian vehicles.   He noted                                                               
that Budget  purchases vehicles  for its  car and  truck division                                                               
through  local  auctions,  as  well as  auctions  in  Oregon  and                                                               
Washington states.  One of the  vehicles that may be available at                                                               
the auctions  are current-model-year U.S. vehicles  with anywhere                                                               
between  100 to  39,000 miles  and higher.   Mr.  Friess admitted                                                               
that he  does not specialize  in buying those  vehicles; however,                                                               
he currently has  three 2003 Chevrolets on his  lot with mileages                                                               
on each  ranging from  6,000 to approximately  20,000.   He said,                                                               
"So, the current  law - the way  it's in place right  now - would                                                               
eliminate  me  from  selling  those  vehicles,  but  it  wouldn't                                                               
eliminate the other 49 states that are able to do that."                                                                        
                                                                                                                                
MR. FRIESS  said that the  distinguishing factor is in  regard to                                                               
"new"  and  "used," which  he  acknowledged  has been  previously                                                               
discussed.   He related that when  he worked in the  car business                                                               
in California  back in 1990,  he learned  in training that  if he                                                               
took  a demonstration  ride in  a vehicle  and did  not have  the                                                               
dealer plate  in the window  and he was subsequently  pulled over                                                               
and cited  for not  having that current  dealer plate,  then that                                                               
dealership could not  sell that vehicle as a new  car, but had to                                                               
sell it  as a used  vehicle.  What  that meant, he  explained, is                                                               
that that  dealership actually  had to  register the  vehicle and                                                               
sell  it as  used.   He said  he believes  that law  is still  in                                                               
effect in California.                                                                                                           
                                                                                                                                
MR. FRIESS,  in response to  a request  by the chair  to conclude                                                               
his testimony, remarked that he has  had a short time to converse                                                               
with [those  involved with this  legislation] and he  invited the                                                               
legislators  to call  him for  more details.   He  added that  he                                                               
agrees with "everybody else [who] called in tonight."                                                                           
                                                                                                                                
Number 1212                                                                                                                     
                                                                                                                                
RICK  MORRISON, Owner,  Morrison Auto  Group, told  the committee                                                               
that  he is  a  new-car  dealer, and  he  listed  his credits  as                                                               
follows:   board of directors  for the Alaska  Automobile Dealers                                                               
Association;  and  member  of  the board  of  directors  for  the                                                               
National  Automobile Dealers  Association,  serving as  secretary                                                               
and  head of  government affairs,  and nominee  for the  national                                                               
chair's  position.   Mr. Morrison  said he  has been  in the  car                                                               
business  for about  30 years  and has  been a  car dealer  since                                                               
1985.   He stated that he  knows many of the  previous testifiers                                                               
personally.    Mr. Morrison  stated  that  the important  key  to                                                               
remember is  that nobody  is "pointing  fingers at  these people,                                                               
trying to say that these people are a problem."                                                                                 
                                                                                                                                
MR. MORRISON turned  to the issue of Canadian  vehicles, which he                                                               
said  is   a  complex,   controversial  issue   getting  national                                                               
attention.   He stated  his belief  that the  State of  Alaska is                                                               
probably not going  to be the one that comes  up with the answer;                                                               
therefore,  he   opined,  trying   to  correct   the  importation                                                               
questions  within  the Alaska  State  Legislature  is "going  the                                                               
wrong direction."   He stated that the basis  of this legislation                                                               
is about brokering a "like-new" car.                                                                                            
                                                                                                                                
MR. MORRISON  said that  this legislation  is about  clarifying a                                                               
law that  is currently on  the books.   The "second part"  of the                                                               
bill  is an  attempt to  clean  up the  language from  previously                                                               
passed  legislation,  in  order to  clarify  consumer  protection                                                               
issues regarding advertising, for example.                                                                                      
                                                                                                                                
MR. MORRISON  turned to Section 1.   He said the  issue of people                                                               
being allowed  to sell  a "like-new" car  was already  handled by                                                               
the state  in a  law made  in 1993.   He stated  that there  is a                                                               
substantial  difference  in  selling  a  new  car  today,  and  a                                                               
customer's expectations  of what comes  with a new car  is really                                                               
what the  issue is about.   He added that he  believes that's why                                                               
the original bill was passed 10 years ago.                                                                                      
                                                                                                                                
MR.  MORRISON noted  that this  year alone,  he will  be spending                                                               
close to  $100,000 between his  two stores, solely  for training.                                                               
He offered  an example of  one vehicle that will  require $70,000                                                               
to  set up  the "warrants  process" and  training.   He told  the                                                               
committee  that  the salespeople  cannot  even  sell the  vehicle                                                               
unless  they are  certified  by the  manufacturer to  do  so.   A                                                               
customer who buys a car with 10  miles on it, for example, is not                                                               
getting that  trained personnel  "to take care  of it,"  he said.                                                               
He explained that nobody will have  taken the time to lay out the                                                               
differences between  a Heritage  warranty and  the manufacturer's                                                               
warranty, which he expressed are substantially different.                                                                       
                                                                                                                                
MR. MORRISON  said, "I can't tell  you how many customers  I have                                                               
had call me with other brand names  of cars - other than my brand                                                               
names - saying, 'What can I  do about this situation, and how can                                                               
I  deal with  this?'   And they  have no  leg to  stand on."   He                                                               
explained that  they can't go  back on  lemon laws, nor  can they                                                               
[follow] the  normal processes [a  person would  follow regarding                                                               
a] new car.                                                                                                                     
                                                                                                                                
Number 0860                                                                                                                     
                                                                                                                                
MR.  MORRISON said  that  he has  invested  "several hundreds  of                                                               
thousands  of dollars"  to protect  the customer  and to  provide                                                               
"the  top level  of service  to  meet the  expectations that  are                                                               
being put forward."   He opined that a  used-car [dealer] selling                                                               
a  current-model  car  is  trying to  become  a  new-car  dealer,                                                               
without the  commitment and investment that  a new-car franchised                                                               
dealer has.   That's the  reason the  law was changed  [in 1993].                                                               
He said  he thinks it's important  to keep in mind  that [HB 272]                                                               
is not about regulating Canadian cars.   He added that he doesn't                                                               
think  "we"  can do  that.    Rather,  it's about  clarifying  an                                                               
existing law to  make it more understandable.  He  said he thinks                                                               
the  fact that  "a  lot of  these lots  have  been tolerated  and                                                               
allowed to  sell these cars,  doesn't mean that it's  been right;                                                               
because  they have  been violating  the law  ... up  through this                                                               
time, doesn't mean that they're justified in doing so."                                                                         
                                                                                                                                
MR.  MORRISON said  that  [the  impetus for  HB  272] began  with                                                               
discussion between  the attorney general's office  and the Alaska                                                               
Auto Dealers  Association regarding issues and  difficulties that                                                               
the AG's  office was having  because of consumer complaints.   He                                                               
noted that  customers were also  complaining to  service managers                                                               
of new-car  dealerships.  He  said he  would be thrilled  to have                                                               
employees  as dedicated  as those  who have  previously testified                                                               
[on  behalf of  the  used-car  dealers], and  he  noted that  the                                                               
committee has heard  a lot of testimony from people  who work for                                                               
the used-car  facilities.  He  said, "That doesn't mean  that the                                                               
law that  was passed  10 years  ago was  a bad  law.   If there's                                                               
something  that needs  to  be  addressed on  that,  then I  think                                                               
that's a separate issue."                                                                                                       
                                                                                                                                
Number 0722                                                                                                                     
                                                                                                                                
MR. MORRISON noted that there  are numerous states that have laws                                                               
that prohibit  the sale  of a  current-model car.   He  named the                                                               
State of  Washington as one.   In conclusion, he  reiterated that                                                               
this issue is a national one,  and that the Canadian car issue is                                                               
not one that will be solved in the Alaska State Legislature.                                                                    
                                                                                                                                
Number 0640                                                                                                                     
                                                                                                                                
MIKE  McCABE, Fleet  Manager, Kodiak  Auto Auction  in Anchorage,                                                               
told the  committee that his  company sells exclusively  to motor                                                               
vehicle dealers licensed  in the state of Alaska.   He noted that                                                               
the House  Labor and Commerce  Standing Committee,  while hearing                                                               
HB  272,  imposed a  six-month  [minimum]  time limit  on  rental                                                               
vehicles being  in a bona  fide rental fleet.   He said  that his                                                               
company deals  with a  lot of corporate  and fleet  accounts that                                                               
lease vehicles to rental car  companies on terms shorter than six                                                               
months.   He  said he  might see  three- and  four-month vehicles                                                               
come out  of the rental car  fleet and be brought  to the auction                                                               
to  be liquidated.   He  added that  that is  something that  the                                                               
committee might want to consider.                                                                                               
                                                                                                                                
MR. McCABE continued as follows:                                                                                                
                                                                                                                                
     A  new-car  dealer  can take  in  a  current-model-year                                                                    
     vehicle  in  on  trade.    Say,  for  example,  a  2003                                                                    
     Chevrolet Tahoe gets traded in  at a Ford store that is                                                                    
     selling 2003 Ford Expeditions.   Sometimes that new-car                                                                    
     dealer would elect to take  that vehicle to auction and                                                                    
     liquidate it;  it doesn't want  to sell  a competitive-                                                                    
     make vehicle next  to its Ford Expeditions.   Under the                                                                    
     current  statute,  the  buyers at  the  auction  cannot                                                                    
     resell the  unit, and  knowing that  the buyers  at the                                                                    
     auction cannot  buy that 2003 Tahoe,  the dealer that's                                                                    
     taking  that  Tahoe in  on  trade  will not  give  that                                                                    
     customer a  fair deal.   It creates  a place  where the                                                                    
     consumer  would lose,  and that  would  impact the  car                                                                    
     business in general.                                                                                                       
                                                                                                                                
MR. McCABE referred  to testimony he believed was  offered by Mr.                                                               
Alexander    yesterday    regarding    current-model-year    bank                                                               
repossessions  that have  been sold  at auction.   He  noted that                                                               
currently there's  no language that  will allow  used-car dealers                                                               
to  buy and  then  resell a  current-model-year  vehicle that  is                                                               
repossessed by  a lending institution and  liquidated at auction.                                                               
He remarked  that that's something  that should be added  to this                                                               
bill before it is passed.                                                                                                       
                                                                                                                                
Number 0401                                                                                                                     
                                                                                                                                
MR. McCABE pointed  out that his business  services both used-car                                                               
and  new-car dealers  alike, who  buy  large volumes  of cars  at                                                               
auction to  maintain a  large and diverse  inventory, and  in its                                                               
current  form,  [HB  272]  will severely  affect  the  way  these                                                               
dealers do  business "with  consideration to  the auctions."   In                                                               
the end,  he concluded, that  will effect the livelihood  of "our                                                               
small businesses in Alaska" and the consumer.                                                                                   
                                                                                                                                
Number 0369                                                                                                                     
                                                                                                                                
MR.  McCABE,   in  response  to  a   question  by  Representative                                                               
Crawford, said that he has only  seen Version D, and has not seen                                                               
a copy of Version H for HB 272.                                                                                                 
                                                                                                                                
REPRESENTATIVE CRAWFORD read Sections  (4) through (6) of Version                                                               
H  for Mr.  McCabe [text  provided previously].   He  stated that                                                               
[the drafters of  Version H] were trying to  address Mr. McCabe's                                                               
concerns, and he asked him if they were successful in doing so.                                                                 
                                                                                                                                
MR. McCABE responded that from  what he just heard Representative                                                               
Crawford read,  it sounds as though  a good job has  been done to                                                               
meet his concerns.  Notwithstanding  that, he said that he thinks                                                               
that [Section (4)] should be  changed to allow for the four-month                                                               
program that is seen from [Diamler] Chrysler, for example.                                                                      
                                                                                                                                
Number 0066                                                                                                                     
                                                                                                                                
MR. ALWINE summarized  that the existing law  precludes both new-                                                               
and used-car dealers from selling a current-model used vehicle.                                                                 
                                                                                                                                
TAPE 03-67, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
MR.  ALWINE  reviewed  the  changes that  would  be  effected  by                                                               
Section (1) in Version H, and  reiterated that it would allow all                                                               
dealers  a level  playing  field.   He noted  that  it would  not                                                               
support "the brokering  of new cars in the form  of a low-mileage                                                               
used car."                                                                                                                      
                                                                                                                                
MR.  ALWINE stated  for the  record that  he is  not paid  by the                                                               
Alaska Auto  Dealers Association.   On behalf of all  the members                                                               
of  the  association,  he reminded  the  committee  that  new-car                                                               
dealers   are  required   to  have   the  tools,   training,  and                                                               
facilities,  and   must  meet  very  specific   requirements  and                                                               
restrictions in order  to sell a new car.   A used-car dealer who                                                               
is selling a "brokered" new  car that he/she has obtained outside                                                               
of the  system has  none of  the obligations  or responsibilities                                                               
[as does the new-car dealer].   Ultimately, if there is a problem                                                               
with  a current-model  vehicle [sold  by  that used-car  dealer],                                                               
"they  will come  back  to  ... all  the  new-car  dealers."   He                                                               
commented  that the  AG may  or may  not have  received a  lot of                                                               
complaints, because the new-car dealers  "go out and try and make                                                               
it right for the consumer, so that it doesn't reach that level."                                                                
                                                                                                                                
Number 0219                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked  if leased  vehicles are  included                                                               
anywhere in the proposed legislation.                                                                                           
                                                                                                                                
MR. ALWINE answered  yes.  He explained that a  leased vehicle is                                                               
a vehicle that's on a term, much  like a rental.  He added, "And,                                                               
frankly, that would  be a used vehicle, and it  could be disposed                                                               
of through the auctions."                                                                                                       
                                                                                                                                
REPRESENTATIVE CRAWFORD  asked, "That's under the  'normal course                                                               
of business'?"                                                                                                                  
                                                                                                                                
MR. ALWINE answered yes.                                                                                                        
                                                                                                                                
[The objection  to Version H was  left pending.  HB  272 was held                                                               
over.]                                                                                                                          

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