Senate Standing Committee on Commerce and Consumer Protection

Aloha, and welcome to the Hawaii State Senate Committee on Commerce and Consumer Protection. This is our Wednesday, February 19, 2025 9:30 am agenda in Conference Room 229 at the State Capitol. First measure on the agenda is SB 573 relating to condominiums. This measure requires condominium associations to repair defective conditions of common elements that constitute health or safety violations.

Philip Nurney, online in opposition.

Not available on Zoom, Chair.

Thank you. Dallas Walker for Community Associations Institute. In opposition online. In the room. Good morning.

Good morning. My name is Richard Akimoto. Dallas was not able to be here, but I'm on the Hawaii Legislative Action Committee for CAI. We'll stand on our testimony in opposition to the Bill, and if you have any questions, we'll be happy to answer them.

Thank you very much. We also have a lot of testimony in opposition, three in support, 18 in opposition, and four offering testimony, submitting comments, all written. Is there anyone else in the room who would like to testify, please? Good morning.

Good morning Vice Chair and Chair. Thank you for having me here today. My name is Chris Akita. I'm a partner at Kasdan, Turner, Thompson Booth. We represent homeowners and homeowner associations. And construction defect matters. So trying to recover so that they could do repairs on their buildings.

So we don't actually, the issues in this Bill don't deal with us directly, our practice directly. But, you know, in our practice of construction defect, we do see these issues play out. And so I'm here to testify in opposition of this Bill.

So oftentimes what we see in the construction defect field is we see defects that are significant defects that affect the entire system of a building. So not just common areas, but homeowner, individual, individual units as well. And these defects are defects that, it takes a very expensive cost, expensive repair. It takes a very complicated repair.

And if you try to do some sort of small repair, it could cause more problems than it does good. So our issue with this Bill is that it allows for homeowners to come in and do their own repair, which might cause more damage. So I do have an example.

One of the buildings, one of our clients here in town, is a high rise, and they have multiple construction defects. And one of the construction defects that they do have is they have the plumbing systems weren't built correctly. So specifically, one of the drain lines aren't built correctly.

So as a result, there's a lot of corrosion and buildup that actually happens in that stack. And so basically, one of the homeowners came in and there's a lot of backups. So one of the homeowners came in and tried to clear out that backup by snaking the line and they snaked into the common area.

But a lot of times when you have that buildup, that buildup acts kind of structurally at the bottom and it holds up all the buildup above it. So when they snake the line, it broke up all that buildup at the bottom.

And as a result all that buildup above it came crashing down and blew out into the units below. And so it actually caused more damage than good. And that's why we opposed the Bill. Thank you.

Thank you very much. Is there anyone else who would like to testify on this measure? If not, we'll move to the next measure, SB 1038 relating to privacy.

This measure adds definitions of identifier and specified data element and amends the definition of personal information for the purposes of notifying affected persons of data and security breaches under existing state law that governs the security breach of personal information.

It also includes licensees subject to the insurance data security law among the businesses deemed compliant with security breach notice requirements under existing state law. First up, DCCA Office of Consumer Protection with comments online. Good morning.

Good morning, Chair and Members of the Committee with apologies for our late testimony. The DCCA appreciates the intent of this Bill. It's a good Bill that would make consumers aware of instances where their non public private information has been subjected to unauthorized access. We support the modernization of this law. Thank you.

Thank you very much. Hawaii Financial Services Association online in opposition Good morning.

Good morning. Aloha Chair, Vice Chair, Members. Marvin Dang, attorney for the Hawaii Financial Services Association. We oppose this Bill as drafted. We've been testifying since 2021, continuously raising the same concerns that we're raising today. One of the changes that this Bill would make is it would set a new standard with regard to redacted Social Security numbers.

As I indicate, for the nine digit Social Security number that exists, generally redactions are down to the last four, so the last four digits are visible.

In fact, on page two of my testimony, I've continued what I've done before in footnote two is to cite 15 different statutes in Hawaii which either allow or require redaction so that the last four digits of the Social Security number is visible.

So I know there has been a proponent of only allowing three of the last digits to be shown. But that new standard which is in this Bill would be an outlier. The, in addition to these statutes, the judiciary rules, financial institution procedures all require or permit down to last four.

I'll be happy to answer any questions that you might have. Mahalo.

Thank you very much. Consumer Data Industry Association in opposition. Thank you for standing on your testimony. We also have written testimony from the Department of Human Services offering comments. Tech Net in opposition. The Hawaii Bankers Association offering comments. Thank you. And let me see. Relics Inc. in opposition. The State Privacy and Security Coalition in opposition.

And the Hawaii Credit Union League with comments. Thank you. Is there anyone else who would like to testify? Members, questions?

Let's see. Who should we ask?

Kind of everybody had recommendations for amendments.

But they're all different.

Yeah.

Let's see, who is representing CDIA? Maybe one of the points that some of the technology organizations have pointed out is that going in the direction that the Bill proposes would make us different from all other states and so they have various combinations of amendments.

Has your organization had an opportunity to discuss some of these potential amendments that would be hopefully pretty much in keeping with what other states are doing, as well as updating our definitions?

We haven't had a chance to work with the other stakeholders on this specific Bill. But I will say that there are other states that allow for encryption and reduction and sort of the, I think while everybody.

I've reviewed the testimony, while everybody proposes various amendments, they're all trying to get at the same similar thing, which is that other states propose encryption and redaction of certain information that then harmonizes with the other states. So I think that's the main point being raised.

Okay. Well, perhaps if all of the technology groups as well as bankers, et cetera, are able to get together, it would be great if you folks could come up with something specific.

Sure. And we'd be happy to work with the Chair on that. Thank you.

Thank you.

Senator Lee.

Oh, thanks. OCP, are you still online?

Yes, present.

Hey, thanks. This is not the first year that we've had this discussion. I think this came out of a joint House and Senate task force set of recommendations. Maybe at this point, like six or seven years ago when folks were getting scammed and, you know, privacy was in jeopardy online, etc, etc.

Since then, we've had this discussion every single year in the Legislature and each year since there's, you know, countless seniors in Kupuna and everybody else who continue to get scammed because of their information being available out there in ways that can be used for nefarious purposes.

When it comes to, I think the point that was raised by some of the testimony that four digits is fine for Social Security access or making that available and there's not much risk there.

What's come out in this series of discussions, including in these Committee hearings in previous years, is that having access to four digits, the last four digits of someone social here in Hawaii, where we have a very limited population in which there's really only two or three possible combinations of earlier numbers, means within a handful of guesses, you're able to identify someone's full Social Security number based on their last four digits, plus knowing if they, grew up here, et cetera.

Is that still the case?

Well, absolutely. It's still the case that a Social Security number for a Hawaii resident could be easily guessed at with the inclusion of just the last four digits. And there's a safe harbor in the existing law that I think should clear up any concerns the Committee Members have about moving to this four digit position.

And that's in the existing definition of personal information, which says that information that is lawfully made available from federal, state or local government records does not constitute personal information, which triggers the notice requirements. So in other words, I think it's adequately, more than adequately covered some of the concerns raised about the four digits by existing law.

I'd also like a chance just to address what you mentioned about the 21st Century Task Force and the concerns about encryption. And again, I think a lot of our testifiers are overlooking the definition of security breach in our existing law, which already addresses encryption and data that is encrypted.

In order to trigger the notice requirements, you have to look at the definition of security breach and there has to be a risk of harm to the person. So these testifiers can weigh the balance themselves. If they believe there is no risk of harm, then maybe they're not going to submit a notice requirement.

But absolutely, our existing law already addresses the concerns that have been raised about encryption.

Thank you. Thank you, Chair.

Members, any other questions? Okay, we'll take a recess.

Okay. Good morning and welcome. This is our Wednesday, February 19, 2025, 9:34 a.m. agenda in State Capital Conference Room 229. We are--members, we are going to make a decision on a proposed SD on SB 890, which is a short-form measure that has been noticed on the legislative website and recommit the bill back to CPN so that we can have a hearing on the measure before our decking deadline.

So the recommendation is to pass SB 890 with amendments and recommit the bill back to the CPN Committee. Any discussion? Seeing none. Vice Chair? Passing with amendments. Chair votes aye.

Thank you. Vice Chair also votes aye. [Roll Call]. Senators Richards and Awa are excused. Your measure is adopted.

Thank you very much.

Good morning and welcome back to our Wednesday, February 19, 2025, 9:30 a.m. agenda in Conference Room 229 at the State Capitol. We are prepared to make recommendations and vote on the 9:30 a.m. agenda. The first measure is SB 573, relating to condominiums. Overwhelming opposition on this measure, so we're going to defer. The next measure is SB 1038, relating to privacy.

This measure--members, I'd ask for a little latitude on this measure. We've heard it four or five years in a row. There have been for, I think, the first time, some substantive amendments proposed by many different organizations, so the recommendation is to pass with amendments.

We will defect the effective date of this measure to July 1, 2050 to make sure we can keep the discussion moving, and we will adopt the amendments submitted in the testimony by the Office of Consumer Protection around--we'll say home--we'll add home phone, mobile and home phone and military ID numbers.

We'll adopt the Hawaii Bankers Association amendments related to names, redacted credit card numbers, and publicly available information just for clarity and adopt a proposed expanded definition of personal information submitted in the testimony from the State Privacy and Security Coalition. Members, any comments or questions?

I just hope this applies to the federal government too.

That'd be so nice. Seeing none. Vice Chair. Passing with amendments. Chair votes aye.

Thank you. Vice Chair also votes aye. [Roll Call]. Senator Richards and Awa are excused. Measure's adopted.

Thank you very much. We're adjourned.

Good morning and welcome. This is our Wednesday 19--February 19, 2025 a.m.--2025--year 2025, sorry--9:32 a.m. agenda in Conference Room 229. The measure we are hearing is SB 1291, relating to certified public accountants. This measure clarifies the education and professional experience requirements for certified public accountant licensed applicants to establish alternative pathways to licensure. First up, the Hawaii Board of Public Accountancy with comments. Do we have them online?

Not on Zoom, chair.

Thank you. The Hawaii Association of Public Accountants, in support. Good morning.

Can you hear? Thank you for this opportunity to testify. HAPA is--which represents CPAs, practicing CPAs across the state--supports the measure with amendments. We recognize that the importance of public accounting experience--and this is public accounting experience in a CPA firm only--it would be a valuable substitution for the 30 credit hours past a bachelor's degree that students must take to get the CPA license.

So in the past, people with a bachelor's degree could get the CPA license if they had four and a half years of public accounting experience in a CPA firm, so this is in line with a historical practice in the CPA profession and this measure is needed to help alleviate shortages of new CPA candidates and help students--to help students so that they can become CPAs without the cost of the additional 30 credit, 30 semester hours of postgraduate education. If you have any questions, I'd be glad to answer any. Thank you very much for this opportunity to testify.

Thank you. Next, we have the Hawaii Society of CPAs, in support. Frank Kudo.

I'm Frank Kudo. I stand by my testimony. I just wanted to add just something. The pipeline issue for accountants is real, and we're trying to do everything possible to increase the number of accounting graduates. The CPA is one other hurdle they have to make to become a professional CPA, and this bill would alleviate that. Thank you.

Thank you. Nathan Colgrove, in support. Ron Heller, in support.

I submitted written testimony. Unless the committee has any questions, I'll stand on my testimony.

Thank you very much for standing on your testimony. Mr. Colgrove, we have you online. Good morning.

I'm the President of the Hawaii Association of Public Accountants, and so I want to point out that the problem is in the public accounting industry, and that's--so, you know, I'm in support with modifications, and I submitted written testimony, but as I said, the problem is in the accounting industry as opposed to private industry and government, and that's why we're advocating for a strictly public accounting experience with regards to this bill.

And so currently, we outsource with our firm on Hilo about 30% of our production staff, and that's not out of choice. That's because we just lack people, right? And so we're--I believe this would provide a good path, and it would provide us employees. Additionally, it would provide CPAs who come through through our staff a broader overall experience and understanding of accounting in general, whereas in private industry and government, it's a more narrow experience.

And additionally, in private industry and government, they already have an experience pathway, an alternate pathway to get a CPA right now, as the rules are currently set. Additionally, private industry and government experience--or CPAs working currently in private industry and government experience, they don't have a CPE requirement whereas those of us working in the accounting firm, we have--every two years, we have 80 hours that we have to get of continuing education.

And then on a final note, to be an owner of an accounting firm, you have to be a CPA, whereas in private industry and government, you don't need a CPA to move up, up the ladder to become an owner. That's not a requirement. And so this would stifle succession going into the future. And so, anyhow, the problem is in the public accounting industry. That's my point. Thank you.

Thank you very much. We also have written testimony from Brian Iwata, in support, late testimony from Adrian Hong, in support, Eric Matsuda, in support, Wendell Lee, Earl Dwayne Balantac, Troy Bunsey, Blake Isobe, Ellen Awai, and Daryll Neita. Is there anyone else who would like to testify?

Sir, I'm Wendell Lee and I--

Oh, that's okay. Please.

I'm an instructor at UH West Oahu. I teach taxes and accounting. I'm not representing UH West Oahu, I'm representing my students. They're very excited about this bill. It's a big barrier. So many students do not go into accounting because they cannot afford the 30 additional credits, and when they graduate, they need to start working. And so with this bill and this alternate pathway, we can get these students up and running, increase the pipeline, and create more CPAs in Hawaii.

Thank you. Is there anyone else who'd like to testify? Members, questions? Senator McKelvey.

She came all the way down here, you might as well make some magic. You picked the lucky number. Are you in support of the very--I mean, I've seen the same amendments offered by numerous testifiers across the--are you in support of those amendments?

Yes, I am.

Okay. What--why 'be' instead of 'include?' What's the difference there?

If include, the way I understood it was the 18 credits that they have to have as an undergrad in accounting would--the way I understand when we read it--would include the baccalaureate plus 18 undergraduate credits in accounting. So that would be over the baccalaureate degree, and so that's why we're trying to amend that.

Okay. Okay, sounds good. And then also, you also want to increase to 30 semester hours over 18, is what was originally proposed?

No. So--

Or is that an existing?

That that's existing already.

Okay. Yes. Okay, so you want to see to 30 then instead?

Yeah. So just--they can take 30 and go that pathway and just do one less year of experience or they can not take 30 but get one more year in experience under a CPA firm, and so we feel like we can get more kids into the CPA path, they can start work right after they graduate from the universities, and we can increase the pipeline.

Just real quickly, chair, also on Subsection Four, you have--you want to insert the words 'meeting the' between 'experience and requirements.' Why, why do you want to put those words in?

Okay, I'm going to ask Ron--Ronald, if you could help me?

Please come up one more time.

Basically, just a clarification, because there are now two different sets of experience requirements, you can have experience in business and industry working for a company as opposed to a CPA firm, and now we're adding a new experience requirement that's limited only to being in a CPA firm.

And so when we're referring to one or the other, we need to be very clear about which one we're talking about because the requirements are different. A candidate who chooses this alternative pathway could, for example, have two years of experience working at say, Bank of Hawaii, and then a year at a CPA firm, and that would be qualifying as three years of total experience, but meeting the chunks under two separate definitions.

Okay, thank you, chair. I appreciate you.

Vice Chair.

I have a follow-up question. Since you talked about the need to expand the pipeline, is this area somewhat like healthcare where we're lacking, like, you know, 50%--we're short 50% of what we need or more?

It's a critical shortage nationwide. I've been a practicing CPA for 30 years and I've never seen so difficult to get new accountants. As an instructor at UH West Oahu, I get calls all the time about the firms needing more accountants. Ninety-nine percent of our graduates get jobs upon graduation.

There's such a need and that's why you're seeing more outsourcing. The gentleman who spoke, a lot of firms are outsourcing and they don't want to outsource. They want to hire candidates here, and the problem is larger businesses now don't have a good pipeline of accountants.

And some Fortune 500 companies could not make their 4Ks because they didn't have enough accountants to meet SEC deadlines. We're having the same problem here. I'm a tax preparer, and we're all graying and retiring, and there's not a new group coming in to prepare the taxes to pay the government and so we're seeing a huge shortage. Every tax preparer I know of is just overbooked and we need help. We need more accountants.

And if I could add to that, it's a nationwide problem, but it's particularly acute here in Hawaii, especially on the neighbor islands and in smaller communities. It's just--what I keep hearing is people can't find the staff they need to hire.

Well, certainly at West Oahu campus you have a lot of room to grow, so if there was any place we should be building a bigger pipeline, that would be the location.

Yes, and a lot of them are from the neighbor islands that do async, and so we're trying to develop so they can get jobs on their island and the jobs are available.

Okay. Thank you.

Members, any other questions? Okay, if not, thank you very much. Unless there's any discussion, we can just move right into decision-making. Okay, so we'll, we'll make a recommendation on this measure and that recommendation is to pass with amendments, adopting the proposed amendments from the majority of testifiers. I will make one clarification and that's the third amendment, the third amendment which is--I'm sorry--the second amendment that's submitted in the testimony.

Page two, line 21: delete, include and replace with B so that the measure reads at least 18 semester hours of which shall be upper division or graduate level accounting.

We're just going to change it so it says at least 18 semester hours of upper division or graduate level accounting so that it reads cleaner and then the rest of the amendments we'll adopt that have been submitted in the testimony. Any discussion, members? Yeah, we'll defect the effective date on this measure to July 1st. Yeah, you know what? We'll leave the good date. We'll leave the good date. Any discussion? No? Senator?

Thank you for the amendments, chair, and thank you for actually solving this. We've--I've been through this issue since back I was in the House. We've always had this battle between more CPAs but also not lessening our standards to the lead level, right? We have a high standards here to protect consumers, so thank you for this bill. This is an amazing thing. We're able to push this forward and get more CPAs while not degrading our standards.

Thank you. There are no more comments. Vice Chair, passing with amendments. Chair votes aye.

Thank you. Of the members present, any voting with reservations or objections? Hearing--okay, hearing none, the measure is adopted.

Thank you very much. We're adjourned.

Okay. Good morning and welcome. This is our Wednesday, February 19th, 2025 9:35 am agenda in Conference Room 229 at the Hawaii State Capitol. This is a decision-making agenda. We are hearing and taking written testimony and making recommendations on the following measures that have been heard and passed out in a prior Committee hearing in the Senate.

The first measure is SB 129 SD1 relating to labeling requirements. This measure prohibits the sale of raw ahi, including ahi poke or processed ahi in retail establishments without a label that states the country where the ahi was landed. There's a defective date on this measure as well. Members, the recommendation is to pass with amendments.

We will add a severability clause to the measure and make technical, non substantive changes. Any discussion? Seeing none. Vice Chair passing with amendments. Chair votes aye.

Thank you. Of the Members present, are there any voting with reservations or objections? Hearing none, your measure is adopted.

Thank you very much. The next measure is SB 140, SD1 relating to invasive species. This measure prohibits the importation of firewood into the state except for firewood that meets certain standards. The recommendation is to pass with amendments adopting the DLNR's proposed amendments submitted in their written testimony.

We'll add a defective date of July 1, 2050 to keep the discussion going and there are also technical, non-substantive changes. Any discussion? If not, passing with amendments, Chair votes aye.

Thank you. Of the Members present, are there any voting with reservations or objections? Hearing none, measure is adopted.

Thank you very much. The next measure is SB 144, SD1 relating to chiropractic. The recommendation on this measure is to pass with a defective effective date of July 1, 2050. Any discussion? Seeing none, passing with amendments. Chair votes aye.

Thank you. Of the Members present any voting with registrations or objections? Hearing none, measure is adopted.

Thank you very much. The next measure is SB 1197, SD1 relating to aircraft. The recommendation on this measure is to pass unamended. Any discussion? Okay. Seeing none, passing as is. Chair votes aye.

Thank you. Of the Members present, are there any voting with reservations or objections? Hearing none, measure is adopted.

Thank you very much. The next measure is SB 1341 relating to energy industry information reporting. The recommendation on this Administration measure is to pass unamended. Any discussion? Seeing none. Chair votes aye.

Thank you. Of the Members present, are there any voting with reservations or objections? Hearing none, measure is adopted.

Thank you. The next measure is SB 1411 SD1 relating to Medicaid third party liability. The recommendation on this Administration measure is to pass with a defective effective date of July 1, 2050. Any discussion? Seeing none. Vice Chair passing with amendments. Chair votes aye.

Thank you. Of the Members present, are there any voting with reservations or objections? Hearing none, Measure is adopted.

Thank you. And the final measure on this agenda is SB 1438 relating to home care agencies. The recommendation on this measure is to pass with a defective effective date of July 1, 2050. Any discussion? Okay, seeing none passing with amendments. Chair votes aye.

Thank you. Of the Members present, any voting with reservations, objections? Thank you, Senator Awa is no. Measure is adopted.

Thank you very much.

We are adjourned.

SA.