ARIZONA STATE SENATE 46TH LEGISLATURE FIRST REGULAR SESSION MINUTES OF COMMITTEE ON COMMERCE DATE: February 5, 2003 TIME: 9:00 a.m. ROOM: SHR 3 CHAIRMAN: Senator Leff VICE CHAIRMAN: Senator Blendu ANALYST: Todd Madeksza COMMITTEE SECRETARY: ASSISTANT Brandy Martin ANALYST: Nancy L. DeMichele INTERN: Sophie Rigollet ATTENDANCE BILLS Committee Members Pr Ab Ex Bill Number Disposition Senator Allen X SB 1029 HELD Senator Arzberger X SB 1048 DPA/SE Senator Cheuvront X SB 1159 DP Senator Giffords X SB 1171 DP Senator Martin X SB 1184 HELD Senator Soltero X SB 1188 DISC/HELD Senator Tibshraeny X SB 1193 HELD Senator Blendu, Vice Chair X SB 1197 DP Senator Leff, Chair X GOVERNOR S APPOINTMENTS Name Position Recommendation
Chairman Leff called the meeting to order 9:00 a.m., and attendance was taken. APPROVAL OF MINUTES Senator Leff announced, without objection, the minutes of the meetings of January 22 and 29, 2003, are approved as distributed. APPOINTMENT OF COMMITTEE OF REFERENCE Senator Leff named the following members to the 2003 Commerce Committee of Reference: Senator Leff, Chair Senator Blendu Senator Martin Senator Arzberger Senator Soltero CONSIDERATION OF BILLS SB 1029 credit card revolving account contracts HELD Senator Leff announced SB 1029 will be held until the following week in order to work on amendments. SB 1193 nonprofit corporations; electronic mail action HELD Senator Leff announced SB 1193 will be held until next week because the Arizona Corporation Commission (ACC) would like the opportunity to discuss the measure with its members. SB 1048 technical registration board; technical correction DO PASS AMENDED/STRIKE EVERYTHING Brandy Martin, Senate Commerce Assistant Research Analyst, explained SB 1048 corrects a technical drafting error. She stated the strike-everything amendment being offered deals with professional employer organizations (PEOs). She commented that a PEO is a company that contractually assumes and manages human resource and personnel responsibilities for its clients. She indicated examples of those responsibilities include health benefits, workers compensation claims, payroll, and unemployment insurance claims. Currently in Arizona PEOs are undefined, leaving confusion as to what types of businesses may qualify as a PEO. Ms. Martin explained the strike-everything amendment to SB 1048 defines a PEO for the purposes of workers compensation, clarifying which types of businesses may be considered as PEOs. The amendment also codifies the current practice of PEOs adhering to workers compensation laws in Arizona. She noted there is no anticipated fiscal impact with this amendment. Michael Low, Low and Childers, testified in support of SB 1048. He stated he is working with Michael Preston Green and Janna Day of Fennemore Craig law firm and they are lobbying in favor of this legislation on behalf of the Arizona Association of PEOs. He explained PEO is a professional employers organization that provides a great service for the small businesses in the State. He commented PEOs are increasing in the State, and he believes more will be appearing before the 2 February 5, 2003
Legislature in the future. Mr. Low said a PEO handles all administrative services such as payroll, tax reporting, employee benefits, and providing workers compensation insurance. He said this bill recognizes a PEO as a co-employer with the client employer for purposes of providing workers compensation insurance in this State. He indicated many states are moving in the same direction formally recognizing the PEO as a co-employer. He said discussions have taken place with the State compensation fund, which is the only market currently for the small businessperson to purchase workers compensation insurance in the State. He indicated that the State compensation fund supports this legislation, and would like PEOs defined in the law as a co-employer. He said discussions have also taken place with the Industrial Commission (IC), and it is his understanding that IC is agreeable with this legislation. Mr. Low commented there may be a small amendment to be introduced that can be taken to the floor or perhaps to the House of Representatives. He emphasized this legislation makes sense and is necessary to move the State forward. He stated the measure will benefit small businesses, PEOs, and clarify the status under law. Senator Blendu moved SB 1048 be returned with a DO PASS recommendation. Senator Blendu moved the 30-page Leff strike-everything amendment dated 2/3/03 at 10:35 a.m. be ADOPTED (Attachment B). The motion CARRIED by a voice vote. Senator Blendu moved SB 1048 be returned with an AS AMENDED, DO PASS recommendation. The motion CARRIED by a roll call vote of 8-0-1 (Attachment 1). SB 1184 homestead exemptions HELD Senator Leff announced SB 1184 will be held at the request of the sponsor. SB 1159 securities division; background checks DO PASS Sophie Rigollet, Senate Commerce Intern, explained SB 1159 allows the Director of the Securities Division of ACC to obtain criminal background checks including fingerprint data for all employment applicants who would have access to sensitive, privileged and confidential information. She said according to the Securities Division of ACC, there is no fiscal impact to the State general fund associated with this measure. Senator Blendu moved SB 1159 be returned with a DO PASS recommendation. The motion CARRIED by a roll call vote of 7-0-2 (Attachment 2). SB 1171 structural pest control commission DO PASS Ms. Martin explained SB 1171. She said the Structural Pest Control Commission (Commission) regulates the commercial pest control industry and the use of structural pesticides. She noted that in order to engage in the business of structural pest control, a person must provide proof of liability insurance to obtain a business license from the Commission. Under current law the bond or liability 3 February 5, 2003
insurance that the Commission can accept must be issued by a company that is authorized to do business in Arizona. She indicated SB 1171 codifies current practice by clarifying that the insurance required for a business license must be issued by an insurer who holds a certificate of authority from the Arizona Department of Insurance (DOI) or issued by an insurer who is permitted to issue surplus line insurance in Arizona. David Childers, Surplus Line Association of Arizona, testified in support of SB 1171. He stated that surplus line insurers are insurance companies domiciled in other states, but are not licensed and lack a certificate of authority to do business in Arizona. He said every few years the Director of DOI holds a hearing and invites interested parties to testify regarding the coverage that is available or not available in the marketplace. He explained that coverages not available are allowed to be written on a surplus line basis. Mr. Childers stated that the reason this legislation is needed is because under the laws of the Commission, a person seeking licensure as an applicator has to provide proof of insurance and that can only be accomplished through an authorized insurer. According to the insurance code, it only includes admitted insurance companies and would exclude surplus line carriers. He commented that this change would allow those operators to obtain insurance through both admitted carriers and surplus line carriers, which basically expands the marketplace with more competition. Mr. Low said a structural pest control omnibus bill was vetoed last year because of this particular deficiency. He said everyone worked together this year to include language to cure the defect, which is included in SB 1171. Barry Aarons, Consultant, Arizona Pest Management Association (Association), testified in support of SB 1171. He stated that Mr. Childers has explained the bill very well, and it will provide the Association s membership with a variety of opportunities in order to meet their requirements. He thanked the groups who worked together to arrive at acceptable language in this bill. Senator Blendu moved SB 1171 be returned with a DO PASS recommendation. The motion CARRIED by a roll call vote of 8-0-1 (Attachment 3). SB 1188 state liquor board; membership DISCUSSION/HELD Todd Madeksza, Senate Commerce Research Analyst, explained SB 1188 requires that one of the current seven members of the Arizona State Liquor Board (Board) be an active law enforcement officer with experience in issues concerning businesses selling liquor. The Board is responsible for hearing and ruling on all liquor license applications that are protested by any number of entities, including the public, the Director, or a governing body of a city, town, county, or the Board itself. He said members of the Board are appointed by the Governor and confirmed by the Senate. Mr. Madeksza explained a 6-line Leff amendment dated 2/4/03 at 4:20 p.m. stipulates that only one member may be a law enforcement officer and they will not be allowed to participate or vote on any matter regarding a license in the municipality employing the officer (Attachment C). Senator Cheuvront, bill sponsor, explained this bill was brought forward by many of the neighborhoods and law enforcement officials. He said often when dealing with liquor licenses, it is the law enforcement officials who determine the implementation of the laws. He indicated those officials were concerned that they had no input on where the licenses were going and any repercussions that may occur in neighborhoods. He said law enforcement officers approached him 4 February 5, 2003
and asked to have their voice on the Board. He noted currently the Board consists of an at-large membership, and it is at the Governor s discretion to appoint members. Senator Blendu stated he believes it is a good idea, but he is concerned that we may be stretching our law enforcement officers too thin. He said the problem exists currently with attracting qualified policemen and this may put an extra burden on an already burdened law enforcement body. Senator Cheuvront stated that the officers approached him with the problem. He explained the Board is voluntary and meets once a month, therefore, he does not believe it would be that taxing for an officer to serve as a member of the Board. In response to Senator Allen, Senator Cheuvront said this is the first time he has seen the amendment. He said he does not have a problem with it, but is not sure that a law enforcement member should be eliminated from the Board. Senator Tibshraeny questioned whether all the requirements of the Board can be met with all the stipulations. Senator Cheuvront replied that of the seven members of the Board, only two are members of the liquor industry and one is a neighborhood activist. Senator Tibshraeny commented that there is already a police presence on these issues in most municipalities even though there is not a law enforcement member on the Board. Senator Cheuvront responded that the police officers did not realize this bill was going to be heard today, but are on the way now. He noted that although law enforcement s voice might be heard at the city level, is not heard at the statewide level. Therefore, law enforcement is not able to have input in the decision-making process. Senator Arzberger stated she is reluctant to have the makeup of the Board changed. She said she worked on several issues with the Board and has been very impressed with how proactive they are with legal matters. She indicated she likes the idea of having public members and industry members being involved on the Board, and does not believe that law enforcement needs to be involved. Myron Musfeldt, Deputy Director, Arizona Department of Liquor, registered as being neutral on SB 1188. However, he stated he has not received a specific direction. Senator Tibshraeny asked Mr. Musfeldt if he had an issue with this bill. Mr. Musfeldt responded he had discussed it with the Board chairman earlier and said the Board wanted to relate to the Committee that it was not in favor of the bill. He said the Board believes that if members were continually added, more members may be included in the future and membership for the public at large would be limited. Senator Blendu asked Senator Cheuvront to comment on the proposed addition to the Board and why he believes it needs changing. Senator Cheuvront replied that a law enforcement officer is on the way to explain. Senator Leff stated she could hold the bill until later in the meeting to see if he arrives. SB 1197 occupational disease; peace officers DO PASS Ms. Rigollet explained SB 1197 provides a presumption of employment-related disease when certain cancers result in disability or death for peace officers who have an established record of 5 February 5, 2003
working in uniquely hazardous areas. She said the bill extends current statute that relates only to firefighters. Due to the limited number of officers the legislation encompasses, there is no anticipated fiscal impact to the State general fund. Senator Blendu stated at one time a separate fund was established regarding the cancer issue for firefighters. Senator Leff replied that was her bill two years ago. She said it was not a separate fund, but allowed firefighters to receive workers compensation benefits. Senator Blendu stated approximately five years ago a separate cancer fund was established to include firefighters. He asked whether this bill includes peace officers, and whether or not this is part of the retirement program. Mr. Madeksza stated this bill does not address any type of special fund, but is simply a presumption for workers compensation issues. Senator Leff stated this measure mirrors her recent bill, which adds peace officers involved in hazardous duty. Senator Martin stated that a select few of law enforcement officers who handle hazardous materials would be included and will be offered the same protection as firefighters. Andy Swann, Department of Public Safety, testified in support of SB 1197. He stated that this bill was enacted for firefighters two years ago. Last year the language passed the Senate, but it did not pass the House of Representatives. He said this is an attempt to start the process again. He commented that only certain peace officers are included who are assigned to special duties and exposed to hazardous materials. He explained that usually the peace officers are first to arrive at an emergency situation. He pointed out that the Occupation Safety and Health Act (OSHA) requires an officer to have a baseline physical examination prior to being assigned to one of those duties. They are also required to have annual physicals, therefore, it is a good controlled tracking mechanism. In response to Senator Allen regarding the word presumed, Senator Leff stated that studies have been taken that indicate there are certain cancers that have a connection. However, it was not 100% established that a particular carcinogen causes a particular cancer. She said the reason for the bill is to establish a presumption. She noted that anyone who had ever smoked is also not eligible. Senator Martin said presumed is actually an insurance term and not a legal term. He cited examples of similar issues that occur in workers compensation claims. Senator Blendu moved SB 1197 be returned with a DO PASS recommendation. The motion CARRIED by a roll call vote of 8-0-1 (Attachment 4). Senator Cheuvront stated he just received word that the law enforcement officer will not be able to attend the meeting today; however, will be present next week. Senator Leff announced she will hold SB 1188 until next week at the request of the sponsor. There being no further business, the meeting adjourned at 9:35 a.m. Respectfully submitted, Nancy L. DeMichele Committee Secretary (Tapes and attachments on file in the Secretary of the Senate s Office/Resource Center, Room 115.) 6 February 5, 2003