Legislature(2007 - 2008)CAPITOL 120

05/04/2007 01:00 PM House JUDICIARY


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 200 WORKERS' COMP: DISEASE PRESUMPTION TELECONFERENCED
Moved CSHB 200(JUD) Out of Committee
+ HB 227 UNIFORM MONEY SERVICES ACT TELECONFERENCED
Moved CSHB 227(JUD) Out of Committee
+ HB 232 ALCOHOL SALE/PURCHASE/DISTRIBUTION TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                          May 4, 2007                                                                                           
                           1:13 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Jay Ramras, Chair                                                                                                
Representative Nancy Dahlstrom, Vice Chair                                                                                      
Representative Bob Lynn                                                                                                         
Representative Ralph Samuels                                                                                                    
Representative Max Gruenberg                                                                                                    
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative John Coghill                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 200                                                                                                              
"An Act  relating to the  presumption of coverage for  a workers'                                                               
compensation  claim  for  disability   as  a  result  of  certain                                                               
diseases for certain occupations."                                                                                              
                                                                                                                                
     - MOVED CSHB 200(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 227                                                                                                              
"An  Act relating  to the  Uniform Money  Services Act,  to money                                                               
transmission  services, and  to currency  exchange services;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSHB 227(JUD) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 232                                                                                                              
"An  Act relating  to  the sale,  distribution,  and purchase  of                                                               
alcoholic beverages; relating to a  state database for records of                                                               
certain  purchases  of  alcoholic   beverages;  relating  to  the                                                               
relocation of a license to  sell alcoholic beverages; relating to                                                               
procedures for  local option elections  for control  of alcoholic                                                               
beverages; and providing for an effective date."                                                                                
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 200                                                                                                                  
SHORT TITLE: WORKERS' COMP: DISEASE PRESUMPTION                                                                                 
SPONSOR(s): REPRESENTATIVE(s) DAHLSTROM                                                                                         
                                                                                                                                
03/14/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/07       (H)       L&C, JUD                                                                                               
04/27/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
04/27/07       (H)       Heard & Held                                                                                           
04/27/07       (H)       MINUTE(L&C)                                                                                            
04/30/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
04/30/07       (H)       Moved Out of Committee                                                                                 
04/30/07       (H)       MINUTE(L&C)                                                                                            
05/02/07       (H)       L&C RPT 1DP 1NR 4AM                                                                                    
05/02/07       (H)       DP: GATTO                                                                                              
05/02/07       (H)       NR: NEUMAN                                                                                             
05/02/07       (H)       AM: LEDOUX, GARDNER, RAMRAS, OLSON                                                                     
05/02/07       (H)       FIN REFERRAL ADDED AFTER JUD                                                                           
05/04/07       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
BILL: HB 227                                                                                                                  
SHORT TITLE: UNIFORM MONEY SERVICES ACT                                                                                         
SPONSOR(s): REPRESENTATIVE(s) KERTTULA                                                                                          
                                                                                                                                
03/28/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/28/07       (H)       L&C, FIN                                                                                               
04/25/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
04/25/07       (H)       Moved CSHB 227(L&C) Out of Committee                                                                   
04/25/07       (H)       MINUTE(L&C)                                                                                            
04/26/07       (H)       L&C RPT CS(L&C) 3DP 3NR                                                                                
04/26/07       (H)       DP: GARDNER, BUCH, OLSON                                                                               
04/26/07       (H)       NR: LEDOUX, NEUMAN, GATTO                                                                              
04/26/07       (H)       JUD REFERRAL ADDED AFTER L&C                                                                           
05/04/07       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KELLY HUBER, Staff                                                                                                              
to Representative Nancy Dahlstrom                                                                                               
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 200 on behalf of the sponsor,                                                               
Representative Dahlstrom.                                                                                                       
                                                                                                                                
MARK JONES                                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 200.                                                                          
                                                                                                                                
ROD HARRIS                                                                                                                      
Alaska Professional Fire Fighters Association (AKPFFA)                                                                          
Eagle River, Alaska                                                                                                             
POSITION STATEMENT:   Provided comments  during discussion  of HB
200.                                                                                                                            
                                                                                                                                
MIKE DAVIDSON                                                                                                                   
Alaska Professional Fire Fighters Association (AKPFFA)                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Provided comments  during discussion  of HB
200.                                                                                                                            
                                                                                                                                
LISA WEISSLER, Staff                                                                                                            
to Representative Beth Kerttula                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided a comment during  discussion of HB
227 on behalf of the sponsor, Representative Kerttula.                                                                          
                                                                                                                                
JESSE KIEHL, Staff                                                                                                              
to Senator Kim Elton                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:      Presented   HB  227   on   behalf   of                                                             
Representative Kerttula, sponsor.                                                                                               
                                                                                                                                
MARK DAVIS, Director                                                                                                            
Juneau office                                                                                                                   
Division of Banking & Securities                                                                                                
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED)                                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Provided comments  during discussion  of HB
227.                                                                                                                            
                                                                                                                                
W. GRANT CALLOW, Commissioner                                                                                                   
National  Conference  of  Commissioners  on  Uniform  State  Laws                                                               
(NCCUSL)                                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Provided comments  during discussion  of HB
227.                                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR JAY  RAMRAS called the  House Judiciary  Standing Committee                                                             
meeting to  order at 1:13:18  PM.  Representatives  Lynn, Holmes,                                                             
Gruenberg,  Dahlstrom, Coghill,  and Ramras  were present  at the                                                               
call to  order.   Representative Samuels  arrived as  the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
HB 200-WORKERS' COMP: DISEASE PRESUMPTION                                                                                     
                                                                                                                                
1:13:46 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced that the  first order of business would be                                                               
HOUSE  BILL NO.  200,  "An  Act relating  to  the presumption  of                                                               
coverage for  a workers' compensation  claim for disability  as a                                                               
result of  certain diseases for certain  occupations."  [Included                                                               
in  members packets  was the  proposed committee  substitute (CS)                                                               
for HB 200, Version 25-LS0748\E, Bailey, 5/4/07.]                                                                               
                                                                                                                                
1:14:44 PM                                                                                                                    
                                                                                                                                
KELLY  HUBER, Staff  to  Representative  Nancy Dahlstrom,  Alaska                                                               
State   Legislature,   relayed   on  behalf   of   Representative                                                               
Dahlstrom, sponsor,  that the proposed committee  substitute (CS)                                                               
for  HB  200,  Version  25-LS0748\E,  Bailey,  5/4/07,  allows  a                                                               
presumption for  certain diseases and illnesses  for firefighters                                                               
and first  responders.   She offered  her understanding  that the                                                               
program is not  mandatory and provides that  for eligibility, the                                                               
firefighter or first responder must  have at least seven years of                                                               
service  and possess  a minimum  of Firefighter  1 certification.                                                               
The diseases listed in the  bill are linked to these occupations,                                                               
which have  an inherent risk.   Under the presumption,  those who                                                               
work  in these  occupations could  pursue workmen's  compensation                                                               
should they contract any of the listed illnesses.                                                                               
                                                                                                                                
1:17:14 PM                                                                                                                    
                                                                                                                                
MARK JONES, after relaying he has  32 years' experience as a fire                                                               
fighter,   said  physical   fitness   is  a   necessity  in   the                                                               
firefighting industry.  Many fire  departments around Alaska, and                                                               
the United  States, have implemented aggressive  physical fitness                                                               
programs to ensure  employees are in the  best physical condition                                                               
possible.    Improvements  in  protection,  including  equipment,                                                               
engineering,  and  barriers,  have   all  provided  a  tremendous                                                               
reduction  in exposure  to diseases.   These  prevention programs                                                               
are working.   However, there  are still instances  where workers                                                               
are  exposed.   The  physical  demands,  coupled with  long  term                                                               
exposure to  carbon monoxide, all  lead to continued  high levels                                                               
of  heart and  lung disease.   Skin  contact with  smoke carrying                                                               
carcinogens is  still a major  problem, often leading  to cancer,                                                               
but fully protective  equipment and clothing to  protect one from                                                               
this contact  has not yet  been developed.   One of the  goals of                                                               
everyone  in  fire  and  emergency  services  is  to  reduce  the                                                               
occurrence of these  occupational illnesses to zero.   Until this                                                               
can be achieved, the industry needs the protections of HB 200.                                                                  
                                                                                                                                
1:21:19 PM                                                                                                                    
                                                                                                                                
ROD  HARRIS,   Alaska  Professional  Fire   Fighters  Association                                                               
(AKPFFA), said that  in spite of improvements to  the safety gear                                                               
and training,  firefighters are still regularly  exposed to toxic                                                               
environments.   The nature of  their work calls  for firefighters                                                               
to mitigate emergencies in extreme  conditions.  As of this year,                                                               
41 states  have enacted presumptive legislation  to protect their                                                               
emergency responders.   Alaska's  emergency responders  need this                                                               
same protection as their peers in other states.                                                                                 
                                                                                                                                
1:22:32 PM                                                                                                                    
                                                                                                                                
MIKE  DAVIDSON,  Alaska  Professional Fire  Fighters  Association                                                               
(AKPFFA), said that HB 200 represents  an important fix to a hole                                                               
in the  safety net that  currently exists in Alaska.   Currently,                                                               
AKPFFA  members  are  frequently exposed  to  known  carcinogens,                                                               
contagious  diseases,   and  other  hazards  as   part  of  their                                                               
occupation.  These hazards are  routine, unpredictable, and occur                                                               
on  a  regular basis.    Unlike  other healthcare  and  emergency                                                               
occupations, there is no opportunity  to pre-assess the scene for                                                               
potentially  hazardous exposures.    The AKPFFA  has taken  every                                                               
engineering step possible to prevent  these exposures.  It is the                                                               
goal  of everyone  in fire  service to  eradicate these  diseases                                                               
among their employees.  It  is difficult to trace these exposures                                                               
back to  a single event,  but rather,  it is chronic  exposure to                                                               
various known  carcinogens and  diseases.   The AKPFFA  needs the                                                               
protections  contained within  HB 200  as these  diseases can  be                                                               
terminal, and are  not covered by private health  insurance.  Mr.                                                               
Davidson  commented  that  private  health insurance  is  a  good                                                               
safety net, but it does not  provide living expenses for a family                                                               
while  the  firefighter is  unable  to  work.   "I  am  certainly                                                               
supportive of HB 200," he concluded.                                                                                            
                                                                                                                                
CHAIR RAMRAS  asked if there  were any more questions  or whether                                                               
anyone else wished to speak  before he closed public testimony on                                                               
HB 200.                                                                                                                         
                                                                                                                                
1:28:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM  moved to adopt  the proposed CS  for HB
200, Version 25-LS0748\E, Bailey, 5/4/07, as the work draft.                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG objected for the purpose of discussion.                                                                
                                                                                                                                
MS. HUBER, in response to  a question, explained that the changes                                                               
she'd described earlier applied to Version E.                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG removed his objection.                                                                                 
                                                                                                                                
[Although nothing  further was stated,  Version E was  treated as                                                               
being before the committee.]                                                                                                    
                                                                                                                                
1:28:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM moved  to report the proposed  CS for HB
200, Version  25-LS0748\E, Bailey, 5/4/07, out  of committee with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG asked whether,  if the exposure occurred                                                               
before the effective date of the  act, would a court or a carrier                                                               
require  that "any  or  all"  of the  exposure  occur before  the                                                               
effective date.  He said he wanted  to be sure there was as broad                                                               
a coverage as possible.                                                                                                         
                                                                                                                                
MS. HUBER responded  that claims must be from  the effective date                                                               
forward, but  the prior exposure  is included, if  claimants meet                                                               
the  presumption  of  seven  years   service  and  Firefighter  1                                                               
certification.   Then, the  exposure from  the claimants  work is                                                               
included.   No  claims from  the past  can be  brought up  in the                                                               
future.                                                                                                                         
                                                                                                                              
1:30:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG removed his objection.                                                                                 
                                                                                                                                
CHAIR RAMRAS announced  that CSHB 200(JUD) was  reported from the                                                               
House Judiciary Standing Committee.                                                                                             
                                                                                                                                
HB 227-UNIFORM MONEY SERVICES ACT                                                                                             
                                                                                                                                
1:31:32 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced  that the last order of  business would be                                                               
HOUSE  BILL  NO. 227,  "An  Act  relating  to the  Uniform  Money                                                               
Services  Act, to  money transmission  services, and  to currency                                                               
exchange  services;   and  providing  for  an   effective  date."                                                               
[Before the committee was CSHB 227(L&C).]                                                                                       
                                                                                                                                
1:32:19 PM                                                                                                                    
                                                                                                                                
LISA  WEISSLER, Staff  to  Representative  Beth Kerttula,  Alaska                                                               
State  Legislature, said  on behalf  of Representative  Kerttula,                                                               
sponsor, that a representative from  Senator Elton's office would                                                               
be presenting HB 227.                                                                                                           
                                                                                                                                
1:32:36 PM                                                                                                                    
                                                                                                                                
JESSE   KIEHL,  Staff   to  Senator   Kim  Elton,   Alaska  State                                                               
Legislature, on  behalf of the sponsor,  Representative Kerttula,                                                               
explained that HB 227 would  enact the Uniform Money Services Act                                                               
here in  Alaska.  The bill  would ensure safety and  soundness in                                                               
certain  financial institutions  for those  who don't  use banks.                                                               
This bill  doesn't pertain  to banks.   The bill  regulates money                                                               
transmitters, both  large (Western Union, Money  Gram) and small.                                                               
He clarified  that the small  money transmitters found  in Alaska                                                               
serve  people from  both cruise  ships,  and fishing  businesses,                                                               
neither  of which  open Alaska  bank accounts,  but need  to wire                                                               
money or write checks.                                                                                                          
                                                                                                                                
MR. KIEHL noted  that Alaskans and visitors  have been victimized                                                               
by  phony money  transmitters.   This  bill would  place a  prior                                                               
restraint  on  those  transmitters   by  requiring  licensure  in                                                               
advance.   The bill addresses  two industries, both of  which are                                                               
of some  concern to  the federal government  because of  the risk                                                               
posed for  money laundering and  terrorists financing.   The bill                                                               
ensures law  enforcement coordination  between state  and federal                                                               
governments.  The  bill is revenue neutral and  will be regulated                                                               
by the Division  of Banking & Securities.  The  bill is supported                                                               
by  a  consortium  of  large  money  transmitting  companies,  an                                                               
association  of  small  money  transmitters,  the  Department  of                                                               
Commerce, Community and Economic  Development (DCCED), a consumer                                                               
advocacy   group,  the   bankers   association  [Alaska   Bankers                                                               
Association (ABA)], and one of the major cruise lines.                                                                          
                                                                                                                                
MR. KIEHL referred  to [what would later become  Amendment 1] and                                                               
said it  would bring  the bill more  closely in  conformance with                                                               
the uniform  act, in  response to  a recent  U. S.  Supreme Court                                                               
decision,  [Watters v.  Watters, 550  U.S. (2007)];  Amendment 1,                                                             
labeled 25-LS0814\E.1, Bannister, 4/27/07, read:                                                                                
                                                                                                                                
      Page 28, line 14, following the first occurrence of                                                                       
     "that":                                                                                                                    
          Insert "(A)"                                                                                                          
                                                                                                                                
     Page 28, line 15, following "loans;":                                                                                      
          Insert "or                                                                                                            
               (B)  engages in credit card operations and                                                                       
     maintains only  one office that accepts  deposits, does                                                                    
     not  accept  demand  deposits   or  deposits  that  the                                                                    
     depositor may  use for payments to  third parties, does                                                                    
     not  accept  a  savings   or  time  deposit  less  than                                                                    
     $100,000,  and  does  not engage  in  the  business  of                                                                    
     making commercial loans;"                                                                                                  
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked  for clarity  on  the  statement                                                               
regarding conformity  with the uniform  act; specifically,  is it                                                               
out  of conformity,  and was  there any  danger it  would not  be                                                               
interpreted uniformly.                                                                                                          
                                                                                                                                
MR. KIEHL responded that there  are small differences between the                                                               
bill  and the  uniform act  as originally  drafted.   There is  a                                                               
category of  bank subsidiaries referred to  as "rent-a-banks" and                                                               
these  are  not currently  doing  money  transmission in  Alaska.                                                               
This very  narrow category  was carved out  of the  definition of                                                               
bank.    Banks are  exempt,  so  this  would have  regulated  the                                                               
aforementioned    subsidiaries   should    they   have    started                                                               
transmitting money in Alaska.   The U.S. Supreme Court's decision                                                               
in Watters  strictly limited  the ability  of states  to regulate                                                             
bank securities.   The sponsors thought  it best to put  back the                                                             
original definition as written by  the uniform law commissioners,                                                               
and that  is what Amendment  1 would  do.  The  other significant                                                               
difference was  that the  uniform act  had three  entities: money                                                               
transmitters, check  cashers, and currency exchangers.   The bill                                                               
does not regulate check cashers,  because you can't launder money                                                               
or finance terrorists by cashing a  check, and there is no safety                                                               
or soundness risk.                                                                                                              
                                                                                                                                
MR. KIEHL concluded by stating  that the uniform act was designed                                                               
to be modular; the state could adopt  any one or all three of the                                                               
pieces.                                                                                                                         
                                                                                                                                
1:39:38 PM                                                                                                                    
                                                                                                                                
MARK  DAVIS,  Director,  Juneau office,  Division  of  Banking  &                                                               
Securities,  Department   of  Commerce,  Community,   &  Economic                                                               
Development (DCCED), referring to  Watters, stated that the issue                                                             
was whether  a state could  regulate a mortgage company  that was                                                               
an  operating   subsidiary  of  a   national  bank.     Operating                                                               
subsidiaries are not  subject to supervision by  states under the                                                               
U.S. Office of  the Comptroller of the Currency (OCC).   The U.S.                                                               
Supreme Court agreed,  but explicitly noted that  affiliates of a                                                               
national bank can  be subject to state regulation.   This bill is                                                               
reworded  so that  it  would not  cover a  bank  or an  operating                                                               
subsidiary of a bank.                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG asked if Alaska  will need to change any                                                               
of its banking laws to conform to Watters.                                                                                    
                                                                                                                                
MR. DAVIS responded that Alaska would  not need to at the present                                                               
time  because  it has  not  exercised  any supervision  over  any                                                               
subsidiaries  of national  banks.   The few  national banks  that                                                               
operate  in Alaska  have decided  to operate  through affiliates,                                                               
which do fall under the scrutiny of the state.                                                                                  
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked whether  Mr. Davis  was preparing                                                               
any legislation  to extend  state jurisdiction  to the  limits of                                                               
the Watters case.                                                                                                             
                                                                                                                                
MR. DAVIS  indicated that he was,  adding he did not  think there                                                               
would be state supervision of subsidiaries in the near future.                                                                  
                                                                                                                                
REPRESENTATIVE  GRUENBERG commented  that he  generally likes  to                                                               
see  Alaska  regulate  to  the extent  permitted  by  the  [U.S.]                                                               
Constitution,  to  ensure  that   businesses  and  customers  are                                                               
protected.  He asked Mr. Davis  where there may be areas in which                                                               
Alaska's banking jurisdiction could  be extended, as permitted by                                                               
Watters.                                                                                                                      
                                                                                                                                
1:43:27 PM                                                                                                                    
                                                                                                                                
MR. DAVIS  responded that he  did not think  so.  He  agreed that                                                               
the deferred deposit act covers  Internet operations.  Alaska has                                                               
been  successful in  enforcing  this act  against companies  only                                                               
operating  via the  Internet in  Alaska, which  is asserting  its                                                               
jurisdiction on behalf of consumers in every bill it reviews.                                                                   
                                                                                                                                
CHAIR  RAMRAS expressed  concern  for the  financial security  of                                                               
crew and passengers of cruise  ships, when they are sending money                                                               
by wire.   He asked for  clarity on the security  and surety bond                                                               
required by the money transmitters.                                                                                             
                                                                                                                                
MR. KIEHL responded that the  security requirement in proposed AS                                                               
06.55.104 speaks  primarily to  losses by  the consumer  should a                                                               
money transmitter go  out of business.  The bill  is written with                                                               
some flexibility,  on the advice  of the regulator, with  a lower                                                               
security requirement than  the model Act initially  suggested.  A                                                               
money transmitter can  post a bond, a certificate  of deposit, or                                                               
an acceptable  tangible asset which  would be for the  benefit of                                                               
consumers should  the transmitter close up  shop with outstanding                                                               
obligations.   The  security requirement  under this  bill is  an                                                               
acceptable  security  (including  a  surety  bond  or  letter  of                                                               
credit) of $25,000 with an  additional $5,000 acceptable security                                                               
required for each location.   This would apply, primarily, to the                                                               
larger  money  transmitters  that  have a  number  of  authorized                                                               
delegates.  This  security requirement was written  to the lowest                                                               
level  that the  regulator thought  would protect  consumers, and                                                               
yet not affect the competitive environment in Alaska.                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG commented  that the security requirement                                                               
amount  seems very  low, as  one default  on a  transaction could                                                               
wipe this amount out.                                                                                                           
                                                                                                                                
MR. KIEHL  replied that proposed  AS 06.55.104  operates together                                                               
with  proposed AS  06.55.107 which  is a  net worth  requirement.                                                               
The money  transmitters are required  to maintain a  positive net                                                               
worth,  which  is  reported  in  their  regular  reports  to  the                                                               
regulator.   There  are receivership  provisions in  the bill  to                                                               
ensure that a money transmitter  getting into trouble isn't going                                                               
to leave its Alaskan customers in the lurch.                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  Mr. Davis  and Mr.  Callow about                                                               
the figures  in the  uniform Act  and what  the division  and the                                                               
NCCUSL commissioners  feel about  the financial  security amounts                                                               
in AS 06.55.104(a).                                                                                                             
                                                                                                                                
MR. DAVIS  said DCCED supports  the $25,000 amount because  it is                                                               
difficult to obtain  a larger bond.  The  sponsors were sensitive                                                               
to the issue  of not wanting to put small  money transmitters out                                                               
of business.   DCCED does support  the maximum of $5,000.   There                                                               
are the  very large companies,  including Money Gram  and Western                                                               
Union,  who have  more  than  enough resources  to  pay back  the                                                               
consumer; and  there are the  small companies which can  offer no                                                               
financial protection to the consumer.   This bill is a compromise                                                               
based on DCCED experience with the other Act.                                                                                   
                                                                                                                                
1:49:54 PM                                                                                                                    
                                                                                                                                
W.   GRANT   CALLOW,   Commissioner,   National   Conference   of                                                               
Commissioners on  Uniform State  Laws (NCCUSL), offered  that the                                                               
Chicago  office  of  the  NCCUSL looked  at  the  [Uniform  Money                                                               
Services Act]  with the changes,  prior to the  Watters decision,                                                             
and approved all  the changes that were made.   It was drafted as                                                               
a  uniform Act,  with  the understanding  that  each state  could                                                               
adjust the  [financial] levels.   Unless there have  been changes                                                               
to the  numbers since HB 227  was drafted, the Chicago  office is                                                               
comfortable with the numbers, he said.                                                                                          
                                                                                                                                
MR. KIEHL in  response to a question relayed that  the numbers in                                                               
the bill have not been  changed since the Chicago office reviewed                                                               
them.    The security  requirements  (surety  bond or  letter  of                                                               
credit) in  the model Act were  twice the amount required  in the                                                               
bill.  The  $25,000 net worth requirement in the  model Act reads                                                               
the same as in the bill.                                                                                                        
                                                                                                                                
CHAIR  RAMRAS  expressed support  for  the  bill, but  wanted  to                                                               
ensure that  those customers who  don't speak English as  a first                                                               
language  are  not preyed  upon.    He  asked  how the  fees  are                                                               
regulated, particularly  for those who  don't speak English  as a                                                               
first language.   He asked  the rights  of those who  don't speak                                                               
English; what the  commissions are; how many  of these businesses                                                               
are there  be in Juneau; and  how many of these  businesses would                                                               
be nationally recognized versus only locally recognized.                                                                        
                                                                                                                                
MR.  KIEHL responded  that  HB  227 won't  regulate  fees, as  it                                                               
pertains  to   a  competitive   industry,  and   the  competitive                                                               
environment  is helping  to keep  fees low.   There  are consumer                                                               
protections in  the bill  that have been  reviewed by  both large                                                               
and  small  money transmitter  associations,  and  they refer  to                                                               
posting, receipts, timely-transmission  minimum requirements, and                                                               
refund  ability requirements.   The  bill requires  businesses to                                                               
post  a sign  detailing where  and  how to  make complaints,  and                                                               
every money  transmission must come  with a receipt  that clearly                                                               
states the fees  that were charged, and the exchange  rate or the                                                               
floating exchange  rate for exchanging  foreign currencies.   For                                                               
foreign currency  exchange with  a floating exchange  rate, there                                                               
needs to  also be  an explanation of  how this  floating exchange                                                               
works.                                                                                                                          
                                                                                                                                
MR. KIEHL  further stated that  many of  the people who  use this                                                               
service become quite  savvy and know how  exchange rates operate.                                                               
They  pick the  businesses  that  serve them  best.   The  timely                                                               
transmission requirements  set a  bare minimum.   The competitive                                                               
environment  allows one  minute  money  transfers, whereby  money                                                               
goes directly  into someone's bank  account.  There are  an array                                                               
and variety of  services available.  The bill  does not interfere                                                               
with the  competitive environment,  but ensures the  consumer has                                                               
the information needed to make a smart choice.                                                                                  
                                                                                                                                
1:57:02 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS  made a motion  to adopt Amendment 1  [text provided                                                               
previously].                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM objected for the purpose of discussion.                                                                
                                                                                                                                
MR. KIEHL  stated that Amendment  1 adds  to the definition  of a                                                               
bank.   It adds "rent  a banks" or  "credit card banks",  both of                                                               
which are  federally recognized banking institutions  that do not                                                               
have  "bank  locations"  and  just  offer  credit  cards.    This                                                               
language is in  the uniform Act.  It was  originally taken out of                                                               
the  bill,  but,  after  the  Watters  ruling,  it  needs  to  be                                                             
returned.                                                                                                                       
                                                                                                                                
REPRESENTATIVE DAHLSTROM removed her objection.                                                                                 
                                                                                                                                
CHAIR RAMRAS stated that Amendment 1 was adopted.                                                                               
                                                                                                                                
REPRESENTATIVE  GRUENBERG commented  that  this is  a "trust  me"                                                               
bill.  He asked whether there  is any other provision in the bill                                                               
about which the committee should be informed.                                                                                   
                                                                                                                                
2:00:24 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS  asked whether both  the transmission time  limit of                                                               
10  days and  the  requirements regarding  posting the  complaint                                                               
notice would  be established through  regulation, or  are already                                                               
in the bill.                                                                                                                    
                                                                                                                                
MR. DAVIS  responded that  the Division  of Banking  & Securities                                                               
will have  regulatory power  to set  the signage  requirement and                                                               
has been  doing that  with regard  to the  deferred deposit.   In                                                               
response  to  Representative  Gruenberg,   Mr.  Davis  said  that                                                               
currently,   the  division   is  required   to  keep   the  money                                                               
transmitter  information confidential,  and so  he would  like to                                                               
have  a   provision  added  that  would   require  money  service                                                               
companies   to  ensure   that   customer   information  is   kept                                                               
confidential.                                                                                                                   
                                                                                                                                
CHAIR RAMRAS asked about the 10-day transmission time limit.                                                                    
                                                                                                                                
MR. DAVIS  offered his understanding  that this time limit  is in                                                               
the bill  and although 10  days is a long  period of time,  it is                                                               
part  of the  uniform Act.   He  recommended retaining  that time                                                               
limit  for now,  as there  may  be problems  with foreign  banks.                                                               
This service,  referred to  above, is  primarily for  persons who                                                               
don't have a bank account where they are currently.                                                                             
                                                                                                                                
MR. KIEHL  clarified that  the 10-day time  limitation is  not in                                                               
the uniform  Act, and that it  is designed to work  with existing                                                               
consumer protections that individual states  have in effect.  The                                                               
"timely  transmission" language  came  at the  suggestion of  the                                                               
industry, and  it matches  the form and  content of  the language                                                               
adopted  by both  Hawaii  and  Washington.   Almost  none of  the                                                               
transmissions take  10 days, as  the competitive  environment has                                                               
promoted having transmissions happen quickly.                                                                                   
                                                                                                                                
MR. DAVIS concurred.                                                                                                            
                                                                                                                                
REPRESENTATIVE   GRUENBERG  asked   why  a   provision  regarding                                                               
reciprocal confidentiality was not in the bill.                                                                                 
                                                                                                                                
MR.  DAVIS replied  that the  uniform  Act did  not address  this                                                               
issue, and  the sponsor decided  not to  modify the bill  in that                                                               
regard.   In response to  Representative Gruenberg,  he clarified                                                               
that  he would  like to  see customer  confidentiality maintained                                                               
with money  transmitters, as  customer information  can sometimes                                                               
include bank routing numbers.                                                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  whether members  understood that                                                               
Mr. Davis  wants to make  the customer  information confidential,                                                               
as that  information may  contain bank  routing and  bank account                                                               
numbers.                                                                                                                        
                                                                                                                                
2:06:01 PM                                                                                                                    
                                                                                                                                
MR. KIEHL  reiterated that it  was a change the  sponsors elected                                                               
not to make.   Bank routing numbers are not  transmitted by money                                                               
transmitters; but,  should a person  choose to  transfer directly                                                               
to  a  bank  account,  then   a  bank  routing  number  would  be                                                               
collected.  The  sponsor elected not to impose  a higher standard                                                               
than the uniform Act imposed.                                                                                                   
                                                                                                                                
MR.  DAVIS responded  that for  some special  transfers, one  may                                                               
provide a bank number to  the transmitter.  The transmitter would                                                               
then be  in possession of  bank account records, which  he thinks                                                               
should be  kept confidential.   The drafters  of the  uniform Act                                                               
probably  did  not  anticipate  the use  of  such  transfers,  he                                                               
surmised.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG  expressed  concern with  the  lack  of                                                               
confidentiality for such transfers.                                                                                             
                                                                                                                                
MR. DAVIS  said he  did not think  this was a  major flaw  in the                                                               
bill,  but   suggested  that  proposed  AS   06.55.407(1)  should                                                               
probably  say  "all  information   collected  from  a  client  or                                                               
contained in examination is confidential."                                                                                      
                                                                                                                                
REPRESENTATIVE GRUENBERG stated  that he would not  want his bank                                                               
information released  to the public.   He asked Mr. Kiehl  if the                                                               
sponsor would reconsider that point.                                                                                            
                                                                                                                                
MR.  CALLOW   stated  his  personal   opinion  that   Mr.  Davis'                                                               
suggestion to protect customer confidentiality  seems like a good                                                               
idea.   He said that  [customer confidentiality] does  raise some                                                               
liability  issues   with  the  consequences  of   revealing  that                                                               
information.     He  said  he  agrees   that  confidentiality  is                                                               
important.   He  said  he did  not know  whether  that issue  was                                                               
addressed during  the drafting  of the uniform  Act, so  he could                                                               
not say whether it was purposefully left out.                                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG suggested  that the  sponsor work  with                                                               
Mr. Davis to address his  concern in the House Finance Committee.                                                               
He said he wants to see Alaskans protected in this regard.                                                                      
                                                                                                                                
MR. KIEHL responded that he and  the sponsors will work with both                                                               
the Division of Banking &  Securities and the industry to protect                                                               
the security of  personal financial records, in  order to prevent                                                               
identity theft.                                                                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG asked whether  there is any provision in                                                               
the Act  whereby other states  are immediately informed  should a                                                               
company be found to be fraudulent.                                                                                              
                                                                                                                                
MR.  DAVIS said  that  once the  state  passes this  legislation,                                                               
Alaska can ask the U.S.  Department of Treasury, Financial Crimes                                                               
Enforcement Network  to confirm  which companies  are registered.                                                               
That federal tracking system protects honest companies.                                                                         
                                                                                                                                
2:13:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DAHLSTROM  moved  to  report  CSHB  227(L&C),  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the accompanying  fiscal notes.   There being no  objection, CSHB
227(JUD)  was   reported  from   the  House   Judiciary  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
[Members spoke  briefly on  a couple  of topics  addressed during                                                               
prior meetings.]                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Judiciary Standing Committee meeting was adjourned at 2:15 p.m.                                                                 

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