Legislature(2021 - 2022)BARNES 124

05/11/2022 03:15 PM House LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 344 INTELLECTUAL PROPERTY OF EMPLOYEES TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 408 MONEY TRANSMISSION; VIRTUAL CURRENCY TELECONFERENCED
Heard & Held
+= SB 185 ELIMINATE MINIMUM WAGE EXEMPTION TELECONFERENCED
Moved HCS CSSB 185(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                          May 11, 2022                                                                                          
                           3:19 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Zack Fields, Co-Chair                                                                                            
Representative Ivy Spohnholz, Co-Chair                                                                                          
Representative Calvin Schrage                                                                                                   
Representative Liz Snyder                                                                                                       
Representative David Nelson                                                                                                     
Representative Ken McCarty                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative James Kaufman                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 344                                                                                                              
"An Act relating to employee intellectual property."                                                                            
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
CS FOR SENATE BILL NO. 185(L&C)                                                                                                 
"An Act relating to exemptions from minimum wage."                                                                              
                                                                                                                                
     - MOVED HCS CSSB 185(L&C) OUT OF COMMITTEE                                                                                 
                                                                                                                                
HOUSE BILL NO. 408                                                                                                              
"An Act relating to the  business of money transmission; relating                                                               
to  money  transmission  licenses,  licensure  requirements,  and                                                               
registration through the  Nationwide Multistate Licensing System;                                                               
relating to the  use of virtual currency  for money transmission;                                                               
relating  to  authorized delegates  of  a  licensee; relating  to                                                               
acquisition  of   control  of  a  license;   relating  to  record                                                               
retention and reporting  requirements; authorizing the Department                                                               
of  Commerce, Community,  and Economic  Development to  cooperate                                                               
with  other  states  in the  regulation  of  money  transmission;                                                               
relating to  permissible investments; relating to  violations and                                                               
enforcement  of  money  transmission   laws;  relating  to  money                                                               
transmission license  exemptions; relating to  payroll processing                                                               
services;  repealing currency  exchange  licenses; and  providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 344                                                                                                                  
SHORT TITLE: INTELLECTUAL PROPERTY OF EMPLOYEES                                                                                 
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
02/17/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/17/22       (H)       L&C, STA                                                                                               
05/11/22       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 185                                                                                                                  
SHORT TITLE: ELIMINATE MINIMUM WAGE EXEMPTION                                                                                   
SPONSOR(s): MICCICHE                                                                                                            
                                                                                                                                
02/08/22       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/08/22       (S)       L&C                                                                                                    
02/28/22       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/28/22       (S)       Scheduled but Not Heard                                                                                
03/14/22       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/14/22       (S)       Heard & Held                                                                                           
03/14/22       (S)       MINUTE(L&C)                                                                                            
03/16/22       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/16/22       (S)       Moved CSSB 185(L&C) Out of Committee                                                                   
03/16/22       (S)       MINUTE(L&C)                                                                                            
03/18/22       (S)       L&C RPT CS  4DP  SAME TITLE                                                                            
03/18/22       (S)       DP: COSTELLO, GRAY-JACKSON, STEVENS,                                                                   
                         MICCICHE                                                                                               
03/21/22       (S)       TRANSMITTED TO (H)                                                                                     
03/21/22       (S)       VERSION: CSSB 185(L&C)                                                                                 
03/22/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/22/22       (H)       L&C                                                                                                    
04/25/22       (H)       L&C AT 3:15 PM BARNES 124                                                                              
04/25/22       (H)       Moved CSSB 185(L&C) Out of Committee                                                                   
04/25/22       (H)       MINUTE(L&C)                                                                                            
04/29/22       (H)       L&C AT 9:00 AM BARNES 124                                                                              
04/29/22       (H)       <Bill Hearing Canceled>                                                                                
05/04/22       (H)       L&C AT 3:15 PM BARNES 124                                                                              
05/04/22       (H)       Moved   HCS   CSSB   185(L&C)   Out   of                                                               
                         Committee                                                                                              
05/04/22       (H)       MINUTE(L&C)                                                                                            
05/11/22       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 408                                                                                                                  
SHORT TITLE: MONEY TRANSMISSION; VIRTUAL CURRENCY                                                                               
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
04/04/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/04/22       (H)       L&C, FIN                                                                                               
04/22/22       (H)       L&C AT 9:00 AM BARNES 124                                                                              
04/22/22       (H)       Heard & Held                                                                                           
04/22/22       (H)       MINUTE(L&C)                                                                                            
05/04/22       (H)       L&C AT 3:15 PM BARNES 124                                                                              
05/04/22       (H)       <Bill Hearing Canceled>                                                                                
05/09/22       (H)       L&C AT 3:15 PM BARNES 124                                                                              
05/09/22       (H)       -- Delayed to 5/10/22 at 9:00 am --                                                                    
05/10/22       (H)       L&C AT 9:00 AM BARNES 124                                                                              
05/10/22       (H)       -- Rescheduled from 5/9/22 --                                                                          
05/11/22       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR JESSE KIEHL                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 344.                                                                                        
                                                                                                                                
CATHY SCHLINGHEYDE, Staff                                                                                                       
Senator Jesse Kiehl                                                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  During the hearing on HB 344, answered a                                                                 
question on behalf of Senator Kiehl.                                                                                            
                                                                                                                                
CHELSEA WARD-WALLER, Staff                                                                                                      
Representative Ivy Spohnholz                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  During the hearing on HB 408, provided a                                                                 
summary of changes in the proposed committee substitute, Version                                                                
B.                                                                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:19:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ZACK  FIELDS  called   the  House  Labor  and  Commerce                                                             
Standing   Committee    meeting   to    order   at    3:19   p.m.                                                               
Representatives  McCarty, Snyder,  Nelson, Spohnholz,  and Fields                                                               
were  present  at the  call  to  order.   Representative  Schrage                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
           HB 344-INTELLECTUAL PROPERTY OF EMPLOYEES                                                                        
                                                                                                                                
3:19:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced that the  first order of business would                                                               
be HOUSE BILL NO. 344,  "An Act relating to employee intellectual                                                               
property."                                                                                                                      
                                                                                                                                
CO-CHAIR FIELDS stated  that HB 344 is a bill  by the House Labor                                                               
and Commerce Committee by way of Senator Jesse Kiehl.                                                                           
                                                                                                                                
3:20:30 PM                                                                                                                    
                                                                                                                                
SENATOR JESSE KIEHL, Alaska State  Legislature, presented HB 344.                                                               
He  thanked  the  co-chairs  for  taking up  an  issue  that  was                                                               
discussed earlier in the session  and making it a committee bill.                                                               
He explained  that HB 344  is designed to provide  protection for                                                               
innovation and innovators in Alaska  and aligns with similar laws                                                               
passed  in recent  years by  Washington, Kansas,  California, and                                                               
Minnesota.   He said the  premise of the  bill is to  protect the                                                               
intellectual property of  an employee who innovates  on their own                                                               
time, but the bill does  not change the well-established law that                                                               
when someone  is working  for the  boss, the  boss owns  the work                                                               
product.  The bill clarifies,  he continued, that when someone is                                                               
working  on their  own  time  with their  own  equipment and  not                                                               
employing their boss's resources, then  the boss cannot claim the                                                               
person's work  product as theirs  and cannot ask the  employee to                                                               
sign an employment  contract that says otherwise.   Senator Kiehl                                                               
related that an  Alaskan brought this issue  to the legislature's                                                               
attention  and   his  understanding  is  that   this  Alaskan  is                                                               
currently  in   litigation.    He  specified   that  nothing  the                                                               
legislature does  can or  should affect  an ongoing  lawsuit, and                                                               
this is seen  in an applicability clause so  that the legislature                                                               
doesn't  step over  that  line with  this bill.    This bill,  he                                                               
added, is  designed to  make the  rules clear  for the  future so                                                               
that  employees and  businesses  know where  the  rules are,  and                                                               
everyone  can work  and innovate  and enjoy  the fruits  of their                                                               
industry.                                                                                                                       
                                                                                                                                
3:22:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NELSON  stated he understands that  HB 344 relates                                                               
to employees,  but inquired about  student research  that creates                                                               
an  invention  and  then  the university  claims  credit  for  or                                                               
utilizes that [invention] afterwards.                                                                                           
                                                                                                                                
SENATOR KIEHL replied that in  most situations where a student is                                                               
working  on a  research project  with a  university, the  student                                                               
would be  using the university's  laboratories and  equipment and                                                               
probably getting a  stipend from a university  grant.  Therefore,                                                               
he said, the  student would be under the terms  of the bill using                                                               
the boss's equipment and on the  boss's paid time, so any patents                                                               
coming  from   that  research  would   probably  adhere   in  the                                                               
university   under  the   usual  sharing   agreements  that   the                                                               
university has with its professors.                                                                                             
                                                                                                                                
3:23:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCARTY spoke  about the  originality of  thought                                                               
and how someone formulates because  they have grabbed information                                                               
from other  places, such as working  for a company and  sharing a                                                               
dialogue of  thought.   He inquired  about the  point at  which a                                                               
business  is  involved in  the  formulation  of a  thought,  even                                                               
though an  employee goes home.   He further inquired  about where                                                               
the differentiation  exists for  an employer  on this  concept of                                                               
original  thought and  transition of  information in  formulating                                                               
new ideas that may be directly related to the employment.                                                                       
                                                                                                                                
SENATOR  KIEHL responded  that the  bill's  language gives  clear                                                               
guidelines regarding that, and if  trade secret is involved it is                                                               
clear  cut.   He  drew attention  to page  1,  lines 9-10,  which                                                               
provide a topical  guideline.  He posed an example  of a computer                                                               
programmer  doing   information  technology  (IT)   security  for                                                               
McCarty Industries.   If on his spare time at  home and not using                                                               
McCarty  Industries  computers,  the programmer  creates  a  game                                                               
called  First  Person  Shooter,  it  is  unrelated,  and  McCarty                                                               
Industries   doesn't  have   any   right   to  the   programmer's                                                               
intellectual property in the game.   However, he continued, if on                                                               
his spare  time at home and  on his own computer,  the programmer                                                               
creates  an  anti-virus  program,  then there  is  a  significant                                                               
overlap  of   the  actual  research  and   development  that  the                                                               
programmer is doing  for McCarty Industries and  then there would                                                               
be potential employer claim to that intellectual property.                                                                      
                                                                                                                                
3:27:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCARTY   asked  how   a  no-compete   clause,  a                                                               
contractual agreement for employment, would  fit into the bill or                                                               
whether  the  bill  would eliminate  the  no-compete  clause  for                                                               
employers.                                                                                                                      
                                                                                                                                
SENATOR KIEHL  answered that nothing  in the bill would  impact a                                                               
non-compete  provision.    He  said  the  bill  deals  only  with                                                               
ownership of the intellectual property.                                                                                         
                                                                                                                                
3:28:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FIELDS  observed  that   the  fiscal  note  states  the                                                               
legislation does not contain a  provision for penalties, nor does                                                               
it grant  enforcement powers  to the  Wage and  Hour [component].                                                               
He related  that Title 23  empowers the [Department of  Labor and                                                               
Workforce Development]  and says  the department may  enforce all                                                               
state labor  laws.  Given the  bill would add a  section in Title                                                               
23, he  asked whether it is  fair to say that  under AS 23.05.060                                                               
the department may  enforce all state labor laws  should the bill                                                               
pass.   He  said [the  bill would  create] a  currently undefined                                                               
enforcement authority  within the  department.   He said  he also                                                               
thinks that an affected employee  would retain a private right of                                                               
action  just like  they would  in the  event of  wage theft.   He                                                               
further  asked whether  an employee  would be  protected both  by                                                               
state enforcement capacity and through private right of action.                                                                 
                                                                                                                                
SENATOR KIEHL  deferred to his staff  member, Cathy Schlingheyde,                                                               
to answer the question.                                                                                                         
                                                                                                                                
3:29:15 PM                                                                                                                    
                                                                                                                                
CATHY  SCHLINGHEYDE, Staff,  Senator  Jesse  Kiehl, Alaska  State                                                               
Legislature, on  behalf of Senator  Kiehl, responded that  HB 344                                                               
specifically  contemplates a  private right  of action  where the                                                               
employee can address the employer.   She said she doesn't believe                                                               
that  the state  would  be able  to enforce  this,  but she  will                                                               
confirm that and get back to the committee.                                                                                     
                                                                                                                                
3:29:39 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
3:29:52 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced that HB 344 was held over.                                                                            
                                                                                                                                
            SB 185-ELIMINATE MINIMUM WAGE EXEMPTION                                                                         
                                                                                                                                
3:30:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced  that the next order  of business would                                                               
be  CS  FOR  SENATE  BILL  NO.  185(L&C),  "An  Act  relating  to                                                               
exemptions from minimum wage."                                                                                                  
                                                                                                                                
CO-CHAIR FIELDS specified the intent  of the hearing was to bring                                                               
the legislation back before the  committee because, after lengthy                                                               
consultation  with stakeholders  and Legislative  Legal Services,                                                               
language  has been  written  that will  ensure  Girl Scouts,  Boy                                                               
Scouts, and  Campfire can continue  to operate.  He  related that                                                               
the  [Department   of  Labor   and  Workforce   Development]  has                                                               
promulgated   temporary  or   emergency  regulations   so  [these                                                               
nonprofits]  can continue  to operate  this summer  regardless of                                                               
whether  a bill  is passed,  but this  legislation would  provide                                                               
them  some certainty.   He  said the  committee needs  to rescind                                                               
action  on SB  185,  then adopt  a  new HCS,  and  then pass  the                                                               
amended legislation so it can be heard on the House floor.                                                                      
                                                                                                                                
3:30:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NELSON offered his  understanding that this is for                                                               
all nonprofits,  not just Girl  Scouts, Boy Scouts,  and Campfire                                                               
specifically.                                                                                                                   
                                                                                                                                
CO-CHAIR FIELDS replied yes, this  exemption would fall under the                                                               
"learner"  category in  statute.   It  would  codify an  existing                                                               
practice so that  employees in a residential  camp receiving room                                                               
and board can  be paid sub-minimum wage, he  explained, and there                                                               
are some thresholds depending on the  number of hours worked.  It                                                               
does not create a new exemption,  he continued, it codifies a new                                                               
exemption  following  the  Department   of  Labor  and  Workforce                                                               
Development's   re-interpretation   of   the   existing   learner                                                               
exemption.   He stated  that this language  has been  endorsed by                                                               
the Girl  Scouts, Boy Scouts,  Campfire, and the  Alaska AFL-CIO.                                                               
It would apply  to other camps, he said, but  it was important to                                                               
work with those camps that had identified this problem.                                                                         
                                                                                                                                
3:31:52 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SPOHNHOLZ  specified  that  this would  only  apply  to                                                               
nonprofit residential  camps that  operate for  12 weeks  or less                                                               
and which  offer room and board  in addition to the  weekly wage.                                                               
It is a very narrow  exemption, she continued, designed to ensure                                                               
that nonprofit  organizations will  be able to  continue offering                                                               
residential   summer  camps   within  their   existing  financial                                                               
frameworks.  It does not go beyond that, she added.                                                                             
                                                                                                                                
CO-CHAIR FIELDS clarified  it would be more accurate  to say that                                                               
the Alaska AFL-CIO  does not object to this  language rather than                                                               
to say  that the Alaska AFL-CIO  endorses it.  He  said he agrees                                                               
it  is important  to  have tight  language so  that  this is  not                                                               
abused.   His view, he  opined, is that  it needs to  be language                                                               
that can  be passed on the  floor; if it gets  broadened it would                                                               
endanger the underlying bill.                                                                                                   
                                                                                                                                
3:32:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCARTY asked  whether  anything  has been  heard                                                               
from nonprofits that offer winter camps.                                                                                        
                                                                                                                                
CO-CHAIR  SPOHNHOLZ responded  that  the  residential camps  that                                                               
were  worked with  operate residential  camps  and don't  operate                                                               
winter  camps for  the  most  part.   While  there are  sometimes                                                               
spring  break  camps,  she  continued,  they  are  not  typically                                                               
residential camps,  and this only  applies to  residential camps.                                                               
The language is designed to  apply to that very narrow exception,                                                               
she added.                                                                                                                      
                                                                                                                                
3:33:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SPOHNHOLZ  moved to rescind  the committee's  action [on                                                               
5/4/22]  in moving  HCS CSSB  185(L&C) out  of committee.   There                                                               
being no objection, it was so ordered.                                                                                          
                                                                                                                                
CO-CHAIR  FIELDS  explained  that  now   the  new  HCS  with  the                                                               
consensus  language,  [Version   32-LS1443\E,  Klein,  5/11/22)],                                                               
would be brought before the committee.                                                                                          
                                                                                                                                
3:34:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SPOHNHOLZ  moved to adopt  the proposed  House committee                                                               
substitute (HCS)  for CSSB 185(L&C), Version  32-LS1443\E, Klein,                                                               
5/11/22.   There  being no  objection, Version  E was  before the                                                               
committee.                                                                                                                      
                                                                                                                                
3:34:55 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:34 p.m. to 3:35 p.m.                                                                       
                                                                                                                                
3:35:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SPOHNHOLZ moved  to report  HCS CSSB  185(L&C), Version                                                               
32-LS1443\E,  Klein, 5/11/22,  out of  committee with  individual                                                               
recommendations and  the accompanying fiscal notes.   There being                                                               
no objection,  HCS CSSB  185(L&C) was reported  out of  the House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
3:35:43 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:35 p.m. to 3:38 p.m.                                                                       
                                                                                                                                
          HB 408-MONEY TRANSMISSION; VIRTUAL CURRENCY                                                                       
                                                                                                                                
3:38:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced that the  final order of business would                                                               
be HOUSE BILL NO. 408, "An  Act relating to the business of money                                                               
transmission; relating to  money transmission licenses, licensure                                                               
requirements, and registration  through the Nationwide Multistate                                                               
Licensing System;  relating to  the use  of virtual  currency for                                                               
money  transmission;  relating  to   authorized  delegates  of  a                                                               
licensee;  relating  to  acquisition  of control  of  a  license;                                                               
relating   to  record   retention  and   reporting  requirements;                                                               
authorizing the  Department of Commerce, Community,  and Economic                                                               
Development to cooperate  with other states in  the regulation of                                                               
money   transmission;   relating  to   permissible   investments;                                                               
relating  to violations  and  enforcement  of money  transmission                                                               
laws;   relating  to   money  transmission   license  exemptions;                                                               
relating  to  payroll  processing  services;  repealing  currency                                                               
exchange licenses; and providing for an effective date."                                                                        
                                                                                                                                
3:38:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SPOHNHOLZ  stated   that  the  Dunleavy  Administration                                                               
introduced this legislation to update  Alaska statute to get more                                                               
visibility  into  the  utilization  of virtual  currency  in  the                                                               
state.  Given  the original bill's large size, she  said, it took                                                               
about  two weeks  to  get back  the  requested updated  language.                                                               
Although there  is no  confidence that the  language is  where it                                                               
needs  to  be,  she  explained,   the  adoption  of  a  committee                                                               
substitute today will  get the work done to date  into the public                                                               
sphere to enable future legislatures to  build on that work.  She                                                               
recounted  that  in  his  [4/22/22  testimony],  Robert  Schmidt,                                                               
Director of the  Division of Banking and  Securities, stated that                                                               
significant   growth  has   occurred   in   the  utilization   of                                                               
cryptocurrency  in Alaska  and that  this growth  was way  out of                                                               
proportion to what  other states have been seeing.   This serious                                                               
issue  needs to  be done  right, she  stressed.   Multiple issues                                                               
still need to be addressed before  the legislation is ready to be                                                               
adopted in final,  including a series of  definitions, she added.                                                               
This  committee, Co-Chair  Spohnholz stated,  is the  only policy                                                               
committee  doing a  deep  dive into  understanding  the way  that                                                               
virtual currency  can and should  be overseen.   The bill  is not                                                               
going  to be  ready for  final  consideration before  the end  of                                                               
session next week,  she pointed out, but the  committee wanted to                                                               
get the  newest version  of the  bill into  the public  sphere so                                                               
people can  provide feedback  to the division  and to  members of                                                               
the  legislature.   She requested  Ms. Ward-Waller  to provide  a                                                               
summary of the [proposed] changes to HB 408.                                                                                    
                                                                                                                                
3:40:43 PM                                                                                                                    
                                                                                                                                
CHELSEA WARD-WALLER, Staff,  Representative Ivy Spohnholz, Alaska                                                               
State  Legislature,   at  the  request  of   Co-Chair  Spohnholz,                                                               
provided  a   summary  of  changes  in   the  proposed  committee                                                               
substitute  (CS)  for  HB 408,  Version  32-GH2312\B,  Bannister,                                                               
5/10/22 (Version  B).   She qualified  that she  did her  best to                                                               
highlight the most significant and  substantial changes that were                                                               
made.   She  spoke from  the  four-page written  document in  the                                                               
committee  packet  titled  "Summary   of  Changes  CSHB  408(L&C)                                                               
Version  A  to  Version  B",  which  read  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Technical changes were made throughout  the CS to bring                                                                    
     the bill in line  with the legislature's drafting style                                                                    
     and for clarity. Examples  include replacing "any" with                                                                    
     "an", "a" with "the", a  plural word with the singular,                                                                    
     and   reordering   phrases   for  clarity.   Under   AS                                                                    
     01.10.050, which applies to  all statutes, the singular                                                                    
     includes  the  plural,  and  the  plural  includes  the                                                                    
     singular.  References  to  private  organizations  have                                                                    
     been  replaced with  organizations that  the department                                                                    
     selects as  directed by  the bill.  Substantive changes                                                                    
     are addressed below.                                                                                                       
                                                                                                                                
     Page  1, line  10;  added "amending  Rules  79 and  82,                                                                    
     Alaska Rules  of Civil Procedure"  to the title  of the                                                                    
     bill.                                                                                                                      
                                                                                                                                
     Section 1                                                                                                                
     Page 2,  line 8; adds  "for money transmission"  to the                                                                    
     end of the purpose of the act.                                                                                             
                                                                                                                                
     Section 2                                                                                                                
     Page  2, line  14; replaces  "of a  person who  holds a                                                                    
     license" by "licensee".                                                                                                    
                                                                                                                                
     Page 2, line 19; includes  section (b) of AS 06.55.101,                                                                    
     that a license is not transferrable or assignable.                                                                         
                                                                                                                                
     Section 3                                                                                                                
     Page 2,  lines 23-26; combines subsections  (1) and (2)                                                                    
     regarding  the   form,  medium,   and  content   of  an                                                                    
     application as determined by the department.                                                                               
                                                                                                                                
     Page 3, line 1; the  department is not allowed to waive                                                                    
     subsection  (5) "a  surety bond  or  other security  as                                                                    
     required by  AS 06.55.505" or permit  other information                                                                    
     in place of this information in the application.                                                                           
                                                                                                                                
     Page 3, line 3; AS  06.55.102 subsection (c) is removed                                                                    
     because  the department  already has  the authority  to                                                                    
     establish  the application  form and  to require  other                                                                    
     information.                                                                                                               
                                                                                                                                
     Section 4                                                                                                                
     Page 4,  line 14; add clarifying  language that appeals                                                                    
     should be directed to the department.                                                                                      
                                                                                                                                
     Page 4, lines 23-24; inserts  a new subsection (h) that                                                                    
     the  applicant  must  meet   the  requirements  of  the                                                                    
     chapter.                                                                                                                   
                                                                                                                                
     Section 6                                                                                                                
     Page  5, lines  9-13;  technical changes  were made  to                                                                    
     clarify  that   a  licensee   shall  always   meet  the                                                                    
     requirements  of the  chapter. If  not, the  department                                                                    
     may suspend  or revoke  the license in  accordance with                                                                    
     this chapter or other applicable law.                                                                                      
                                                                                                                                
     Page 5,  line 14    page 6,  line 9;  Section 06.55.109                                                                    
     has been  reorganized for clarity.  Criminal background                                                                    
     check language in subsection (a)(1),  page 5, lines 18-                                                                    
     20, has been  adjusted to the more usual  way to handle                                                                    
     fingerprinting. The background check  has been added to                                                                    
     AS 12.62.400(a),  included in  Section 63 of  this bill                                                                    
     on page 53, line 1  page 54, line 31.                                                                                      
                                                                                                                                
     Page  5,  line 31;  replaces  when  an individual  must                                                                    
     additionally   provide   an  investigative   background                                                                    
     report if they  have resided outside the  U.S. from "at                                                                    
     any time  in" to  "for four  or more  of" the  last ten                                                                    
     years.                                                                                                                     
                                                                                                                                
     Section 7                                                                                                                
     Page  7,  line 15     page  13,  line 11;  updates  and                                                                    
     reorganizes sections under AS 06.55, including                                                                             
     Section 06.55.150, previously 06.55.206                                                                                    
     Section 06.55.155, previously 06.55.207                                                                                    
     Section 06.55.160, previously 06.55.208                                                                                    
     Section 06.55.165, previously 06.55.209                                                                                    
     Section 06.55.170, previously 06.55.205                                                                                    
                                                                                                                                
     Page 9,  lines 20-22; adds additional  disclaimers that                                                                    
     "persons are  not required to  take payment  in virtual                                                                    
     currency,  the value  of virtual  currency can  change,                                                                    
     and  that  virtual currency  may  not  be backed  by  a                                                                    
     government agency."                                                                                                        
                                                                                                                                
     Page   10,  line   17;   for  permissible   investments                                                                    
     considered   under  subsection   (4),  replaces   "this                                                                    
     chapter" with "AS 06.55.502".                                                                                              
                                                                                                                                
     Page  11,   line  15;  clarifies  that   licensees  are                                                                    
     required to maintain a record  of the reports submitted                                                                    
     under AS 06.55.403.                                                                                                        
                                                                                                                                
     Page 13,  line 11; definitions for  "virtual currency",                                                                    
     "virtual  currency  business  activity",  and  "virtual                                                                    
     currency  exchange" that  were  previously included  in                                                                    
     this  section  have  been   added  to  the  definitions                                                                    
     section   under  AS   06.55.990  or   more  appropriate                                                                    
     locations in the bill.                                                                                                     
                                                                                                                                
     Section 8                                                                                                                
     Page  15, lines  2-3; adds  a new  subsection (f)  that                                                                    
     subdelegates   cannot   be   used  to   conduct   money                                                                    
     transmission on behalf of a  licensee and renumbers the                                                                    
     next subsection.                                                                                                           
                                                                                                                                
     Section 10                                                                                                               
     Page 15, line 18;  adds "examination; investigation" to                                                                    
     the subsection title.                                                                                                      
                                                                                                                                
     Section 11                                                                                                               
     Page 16,  line 20;  replaces "the fiscal  quarter" with                                                                    
     "each quarter of the calendar year".                                                                                       
                                                                                                                                
     Section 12                                                                                                               
     Page  17, line  2; replaces  "the fiscal  quarter" with                                                                    
     "each quarter of the calendar year".                                                                                       
                                                                                                                                
     3:46:13 PM                                                                                                               
                                                                                                                                
     Section 13                                                                                                               
     Page  17,  line 27;  clarifies  Bankruptcy  Code as  11                                                                    
     U.S.C 101-112.                                                                                                             
                                                                                                                                
     Section 15                                                                                                               
     Page   18,   line   17;   replaces   subsection   title                                                                    
     "Acquisition  of control"  with "Control;  acquisition;                                                                    
     passive investor."                                                                                                         
                                                                                                                                
     Page 19,  lines 9-10;  updates language to  clarify the                                                                    
     period  referenced  is  "for approving  or  denying  an                                                                    
     application under (d) of this section."                                                                                    
                                                                                                                                
     Page 21, lines 23 and  26; replaces "AS 06.55.506" with                                                                    
     "AS 06.55.510"  due to reorganization of  the bill. The                                                                    
     content of the referenced subsection remains the same.                                                                     
                                                                                                                                
     Page 22,  lines 11-23; inserts language  that a passive                                                                    
     investor is  not considered to have  control under this                                                                    
     chapter  and  defines  a passive  investor,  which  was                                                                    
     previously included  in the definitions section  at the                                                                    
     end of the bill.                                                                                                           
                                                                                                                                
     Section 18                                                                                                               
     Page 23,  line 15; directs  reports to be filed  to the                                                                    
     "appropriate federal agency".                                                                                              
                                                                                                                                
     Section 19                                                                                                               
     Page 22, line  22; adds subsection (f)  as an exemption                                                                    
     to confidential information.                                                                                               
                                                                                                                                
     Section 24                                                                                                               
     Page  25,  lines  12 and  14;  replaces  "fiscal"  with                                                                    
     "calendar."                                                                                                                
                                                                                                                                
     Section 29                                                                                                               
     Page  33,  line  6;  deletes a  subsection  related  to                                                                    
     requirements for a letter of credit.                                                                                       
                                                                                                                                
     Page 33,  line 30    page 34, line 6;  adds definitions                                                                    
     for  "eligible rating"  and "eligible  rating service",                                                                    
     which  were previously  in the  definitions section  at                                                                    
     the end of the bill.                                                                                                       
                                                                                                                                
     Section 30                                                                                                               
     Page  35, line  5; lowers  the minimum  net worth  that                                                                    
     licensees are required to maintain to $35,000.                                                                             
                                                                                                                                
     Section 39                                                                                                               
     Page  38,  line 11;  removes  changes  to AS  06.55.606                                                                    
     subsection (a)  from the bill  to avoid the use  of the                                                                    
     word "such" and instead use more specific wording.                                                                         
                                                                                                                                
     Section 44                                                                                                               
     Page 39,  lines 27-30; inserts  additional institutions                                                                    
     that are exempt from the chapter.                                                                                          
                                                                                                                                
     Section 47                                                                                                               
     Page  43,  line  31     page  44,  line  1;  inserts  a                                                                    
     definition for "mobile application".                                                                                       
                                                                                                                                
     Section 48                                                                                                               
     Page  44,   lines  3-9;  inserts   a  new   section  on                                                                    
     determining   whether   the   person   requesting   the                                                                    
     transaction is in this state.                                                                                              
                                                                                                                                
     Section 49                                                                                                               
     Page 44, line 27: adds  a new subsection (9) to include                                                                    
     an exchange rate on the receipt.                                                                                           
     Page 45,  line 2: removes subsection  (d)(1), such that                                                                    
     the   section  does   apply  to   money  received   for                                                                    
     transmission subject  to 12  C.F.R. Part  1005, Subpart                                                                    
     B.                                                                                                                         
                                                                                                                                
     Section 51                                                                                                               
     Page  46, line  17;  removes previous  section 50  that                                                                    
     amended AS 06.55.845 related  to disclosure for payroll                                                                    
     processing services.                                                                                                       
                                                                                                                                
     Section 54                                                                                                               
     Page 47, lines 3-7;  adjust the definition of "control"                                                                    
     to avoid having the defined  term in the definition and                                                                    
     to clarify the definition.                                                                                                 
                                                                                                                                
     Section 55                                                                                                               
     Page  47, lines  22-23,  inserts  "engaging in  virtual                                                                    
     currency  exchange" and  "engaging in  virtual currency                                                                    
     business  activity"  under  the  definition  of  "money                                                                    
     transmission."                                                                                                             
                                                                                                                                
     Page 47,  line 26;  removes previous section  55, which                                                                    
     changed the definition of "money transmission license"                                                                     
                                                                                                                                
     Section 61                                                                                                               
     This  section is  reorganized to  list new  definitions                                                                    
     alphabetically.                                                                                                            
                                                                                                                                
     Page 50, line 10; inserts a definition for "license"                                                                       
     Page 50,  lines 12-14; inserts a  definition for "money                                                                    
     received for transmission"                                                                                                 
     Page 51,  line 3; removes the  definitions for "payroll                                                                    
     processing   services"   and   "receiving   money   for                                                                    
     transmission"                                                                                                              
                                                                                                                                
     Section 63                                                                                                               
     Page 53, line 1   page  54, line 31; adds a new section                                                                    
     related to  the criminal background check  required for                                                                    
     licenses under AS 06.55.                                                                                                   
                                                                                                                                
     Section 64                                                                                                               
     Page   55,    lines   2-4;   adds    AS   06.55.406(b),                                                                    
     06.55.990(16),  and   06.55.990(17)  to  the   list  of                                                                    
     repealed statutes in this bill.                                                                                            
                                                                                                                                
     Section 65                                                                                                               
     Page  55,  lines  5-9, adds  a  new  section  regarding                                                                    
     indirect  court  rule  amendment.   The  change  to  AS                                                                    
     06.55.605  changes Rules  79 and  82,  Alaska Rules  of                                                                    
     Civil Procedure,  relating to the award  of court costs                                                                    
     and attorney fees.                                                                                                         
                                                                                                                                
     Section 67                                                                                                               
     Page 55,  line 24; removes previous  section 66 related                                                                    
     to payroll processors.                                                                                                     
                                                                                                                                
     Section 68                                                                                                               
     Page 55, line 30; removes revisor's instructions.                                                                          
                                                                                                                                
     Section 69                                                                                                               
     Page  55,  line  31      page  56,  line  4;  adds  the                                                                    
     conditional effect related to  court rules change under                                                                    
     section 65.                                                                                                                
                                                                                                                                
3:51:29 PM                                                                                                                    
                                                                                                                                
MS. WARD-WALLER, in response to Representative McCarty,                                                                         
clarified that the change under Section 7, page 9, relates to                                                                   
lines 20-22 [of the bill].                                                                                                      
                                                                                                                                
3:53:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SPOHNHOLZ  moved to  adopt the proposed  CS for  HB 408,                                                               
Version   32-GH2312\B,  Bannister,   5/10/22,   as  the   working                                                               
document.   There being  no objection, Version  B was  before the                                                               
committee.                                                                                                                      
                                                                                                                                
3:53:16 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced that HB 408 was held over.                                                                            
                                                                                                                                
3:53:37 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
3:53 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB 344 Sectional Analysis 5.11.22.pdf HL&C 5/11/2022 3:15:00 PM
HB 344
HB 344 Fiscal Note - DOLWD-WH 5.6.22.pdf HL&C 5/11/2022 3:15:00 PM
HB 344
HB 344 Sponsor Statement 5.11.22.pdf HL&C 5/11/2022 3:15:00 PM
HB 344
HB 344 ver A 2.17.22.PDF HL&C 5/11/2022 3:15:00 PM
HB 344
HB 408 ver B 5.10.22.pdf HL&C 5/11/2022 3:15:00 PM
HB 408
SB 185 CS ver E 5.11.22.pdf HL&C 5/11/2022 3:15:00 PM
SB 185
CS HB 408 (L&C) v. B Summary of Changes_5.11.22.pdf HL&C 5/11/2022 3:15:00 PM
HB 408