Legislature(1999 - 2000)
03/10/1999 01:27 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE March 10, 1999 1:27 p.m. MEMBERS PRESENT Representative Pete Kott, Chairman Representative Joe Green Representative Norman Rokeberg Representative Jeannette James Representative Lisa Murkowski Representative Eric Croft Representative Beth Kerttula MEMBERS ABSENT All members present COMMITTEE CALENDAR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 5 "An Act relating to vouchers for education; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 3 "An Act relating to controlled substances and to the possession and distribution of certain chemicals." - MOVED CSHB 3(JUD) OUT OF COMMITTEE HOUSE BILL NO. 83 "An Act relating to the licensing of, acts and practices of, notice filings required of, duties of, registration of, capitalization of, financial requirements for, bonding of, coordinated securities examinations of, recordkeeping by, and documents filed by certain securities occupations; relating to public entity investment pools; relating to investment advisory contracts; relating to the examination of records of certain securities occupations; relating to federal covered securities; relating to the registration of securities; relating to the general exemptions for securities and transactions; relating to offers of securities on the Internet; relating to the confidentiality of investigative files under the Alaska Securities Act; relating to the payment by certain securities occupations of expenses and fees of investigations and examinations; relating to petitions to superior court by the administrator to reduce civil penalties to judgment; exempting certain violations of the Alaska Securities Act from criminal penalties; relating to time limitations in bringing court actions for violations of the Alaska Securities Act; relating to the affirmative defense of timeliness in court actions relating to securities; prohibiting certain lawsuits involving buyers of securities; relating to time limitations for bringing court actions involving the receipt of a written offer related to securities; relating to offers to repay buyers of securities; relating to notification of certain securities occupations regarding administrative hearings; relating to fees established by the administrator; relating to a sale, a purchase, or an offer to sell or purchase under the Alaska Securities Act; relating to the locations of offers to buy or sell; relating to consent to service; amending the Alaska Securities Act definitions of 'agent,' 'broker-dealer,' 'person,' 'Securities Act of 1933,' and 'security;' defining for purposes of the Alaska Securities Act 'advisory client,' 'advisory fee,' 'advisory services,' 'Bank Holding Company Act of 1956,' 'clients who are natural persons,' 'federal covered adviser,' 'federal covered security,' 'Federal Deposit Insurance Act,' 'Home Owners' Loan Act,' 'investment adviser representative,' 'Investment Advisers Act of 1940,' 'investment advisory business,' 'investment advisory contract,' 'Investment Company Act of 1940,' 'NASDAQ,' 'National Securities Markets Improvement Act of 1996,' 'notice filing,' 'place of business,' 'principal place of business,' 'Securities Exchange Act of 1934,' 'securities business,' 'state investment adviser,' 'substantial portion of the business,' 'supervised person,' and 'viatical settlement'; relating to the title of the Alaska Securities Act; relating to the definitions in the Alaska Securities Act of 'assignment' and 'investment adviser'; relating to implementation of the changes to the Alaska Securities Act; and providing for an effective date." - MOVED CSHB 83(JUD) OUT OF COMMITTEE CONFIRMATIONS WERE DISCUSSED IN THE JOINT MEETING. (* First public hearing) PREVIOUS ACTION BILL: HB 5 SHORT TITLE: VOUCHER SYSTEM FOR EDUCATION SPONSOR(S): REPRESENTATIVES(S) KOHRING, Coghill Jrn-Date Jrn-Page Action 1/19/99 19 (H) PREFILE RELEASED 1/8/99 1/19/99 19 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 19 (H) HES, FINANCE 2/05/99 147 (H) COSPONSOR(S): COGHILL 2/10/99 184 (H) SS INTRODUCED-REFERRALS 2/10/99 184 (H) READ THE FIRST TIME - REFERRAL(S) 2/10/99 184 (H) HES, FINANCE 2/16/99 (H) HES AT 3:00 PM CAPITOL 106 2/16/99 (H) HEARD AND HELD 2/23/99 (H) HES AT 3:00 PM CAPITOL 106 2/23/99 (H) WAIVED OUT OF COMMITTEE 2/23/99 (H) MINUTE(HES) 2/24/99 306 (H) HES REFERRAL WAIVED 2/24/99 307 (H) JUD REFERRAL ADDED 2/24/99 307 (H) REFERRED TO JUD 3/03/99 (H) JUD AT 1:00 PM CAPITOL 120 3/03/99 (H) HEARD AND HELD 3/03/99 (H) MINUTE(JUD) 3/10/99 (H) JUD AT 1:15 PM CAPITOL 120 BILL: HB 3 SHORT TITLE: DRUGS: POSSESSION OF LISTED CHEMICALS SPONSOR(S): REPRESENTATIVES(S) BRICE Jrn-Date Jrn-Page Action 1/19/99 18 (H) PREFILE RELEASED 1/8/99 1/19/99 18 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 18 (H) JUDICIARY, FINANCE 2/17/99 (H) JUD AT 1:00 PM CAPITOL 120 2/17/99 (H) HEARD AND HELD 2/17/99 (H) MINUTE(JUD) 3/03/99 (H) JUD AT 1:00 PM CAPITOL 120 3/03/99 (H) SCHEDULED BUT NOT HEARD 3/10/99 (H) JUD AT 1:15 PM CAPITOL 120 BILL: HB 83 SHORT TITLE: ALASKA SECURITIES ACT SPONSOR(S): LABOR & COMMERCE BY REQUEST Jrn-Date Jrn-Page Action 2/08/99 163 (H) READ THE FIRST TIME - REFERRAL(S) 2/08/99 164 (H) L&C, JUD 2/17/99 (H) L&C AT 3:15 PM CAPITOL 17 2/17/99 (H) HEARD AND HELD 2/17/99 (H) MINUTE(L&C) 2/19/99 (H) L&C AT 3:15 PM CAPITOL 17 2/19/99 (H) HEARD AND HELD 2/19/99 (H) MINUTE(L&C) 2/22/99 (H) L&C AT 3:15 PM CAPITOL 17 2/22/99 (H) MOVED CSHB 83(L&C) OUT OF COMMITTEE 2/22/99 (H) MINUTE(L&C) 2/24/99 294 (H) L&C RPT COMMITTEE SUBSTITUTE(L&C) 2DP 5NR 2/24/99 296 (H) DP: ROKEBERG, MURKOWSKI; NR: HALCRO, 2/24/99 296 (H) SANDERS, BRICE, CISSNA, HARRIS 2/24/99 297 (H) ZERO FISCAL NOTE (DCED) 3/03/99 (H) JUD AT 1:00 PM CAPITOL 120 3/03/99 (H) SCHEDULED BUT NOT HEARD 3/10/99 (H) JUD AT 1:15 PM CAPITOL 120 WITNESS REGISTER ANNE D. CARPENETI, Assistant Attorney General Legal Services Section-Juneau Criminal Division Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 Telephone: (907) 465-3428 POSITION STATEMENT: Answered questions regarding the proposed committee substitute for HB 3. REPRESENTATIVE TOM BRICE Alaska State Legislature Capitol Building, Room 426 Juneau, Alaska 99801 Telephone: (907) 465-3466 POSITION STATEMENT: Sponsor of HB 3. FRANKLIN TERRY ELDER, Director Division of Banking, Securities and Corporations Department of Commerce and Economic Development P.O. Box 110807 Juneau, Alaska 99811-0907 Telephone: (907) 465-2521 POSITION STATEMENT: Testified in support of HB 83. VINCENT USERA, Assistant Attorney General Commercial Section Civil Division Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 Telephone: (907) 465-3600 POSITION STATEMENT: Testified on HB 83. COLLEEN MURPHY, M.D., Appointee to the Violent Crimes Compensation Board 2811 Illiamna Avenue Anchorage, Alaska 99517 Telephone: (Not provided) POSITION STATEMENT: Testified on her appointment to the Violent Crimes Compensation Board. LESLIE D. WHEELER, Appointee to the Violent Crimes Compensation Board P.O. Box 878885 Wasilla, Alaska 99687 Telephone: (Not provided) POSITION STATEMENT: Testified on her appointment to the Violent Crimes Compensation Board. JOSEPH N. FAULHABER, Appointee to the Board of Governors of the Alaska Bar 105 Adak Avenue Fairbanks, Alaska 99701 Telephone: (907) 457-2010 POSITION STATEMENT: Testified on his appointment to the Board of Governors of the Alaska Bar. STEPHEN B. WALLACE, Appointee to the Violent Crimes Compensation Board P.O. Box 4054 Kodiak, Alaska 99615 Telephone: (907) 487-2420 POSITION STATEMENT: Testified on his appointment to the Violent Crimes Compensation Board. ACTION NARRATIVE TAPE 99-11, SIDE A Number 0001 CHAIRMAN PETE KOTT called the House Judiciary Standing Committee meeting to order at 1:27 p.m. Members present at the call to order were Representatives Kott, Green, James, Murkowski, Croft and Kerttula. Representative Rokeberg arrived at 1:32 p.m. SSHB 5 - VOUCHER SYSTEM FOR EDUCATION Number 0140 CHAIRMAN KOTT announced the first order of business is SSHB 5, "An Act relating to vouchers for education; and providing for an effective date." CHAIRMAN KOTT stated that Article VII, section 1, of the state constitution commits the state to the pursuit of a public, not a private institutional school system. It is there in black and white. In addition, the constitutional language eliminates substantial barriers that would negatively impact the health and welfare of students attending private institutions. He recognizes that the state constitution is somewhat silent on that and construed that meaning by going back to the state constitution convention. More importantly, Article VII prohibits the direct transfer of state funds for religious or private institutions. In addition, he doesn't believe that in the bill itself the state is hostile towards private institutions. However, he does believe that the bill is not totally neutral. A voucher system would promote enrollment in a private school setting while negatively impacting the public school environment addressed in Article VII. In addition, in relation to how the funds would be spent, he concluded that they would either subsidize or entirely fund those students who receive them via the voucher system. The amount is not known because it would be subject to legislative appropriation. The money associated with the voucher system and those who would use it would be a direct benefit to those institutions. Furthermore, based on how the dispersement of funds would occur, it would be hard to get around the idea of directly supporting that religious or private institution. It could not be skirted by giving the money to the parents who in turn would pay the institution. In conclusion, he noted as he reviewed the state constitution and looked at some of the case law, this cannot be pursued statutorily. It is an issue that deals with the constitution in scope. Number 0442 REPRESENTATIVE GREEN asked Chairman Kott whether he came across any jurisdictions subsequent to the rendering of the state supreme court that are different. CHAIRMAN KOTT replied there are a number of cases that were reviewed in other states that were somewhat appropriate, but it is more appropriate to look at cases within Alaska. He noted when looking at those cases, it is important to review the state constitutions to see how they marry up. In this case, it doesn't marry up to the Alaska Constitution. It was delineated during the state constitution convention. There was a whole argument of funding private institutions and/or where should private institutions be on the pecking order of providing an education for the children of the state. Number 0593 REPRESENTATIVE MURKOWSKI noted her appreciation of Chairman Kott's summation. Anyway she looked at a voucher system, she couldn't come up with anything without directly or indirectly benefitting a particular institution. Number 0673 CHAIRMAN KOTT stated he doesn't see how this particular measure can be dealt with in statute. The correct vehicle is a constitutional amendment. Although the few cases to refer to in Alaska aren't identical, they are identical enough to fail in a challenge based on constitutional grounds and to have set a precedent. Number 0722 REPRESENTATIVE JAMES noted her agreement with Chairman Kott's assessment. She doesn't agree, however, that a constitutional amendment is needed to design a system to allocated monies to each child to go to a school somewhere. The constitution says the state should provide an education which means money should be provided for every child in the district, not for just those who sign up for public school. The state has a responsibility to ensure that the children are educated and parents should have a choice. Public schools cannot serve every child. There are children above and below the norm that need a separate kind of education. She noted, if a public school allocates $5,000 per student for a public education, certainly a voucher for $5,000 should not be given because of the fixed and other costs involved in maintaining a school system. The only portion that should go to a child via a voucher should be just the cost that would be eliminated in the public system because that child isn't there anymore. Number 0841 REPRESENTATIVE ROKEBERG noted his agreement with Chairman Kott's analysis in terms of the Framers of the state constitution and the meaning of the Sheldon Jackson case. At the time of the state constitution convention, there were a large number of private schools operating in the state. He is also drawn to the comments made by Representative James because he recognizes the state's dilemma. He also recognizes the dilemma of how the bill was transmitted to the House Judiciary Committee and the desire of the House Health, Education and Social Services Committee to get an opinion and for it to be returned to them. He is also troubled by the comments made by the sponsor's staff that any court decision of a program would have to be tied to a constitutional amendment. If that is true, not only will a constitutional amendment need to be put before the voters but a vehicle to design a program that meets the merits of that constitutional amendment will need to be attached to it. He asked Chairman Kott whether his staff looked into the connection between a constitutional amendment and the design of a voucher program. CHAIRMAN KOTT replied no. REPRESENTATIVE ROKEBERG asked Chairman Kott what the committee will do now with the bill. CHAIRMAN KOTT replied, as noted at the last meeting, if the bill was found to have constitutional problems, it will not go back to the House Health, Education and Social Services Committee. If that committee wants to deal with it via a constitutional amendment, it will probably come to this committee at some time. If that committee wants to pursue another bill aside from a voucher system, that is fine. It is his intent to lay the bill aside and he believes it is the intent of the sponsor to withdraw it. Number 1042 REPRESENTATIVE GREEN stated, as a member of the House Health, Education and Social Services Committee, that is the proper course. Number 1056 REPRESENTATIVE KERTTULA noted her agreement with Chairman Kott's analysis and thanked him. CHAIRMAN KOTT thanked the committee members for spending the time on this issue and not getting involved with the public policy question, but looking at it from a constitutional aspect. CHAIRMAN KOTT said the bill will be laid aside. HB 3 - DRUGS: POSSESSION OF LISTED CHEMICALS Number 1099 CHAIRMAN KOTT announced the next order of business is HB 3, "An Act relating to controlled substances and to the possession and distribution of certain chemicals." CHAIRMAN KOTT indicated there is a proposed committee substitute (1-LS0040\H, Luckhaupt, 3/8/99) and called for a motion to adopt it. Number 1117 REPRESENTATIVE GREEN made a motion to adopt the proposed committee substitute for HB 3 (1-LS0040\H, Luckhaupt, 3/8/99). There being no objection, it was so adopted. Number 1135 CHAIRMAN KOTT explained the changes in the proposed committee substitute. Section 1 now states that possession with intent is a class A felony in the second degree. An attempt would, therefore, drop to a class B felony correcting the anomaly in the statutes. Language was also added to include "immediate precursor", a term of art referencing certain chemical types primarily in the methamphetamine statutes. Section 5 was also eliminated that required the reporting by retailers. The new Section 5 is a list of chemicals that are used in the manufacturing of controlled substances in violation of AS 11.71. Number 1223 REPRESENTATIVE CROFT noted that the registration requirement was also eliminated. Number 1235 REPRESENTATIVE GREEN referred to the listed chemicals in Section 5 and wondered whether the possession of a similar type of chemical with paraphernalia would be enough to go back to a class B felony. Number 1272 REPRESENTATIVE CROFT said, "It's two different approaches to that. We try in Section 5 to say listed chemicals and chemicals that are used in the manufacture they include. And, so that's one way we give them a hook to maybe even charge the A. At least, it would be if I have beakers and a unlisted chemicals that they can show are in fact constituents of--of meth, that I would be able to do an attempt of this crime, which is the crimes in A and attempt would be a B." REPRESENTATIVE GREEN stated a charge could fall back to an class B felony, if a class A felony doesn't make it. That sounds good. Number 1310 REPRESENTATIVE ROKEBERG said he is a little disappointed and concerned about the list of chemicals in Section 5 and the reference to it in Section 2. The language reads in Section 2, "(c) In this section, 'listed chemical' means a chemical described under AS 11.71.200." The term "a" is singular. He said, "I think we're right back to the--the mom's got the iodine problem and that's really, really troublesome on any (indisc.). And, we had the discussion at the last committee hearing that the Legislative Counsel about the (indisc.) case that we can't adopt by reference. We're trapped in this perhaps case that demands some legislative over--overturning. In terms of adopting by reference, we've found ourselves in that problem because we can't refer with federal--with federal list of changes, dynamic, on-going, organic basis for the changes. We have to be stuck with listing all the stuff in statute. And, I'm very (indisc.). Could you speak to the problems encountered in doing that? I mean it's really a problem to me." Number 1375 REPRESENTATIVE CROFT said, "Well, I can, Mr. Chairman. It's an important public policy decision that I think you and I disagree on. Obviously, with this draft before us, you could propose an amendment that would do that." The issue is, can the statutes be amended in an area where people will go to jail for a long time for something that happens outside of this body. It is a problem that arose in the changes to the building and/or plumbing codes. He said, "Can we allow the third annual or twenty-fifth annual meeting of the plumbers association in Las Vegas to change our statutes? With all respect to what they do at the twenty-fifth annual meeting of the plumbers in Las Vegas, I don't yet know if I want to adopt some, all or none of what they've done. And, when we say in a statute as is amended from time to time by this or other private, or semi-public or public group, even the federal, we're going to make our own decisions about what our law contains..." Number 1437 REPRESENTATIVE ROKEBERG interjected and stated the departments adopt additions by regulation. They are not adopted in a vacuum or in blank. REPRESENTATIVE CROFT replied the legislature has proposed to put in statute the building code as it is adopted from time to time. And the legislature has proposed to put in statute that the departments may adopt building codes by regulation. He thinks it is appropriate to adopt by regulation. It is troublesome enough in the building code area and even more troublesome when someone could be sent away for a long time. Number 1480 REPRESENTATIVE ROKEBERG said the building codes are adopted on a periodic basis after an Administrative Procedure Act (APA) review. They are not adopted totally be reference. The concept is adopted by reference, but there is a regulatory process taken to update them. There is a review and public comment overcoming any of the arguments. He reiterated he is troubled by Section 2(c) and wondered whether it restricts the list to this particular chapter or offense or is there a sideboard. He wants a sideboard or fence put around the list so that it doesn't slop over into general use. He reiterated he is troubled by the language in Section 2(c) and would like to see it word smithed so that it only applies to the intent. He wondered whether AS 11.71.020 refers only to the offense it references. Number 1603 REPRESENTATIVE GREEN stated it seems a definition is being added on page 2, line 7, "(4) possesses a listed chemical with intent to manufacture any...". In other words, if a person has a bottle of iodine to take care of a scratch, there is no intent because that person doesn't have the paraphernalia to manufacture methamphetamine. CHAIRMAN KOTT asked Ms. Carpeneti whether she agrees with Representative Green's assessment. ANNE D. CARPENETI, Assistant Attorney General, Legal Services Section-Juneau, Criminal Division, Department of Law, replied yes she agrees with Representative Green's assessment. "Listed chemical" is added to page 2, line 7 and is being defined in AS 11.71.020. She is not aware of the term being used in any other area of criminal law. Number 1670 REPRESENTATIVE ROKEBERG asked whether AS 11.71 deals with methamphetamine. REPRESENTATIVE CROFT stated the only statute that concerns this list is in the methamphetamine statute. He said, "We don't 'criminalize' possession of a listed chemical with intent to produce cocaine or whatever. The only time we ever use it in statute is on page 2, lines 7-12, where we say possessing a listed chemical with intent to manufacture meth or an immediate precursor. So, while it sounded generic, it is only ever referenced in the meth statute." Number 1710 REPRESENTATIVE ROKEBERG asked what will be done about "ecstasy" and other street compounds that come along. He wondered whether there will be multiple lists in the statutes. REPRESENTATIVE CROFT said, "In those areas because of the special dangers of meth labs, we've chosen to take the step down into listed chemicals. And, under any other drug, we penalize the manufacture, actual manufacture, possession with intent to distribute, possession at a lower level and in some cases attempted manufacture. This listed chemical step has only really been done in meth because of the dangers of meth labs and the dangers of using these listed chemical in the preparation process. Number 1742 REPRESENTATIVE MURKOWSKI asked whether AS 11.71 specifically deals with the manufacture of methamphetamine. REPRESENTATIVE CROFT replied AS 11.71 is the general controlled substances area of Chapter 71. There could be a listed chemicals for methamphetamine because it's only ever used in the methamphetamine statute. It is in effect that already. Number 1767 REPRESENTATIVE ROKEBERG noted it is common in drafting language to refer to definitions that are applicable to certain sections or subsections in chapters. He appreciates the comments made by Representative Green and Ms. Carpeneti regarding the intent. He wants to make sure it is clear. Number 1812 REPRESENTATIVE KERTTULA noted that there has to be the intent to manufacture methamphetamine and the list sets out exactly what a person has to have. REPRESENTATIVE ROKEBERG stated the problem here is the constitutional right to accuse someone with the intent to manufacture with the possession of one of these chemicals. CHAIRMAN KOTT stated that is a potential problem, but proving intentional behavior is extremely difficult. Number 1845 REPRESENTATIVE CROFT referred to Section 11.71.020 and noted the only time "listed chemical" is said in the proposed committee substitute is on page 2, lines 7-12. Therefore, whether a housewife possess a listed chemical with the intent to manufacture methamphetamine or an immediate precursor that housewife is in, and if not, that housewife is out. CHAIRMAN KOTT said that is his understanding as well. MS. CARPENETI said it is actually limited to this one particular paragraph of this section. Number 1890 REPRESENTATIVE GREEN said, "On that same issue, when we go back to the schedule where there are harmful products--I mean there's two to three pages in here where they're by themselves listed and it's under a heading that says, 'a substance shall be placed on schedule A, if it is found under the statute to have the highest degree of danger or probable danger to the person in public'. Iodine certainly wouldn't fall under that category, and so it's listed separately over here which as we've said just applies to this particular section. It's not one of these nasty bad guys that's listed here over a general purpose, so says my counsel." Number 1922 MS. CARPENETI stated the head of the drug enforcement unit in Anchorage thinks it is an excellent draft and appreciates the efforts. REPRESENTATIVE CROFT stated the sponsor likes the draft. Number 1940 REPRESENTATIVE TOM BRICE, Alaska State Legislature, sponsor of HB 3, expressed his appreciation for the work done by the committee and Representative Croft, and announced his support of the proposed committee substitute. Number 1962 REPRESENTATIVE GREEN made a motion to move the proposed committee substitute to HB 3 (1-LS0040\H, Luckhaupt, 3/8/99) from the committee with individual recommendations and the attached zero fiscal note. There being no objection, CSHB 3(JUD) was so moved from the House Judiciary Standing Committee. HB 83 - ALASKA SECURITIES ACT CHAIRMAN KOTT announced the next order of business is HB 83, "An Act relating to the licensing of, acts and practices of, notice filings required of, duties of, registration of, capitalization of, financial requirements for, bonding of, coordinated securities examinations of, recordkeeping by, and documents filed by certain securities occupations; relating to public entity investment pools; relating to investment advisory contracts; relating to the examination of records of certain securities occupations; relating to federal covered securities; relating to the registration of securities; relating to the general exemptions for securities and transactions; relating to offers of securities on the Internet; relating to the confidentiality of investigative files under the Alaska Securities Act; relating to the payment by certain securities occupations of expenses and fees of investigations and examinations; relating to petitions to superior court by the administrator to reduce civil penalties to judgment; exempting certain violations of the Alaska Securities Act from criminal penalties; relating to time limitations in bringing court actions for violations of the Alaska Securities Act; relating to the affirmative defense of timeliness in court actions relating to securities; prohibiting certain lawsuits involving buyers of securities; relating to time limitations for bringing court actions involving the receipt of a written offer related to securities; relating to offers to repay buyers of securities; relating to notification of certain securities occupations regarding administrative hearings; relating to fees established by the administrator; relating to a sale, a purchase, or an offer to sell or purchase under the Alaska Securities Act; relating to the locations of offers to buy or sell; relating to consent to service; amending the Alaska Securities Act definitions of 'agent,' 'broker-dealer,' 'person,' 'Securities Act of 1933,' and 'security;' defining for purposes of the Alaska Securities Act 'advisory client,' 'advisory fee,' 'advisory services,' 'Bank Holding Company Act of 1956,' 'clients who are natural persons,' 'federal covered adviser,' 'federal covered security,' 'Federal Deposit Insurance Act,' 'Home Owners' Loan Act,' 'investment adviser representative,' 'Investment Advisers Act of 1940,' 'investment advisory business,' 'investment advisory contract,' 'Investment Company Act of 1940,' 'NASDAQ,' 'National Securities Markets Improvement Act of 1996,' 'notice filing,' 'place of business,' 'principal place of business,' 'Securities Exchange Act of 1934,' 'securities business,' 'state investment adviser,' 'substantial portion of the business,' 'supervised person,' and 'viatical settlement'; relating to the title of the Alaska Securities Act; relating to the definitions in the Alaska Securities Act of 'assignment' and 'investment adviser'; relating to implementation of the changes to the Alaska Securities Act; and providing for an effective date." CHAIRMAN KOTT indicated the committee will take up CSHB 83(L&C), and called on Representative Norman Rokeberg, sponsor of the bill. Number 2042 REPRESENTATIVE ROKEBERG stated this particular legislation has been before the House of Representatives before. It has been modified to remove some of the Alaska Native Claims Settlement Act (ANCSA) corporation provisions that generated amendments from the Senate causing the bill to perish in conference committee last year. Viatical settlements were added to the bill, then removed by the House Labor and Commerce Committee. They generated some controversy and there is another bill to cover that issue. The department of Commerce and Economic Development has asked that the title be amendment due to an oversight. He provided a copy of the amendment to the committee members. The bill allows the state to collect $3.9 million in annual fees from the securities industry, particularly mutual funds. It is mandatory that this legislation pass and is signed by the Governor to continue to receive these fees. He suggested hearing from Franklin Terry Elder from the Division of Banking, Securities and Corporations to explain the bill. Number 2118 FRANKLIN TERRY ELDER, Director, Division of Banking, Securities and Corporations, Department of Commerce and Economic Development, said Representative Rokeberg has hit the appropriate highlights. The bill is necessary to bring the Alaska Securities Act into compliance with federal law and the changes in 1996. The federal government gave the states three years to amend their statutes and regulations to allow for notice filings and fees for federal covered securities and federal covered advisors, brand new entities created by the federal government in 1996. Seventy percent of the bill does just that. The language was drafted by the North American Securities Administrators Association (NASAA), the organization that creates the Uniform Securities Act, and has been adopted by over 40 states to date. The other 30 percent of the bill is non-NSMIA (National Securities Markets Improvement Act) related, but relate to changes in exemptions that will improve the ability of Alaskan business to access credit markets. Number 2178 CHAIRMAN KOTT thanked Mr. Elder for his summarization. Number 2183 REPRESENTATIVE GREEN asked Mr. Elder whether he is responsible for putting the fine presentation together. MR. ELDER replied it was a common effort with Representative Rokeberg. Number 2201 REPRESENTATIVE ROKEBERG stated there are other letters of support from security advisors and other agents who are covered by this bill. He has also had several contacts with the Anchorage Bull and Bear Club, an informal organization that represents the stock brokers, account executives and investment bankers in the Anchorage area. The letters will be added to the bill packet. In spite of the length of the bill, Representative Murkowski has read it. It has been reviewed and has been given a good length of coverage in the House Labor and Commerce Committee both this year and last year. He is confident that it is a good piece of legislation. He asked Mr. Elder to comment on anything in the bill that pertains to legal ramifications that might be of interest to this committee. Number 2288 MR. ELDER referred to the sections dealing with civil liabilities in AS 45.55.930. Currently, there is a three year statutory limitation from the date of a transaction that governs the liability of a seller of securities to a buyer of securities. Within that three year period, a buyer can sue a seller if it was sold unregistered, for example. The bill changes it from three years after the sell or two years from the discovery of the fraudulence. In addition, the interest rate went from a flat 6 percent to 8 percent or the stated rate of the security, if lower than 8 percent. MR. ELDER further stated that the bill changes the ability of the division to petition the superior court to reduce a civil penalty to judgment without a (indisc.) hearing after an order has become totally final and all rights of appeal have been exhausted. CHAIRMAN KOTT stated Amendment 1 needs to be adopted. It reads as follows: Page 1, line 1 AFTER: "licensing of" INSERT: "and revocation of licenses of" Number 2373 REPRESENTATIVE JAMES made a motion to adopt Amendment 1. There being no objection, it was so adopted. REPRESENTATIVE GREEN asked Mr. Usera from the Department of Law whether he sees any problems that the committee should be aware of. VINCENT USERA, Assistant Attorney General, Commercial Section, Civil Division, Department of Law, indicated in the negative. Number 2406 REPRESENTATIVE GREEN made a motion to move CSHB 83(L&C), as amended, from the committee with individual recommendations and the attached zero fiscal note. There being no objection, CSHB 83(JUD) was so moved from the House Judiciary Standing Committee. [The committee took a brief at-ease in order to prepare for the Joint meeting at which the confirmations were discussed.]
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