Legislature(2015 - 2016)BARNES 124

03/14/2016 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 214 REPEAL WORKERS' COMP APPEALS COMMISSION TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
*+ HB 313 PUBLIC CONSTRUCTION CONTRACTS WAGE RATES TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony <Time Limit May Be Set> --
+= HB 194 AK SECURITIES ACT; PENALTIES; CRT. RULES TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 14, 2016                                                                                         
                           3:21 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 214                                                                                                              
"An Act  repealing the Workers' Compensation  Appeals Commission;                                                               
relating  to   decisions  and  orders  of   the  Alaska  Workers'                                                               
Compensation Board; relating to  superior court jurisdiction over                                                               
appeals  from Alaska  Workers' Compensation  Board decisions  and                                                               
orders; repealing Rules 201.1, 401.1,  and 501.1, Alaska Rules of                                                               
Appellate  Procedure, and  amending Rules  202(a), 204(a)  - (c),                                                               
210(e), 508(g), 601(b),  602, and 603, Alaska  Rules of Appellate                                                               
Procedure; and providing for an effective date."                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 194                                                                                                              
"An  Act  repealing and  reenacting  the  Alaska Securities  Act,                                                               
including   provisions   relating   to  exempt   securities   and                                                               
transactions; relating to registration  of securities, firms, and                                                               
agents  that  offer or  sell  securities  and investment  advice;                                                               
relating  to  administrative,  civil,  and  criminal  enforcement                                                               
provisions,  including   restitution  and  civil   penalties  for                                                               
violations; allowing  certain civil penalties  to be used  for an                                                               
investor  training fund;  establishing increased  civil penalties                                                               
for  harming  older  Alaskans;  retaining  provisions  concerning                                                               
corporations organized under the  Alaska Native Claims Settlement                                                               
Act; amending Rules  4, 5, 54, 65, and 90,  Alaska Rules of Civil                                                               
Procedure; and providing for an effective date."                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 313                                                                                                              
"An Act relating to the public construction contracts, including                                                                
the application of prevailing wage rates."                                                                                      
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 214                                                                                                                  
SHORT TITLE: REPEAL WORKERS' COMP APPEALS COMMISSION                                                                            
SPONSOR(s): REPRESENTATIVE(s) OLSON                                                                                             
                                                                                                                                
01/19/16       (H)       PREFILE RELEASED 1/8/16                                                                                
01/19/16       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/16       (H)       L&C, JUD                                                                                               
03/14/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 194                                                                                                                  
SHORT TITLE: AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
04/13/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/13/15       (H)       L&C, JUD, FIN                                                                                          
02/01/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/01/16       (H)       Heard & Held                                                                                           
02/01/16       (H)       MINUTE(L&C)                                                                                            
02/08/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/08/16       (H)       -- MEETING CANCELED --                                                                                 
02/10/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/10/16       (H)       <Bill Hearing Canceled>                                                                                
02/12/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/12/16       (H)       <Bill Hearing Canceled>                                                                                
02/13/16       (H)       L&C AT 10:00 AM BARNES 124                                                                             
02/13/16       (H)       <Bill Hearing Canceled>                                                                                
03/14/16       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
LAURA STIDOLPH, Staff                                                                                                           
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf of Representative Olson, Chair of                                                              
the House Labor and Commerce Standing Committee, sponsor,                                                                       
introduced HB 214.                                                                                                              
                                                                                                                                
HEIDI DRYGAS, Commissioner                                                                                                      
Department of Labor & Workforce Development                                                                                     
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Stated  that  the  Department of  Labor  &                                                             
Workforce  Development is  in  support of  HB  214, and  answered                                                               
questions.                                                                                                                      
                                                                                                                                
ANDREW HEMENWAY, Chair                                                                                                          
Workers' Compensation Appeals Commission                                                                                        
Division of Workers' Compensation                                                                                               
Department of Labor & Workforce Development                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing on HB                                                             
214.                                                                                                                            
                                                                                                                                
NANCY MEADE, General Counsel                                                                                                    
Office of the Administrative Director                                                                                           
Alaska Court System                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing on HB                                                             
214.                                                                                                                            
                                                                                                                                
KEVIN ANSELM, Director                                                                                                          
Division of Banking and Securities                                                                                              
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Summarized  the changes  from current  law                                                             
proposed in HB 194.                                                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:21:12 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to  order at 3:21 p.m.   Representatives Olson,                                                               
Colver, Tilton, Kito, Josephson,  Hughes, and LeDoux were present                                                               
at the call to order.                                                                                                           
                                                                                                                                
         HB 214-REPEAL WORKERS' COMP APPEALS COMMISSION                                                                     
                                                                                                                                
3:21:41 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL NO.  214, "An Act repealing  the Workers' Compensation                                                               
Appeals  Commission;  relating to  decisions  and  orders of  the                                                               
Alaska Workers'  Compensation Board;  relating to  superior court                                                               
jurisdiction  over  appeals  from  Alaska  Workers'  Compensation                                                               
Board  decisions and  orders; repealing  Rules 201.1,  401.1, and                                                               
501.1, Alaska  Rules of Appellate  Procedure, and  amending Rules                                                               
202(a),  204(a) -  (c),  210(e), 508(g),  601(b),  602, and  603,                                                               
Alaska  Rules  of  Appellate  Procedure;  and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
3:21:52 PM                                                                                                                    
                                                                                                                                
LAURA  STIDOLPH,  Staff  to Representative  Olson,  informed  the                                                               
committee HB  214 would repeal the  Worker's Compensation Appeals                                                               
Commission.  The  commission was established in  2005 to expedite                                                               
the worker's  compensation appeals  process; however,  during the                                                               
past  decade  the  commission  has  had  a  50  percent  decision                                                               
reversal  rate,   and  the  bill   has  been  requested   by  the                                                               
commissioner of  the Department of Labor  & Workforce Development                                                               
(DLWD).  She  asked for the adoption of proposed  Version E which                                                               
was provided in the committee packet.                                                                                           
                                                                                                                                
3:23:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  moved  to adopt  the  proposed  committee                                                               
substitute  (CS)  for  HB   214,  Version  29-LS0854\E,  Wallace,                                                               
2/24/16, as the working document.                                                                                               
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
3:23:29 PM                                                                                                                    
                                                                                                                                
HEIDI  DRYGAS,  Commissioner,  Department of  Labor  &  Workforce                                                               
Development, said  DLWD is in  support of repealing  the Workers'                                                               
Compensation  Appeals   Commission  and  returning   the  appeals                                                               
process to  the courts.   The commission  was created  to provide                                                               
expertise  in   Workers'  Compensation   cases,  but   since  its                                                               
inception, nearly  50 percent  of its  decisions appealed  to the                                                               
Alaska Supreme Court  have been reversed.   The commission serves                                                               
as an appellant court, but  is comprised of lay commissioners and                                                               
although  they are  dedicated,  they do  not  have the  necessary                                                               
legal  training.     She  has  learned   that  the  commissioners                                                               
contribute  little  to  the legal  analysis  required,  thus  the                                                               
chairman  must resolve  legal issues  and write  the commission's                                                               
decisions; therefore, the  decisions are not the work  of a panel                                                               
with  legal expertise  and experience  in Workers'  Compensation,                                                               
which was  the intent of  the legislation.   The bill  would have                                                               
minimal impact  on the  public, and  subsequent appeals  would be                                                               
referred to  the superior court as  prior to 2005.   The increase                                                               
in  cases  to  the  court  system is  estimated  at  20-30  cases                                                               
statewide  per  year, which  would  be  absorbed into  the  court                                                               
system.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  HUGHES  inquired  as   to  the  impetus  for  the                                                               
creation of the commission.                                                                                                     
                                                                                                                                
COMMISSIONER  DRYGAS explained  that  the court  system was  slow                                                               
[processing  appeals] and  it was  expected  that the  commission                                                               
would be  faster.  However,  the commission is  not significantly                                                               
more  efficient, and  accrues  costs  of approximately  $400,000.                                                               
In  response to  Representative  Hughes, she  clarified that  the                                                               
cost of the commission is $439,600 per year.                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  whether the  commission  primarily                                                               
decides in favor of workers or employers.                                                                                       
                                                                                                                                
COMMISSIONER DRYGAS said she did not have that information.                                                                     
                                                                                                                                
3:28:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  recalled that  in 2005  the administration                                                               
thought that the courts were  too worker-friendly, and the intent                                                               
was that the commission would not be as worker-friendly.                                                                        
                                                                                                                                
COMMISSIONER  DRYGAS said  her frustration  with  the process  is                                                               
that  an  administrative decision  is  appealed  to the  Workers'                                                               
Compensation Board,  and then  to another  administrative agency,                                                               
which is a  "double layer that doesn't make a  whole lot of sense                                                               
...  and   the  way  that   the  Workers'   Compensation  Appeals                                                               
Commission  is  set  up  right  now, it  is,  it  is  essentially                                                               
dysfunctional."                                                                                                                 
                                                                                                                                
REPRESENTATIVE  KITO asked  for the  number of  appeals submitted                                                               
from the  board to the  commission per  year.  He  clarified that                                                               
his question related to the number  of cases that would go to the                                                               
superior court if the commission was eliminated.                                                                                
                                                                                                                                
COMMISSIONER  DRYGAS  said  over  the course  of  10  years,  342                                                               
decisions have  been appealed  to the  commission; of  those, 219                                                               
resulted  in  decisions,  and  97 were  appealed  to  the  Alaska                                                               
Supreme Court.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  KITO  surmised  that  the state  would  not  save                                                               
$439,000, because there would be a cost to the court system.                                                                    
                                                                                                                                
COMMISSIONER DRYGAS deferred to the court system.                                                                               
                                                                                                                                
REPRESENTATIVE  COLVER asked  for  a description  of the  process                                                               
before 2005, and after 2005.                                                                                                    
                                                                                                                                
COMMISSIONER DRYGAS  stated that a Workers'  Compensation hearing                                                               
officer renders  a decision, and  either party can appeal  to the                                                               
Workers' Compensation  Board, whose members are  appointed by the                                                               
governor  and  confirmed by  the  legislature.   Before  2005,  a                                                               
decision from the board could  be appealed to the superior court,                                                               
then to the  Alaska Supreme Court.  Currently, an  appeal after a                                                               
decision by the  board goes to the  appeals commission, bypassing                                                               
the superior court, and then to the Alaska Supreme Court.                                                                       
                                                                                                                                
REPRESENTATIVE  LEDOUX,  referred  to   before  2005,  and  asked                                                               
whether a decision from the board  was for an appeal "as of right                                                               
to the superior court, or was it discretionary."                                                                                
                                                                                                                                
3:35:11 PM                                                                                                                    
                                                                                                                                
ANDREW   HEMENWAY,    Chair,   Workers'    Compensation   Appeals                                                               
Commission, Division of  Workers' Compensation, Anchorage Office,                                                               
Department of  Labor & Workforce  Development, advised  that both                                                               
before  2005 when  the superior  court heard  appeals, and  under                                                               
current law, when appealing to  the Workers' Compensation Appeals                                                               
Commission  it   is  an  appeal   "as  of  right,"  and   is  not                                                               
discretionary.  He noted that  the superior court was required to                                                               
hear  the  appeal,  as  is   the  Workers'  Compensation  Appeals                                                               
Commission.  Similarly, he said,  the appeal to the Supreme Court                                                               
was an appeal "as of right."   Therefore, he offered, there is no                                                               
change in terms of the appellant's right to get a hearing.                                                                      
                                                                                                                                
REPRESENTATIVE  LEDOUX  questioned   whether  the  appeal  courts                                                               
address  findings  of fact,  or  rely  upon  the rulings  of  the                                                               
previous entity.                                                                                                                
                                                                                                                                
MR.  HEMENWAY  said  there  is  no change  in  that  regard;  the                                                               
superior court was  required to defer to the  factual findings of                                                               
the board, and the commission is as well.                                                                                       
                                                                                                                                
REPRESENTATIVE LEDOUX  understood that  the appeals  commission -                                                               
composed of members who are  not lawyers - has the responsibility                                                               
for making legal decisions.                                                                                                     
                                                                                                                                
MR.  HEMENWAY  said correct,  although  the  commission chair  is                                                               
required to be an attorney.   He added that the proposed original                                                               
legislation called for three attorney  members on the commission,                                                               
but the legislature changed the composition of the commission to                                                                
match that of the board.                                                                                                        
                                                                                                                                
3:38:39 PM                                                                                                                    
                                                                                                                                
MS. STIDOLPH paraphrased from the following sectional analysis                                                                  
of the proposed committee substitute for HB 214, Version E                                                                      
[original punctuation provided]:                                                                                                
                                                                                                                                
     Section   1.  Amends   AS  23.30.005   by  adding   new                                                                    
     subsection to  read: The  board, in  its administrative                                                                    
     capacity,  shall  make   available  the  decisions  and                                                                    
     orders   of  the   board   and   the  former   Workers'                                                                    
     Compensation Appeals  Commission. Decisions  and orders                                                                    
     of the former  Workers' Compensation Appeals Commission                                                                    
     are final and conclusive  unless appealed to the Alaska                                                                    
     Supreme Court and  shall stand instead of  the order of                                                                    
     the board from which  review was taken. Unless reversed                                                                    
     by the  Alaska Supreme  Court, decisions of  the former                                                                    
     Workers'  Compensation  Appeals   Commission  have  the                                                                    
     force of legal precedent.                                                                                                  
                                                                                                                                
     Section   2.    AS   23.30.107(b)    removes   language                                                                    
     referencing the Commission.                                                                                                
                                                                                                                                
     Section    3.    AS.23.30.108(d)    removes    language                                                                    
     referencing the Commission.                                                                                                
                                                                                                                                
     Section   4.   AS   23.30.108  (e)   removes   language                                                                    
     referencing the Commission.                                                                                                
                                                                                                                                
     Section 5. AS 23.30 is  amended by adding a new section                                                                    
     to  read: A  decision  or order  of  the board  becomes                                                                    
     effective when filed  in the office of  the board under                                                                    
     AS 23.30.110  and becomes  final when  a party  files a                                                                    
     petition, or  a notice  of appeal.  Final order  is not                                                                    
     subject to  judicial review. A director  may intervene.                                                                    
     A  court  shall  award a  successful  party  reasonable                                                                    
     costs.                                                                                                                     
                                                                                                                                
     Section 6. AS  23.30.155(f) removes statutory reference                                                                    
     to the powers  and duties of the Commission  and adds a                                                                    
     reference to the board in AS 23.30.126                                                                                     
                                                                                                                                
     Section  7. AS  39.50.200(b)(31) is  amended to  remove                                                                    
     language  defining  the Workers'  Compensation  Appeals                                                                    
     Commission.                                                                                                                
                                                                                                                                
     Section  8.  Repeal  Rules  201.1,  401.1,  and  501.1,                                                                    
     Alaska Rules of Appellate Procedure.                                                                                       
                                                                                                                                
     Section 9.  Repeals statutes referencing  the creation,                                                                    
     appointment  of   members,  jurisdiction,   powers  and                                                                    
     duties  of the  commission,  powers and  duties of  the                                                                    
     chair   of  the   commission,  administrative   review,                                                                    
     appeals  to  the commissions,  commission  proceedings,                                                                    
     appointment of the members  through OAH, appointment of                                                                    
     the chair.                                                                                                                 
                                                                                                                                
     Section  10.  Changes  the Alaska  Rules  of  Appellate                                                                    
     Procedure  by providing  that appeals  from the  Alaska                                                                    
     Workers'  Compensation  Board  can be  brought  in  the                                                                    
     superior court.                                                                                                            
                                                                                                                                
     Section  11.  The   Workers'  Comp  Appeals  Commission                                                                    
     continues  to  function  as they  presently  are  until                                                                    
     December 1, 2016.                                                                                                          
                                                                                                                                
     Section 12.  Transitional Provisions - for  appeals not                                                                    
     completed  before December  2nd shall  be automatically                                                                    
     transferred  to  the  superior court.  Appeals  seeking                                                                    
     review of  Workers' Comp  Board decisions  that haven't                                                                    
     been filed  before May  31, 2016 must  be filed  in the                                                                    
     superior  court before  June 1,  2016.  Before June  1,                                                                    
     2016 a party  may file for review by  the workers' comp                                                                    
     appeals commission,  after June  1, 2016 a  party files                                                                    
     for review  in the  superior court. Before  November 1,                                                                    
     2016 a party may  request reconsideration of a Workers'                                                                    
     Compensation   Appeals   Commission   decision.   After                                                                    
     November 1,  2016 a party  may file an appeal  with the                                                                    
     Alaska Supreme Court.                                                                                                      
                                                                                                                                
     Section  13. Terms  out  commissioners  on February  2,                                                                    
     2017.                                                                                                                      
                                                                                                                                
     Section 14.  Conditional effect: this Act  takes effect                                                                    
     only  if secs.  8  and 10  of this  Act  receive a  2/3                                                                    
     majority vote of  each house required by  art. IV, sec.                                                                    
     15, Constitution of the State of Alaska.                                                                                   
                                                                                                                                
     Section 15. Effective date of June 1, 2016.                                                                                
                                                                                                                                
3:43:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER referred  to the  chart entitled,  "Alaska                                                               
Workers'  Compensation  Appeals   Commission,"  provided  in  the                                                               
committee  packet.   He  requested  a  brief abstract  describing                                                               
types  of   appeal  issues,  possible  trends,   medical  issues,                                                               
disability compensation, and decisions  or resolutions that would                                                               
provide a "thumbnail sketch of  what's going on."  His experience                                                               
is that worker's compensation cases can be difficult to resolve.                                                                
                                                                                                                                
CHAIR   OLSON  pointed   out  that   the  last   column  on   the                                                               
aforementioned chart  indicated 50 percent  to 75 percent  of the                                                               
cases going to the Alaska Supreme Court were unchanged.                                                                         
                                                                                                                                
REPRESENTATIVE LEDOUX asked for clarification of the chart.                                                                     
                                                                                                                                
3:46:43 PM                                                                                                                    
                                                                                                                                
MR. HEMENWAY explained that the  Alaska Supreme Court may dismiss                                                               
a case for several reasons, such  as late filing or a settlement.                                                               
Also, a  case can  be remanded  to the lower  court if  there are                                                               
questions,  and  vacated  when   laws  have  changed;  these  are                                                               
examples of when the court disposes  of a case, but does not make                                                               
a decision  on whether  the appeals  commission was  correct, and                                                               
the  case  can make  a  reappearance.   Affirmed,  reversed,  and                                                               
affirmed in  part/reversed in part  are cases in which  the court                                                               
has issued  a decision that  addresses the merits of  the appeals                                                               
commission's decision.                                                                                                          
                                                                                                                                
REPRESENTATIVE JOSEPHSON suggested that  the Alaska Supreme Court                                                               
would hear all of the  cases eventually, unless they are affected                                                               
by the statute of limitations.                                                                                                  
                                                                                                                                
MR. HEMENWAY said:                                                                                                              
                                                                                                                                
     I wouldn't  necessarily say that's  the case.  ... Most                                                                    
     of the  cases that  are dismissed,  I'm sure  well over                                                                    
     half, are  dismissed because the parties  have settled.                                                                    
     ...  Sometimes  it might  be  that  there's some,  some                                                                    
     grounds on  which the  court shouldn't  hear it,  but a                                                                    
     dismissal for  reasons other than ...  the parties have                                                                    
     settled, is,  is [a] relatively small  number of cases.                                                                    
     The cases  that are  remanded or vacated,  they're kind                                                                    
     of all over the place ....                                                                                                 
                                                                                                                                
3:50:50 PM                                                                                                                    
                                                                                                                                
NANCY  MEADE,  General  Counsel,  Office  of  the  Administrative                                                               
Director, Alaska Court System, advised  that she has been working                                                               
with  the  bill   sponsor  who  has  incorporated   some  of  her                                                               
suggestions in  the proposed  committee substitute.     Ms. Meade                                                               
said the court system is neutral  on the bill, and will implement                                                               
it upon passage.  The court  system's concerns are related to the                                                               
wording  of the  bill, so  that the  case law  and interpretation                                                               
would  easily transfer  to the  court  system.   Also, the  court                                                               
system seeks to  ensure that the cases are transferred  in a form                                                               
conforming to the rules of the appellate court.                                                                                 
                                                                                                                                
REPRESENTATIVE KITO  asked Mr. Hemenway  whether the  ten pending                                                               
cases indicated on the chart are recent.                                                                                        
                                                                                                                                
MR. HEMENWAY answered that the number  of cases pending are:  one                                                               
from 2011, one from 2013, two from 2014, and six from 2015.                                                                     
                                                                                                                                
REPRESENTATIVE COLVER asked  Ms. Meade to comment  on how appeals                                                               
cases affect the workload of the Alaska Supreme Court.                                                                          
                                                                                                                                
MS. MEADE  responded that an average  of 33 cases per  year could                                                               
be absorbed  by the superior  court.  Further, 10-15  cases could                                                               
be  handled by  the Alaska  Supreme Court  in the  course of  its                                                               
normal business,  without adverse  effects.  In  further response                                                               
to Representative Colver,  she explained that in  2005, there was                                                               
a  perceived   lack  of  consistency  in   workers'  compensation                                                               
decisions from the superior court.   In order to set precedent, a                                                               
case would  have to go  to the  Alaska Supreme Court  because its                                                               
decisions bound the superior court and  the board.  One basis for                                                               
the change  was the concept  that moving to an  expert commission                                                               
within DLWD  would establish  that its  decisions would  bind the                                                               
department,  but the  number of  cases that  were appealed  after                                                               
2005  did not  change.   Therefore,  the workload  of the  Alaska                                                               
Supreme  Court would  be not  affected, but  the workload  of the                                                               
superior court  judges would increase with  difficult and complex                                                               
cases.                                                                                                                          
                                                                                                                                
3:59:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES questioned whether  the number of cases can                                                               
be seasonal.                                                                                                                    
                                                                                                                                
MS. MEADE  said no.  The  bill phases-in the cases  coming to the                                                               
court from the commission during a certain period of time.                                                                      
                                                                                                                                
REPRESENTATIVE HUGHES  observed that  the number of  cases before                                                               
the Alaska Supreme  Court rose beginning in  2011, and questioned                                                               
why the  ratio of  appeals also increased  beginning in  2010 and                                                               
2011.                                                                                                                           
                                                                                                                                
MS. MEADE said she was unsure why more cases were appealed.                                                                     
                                                                                                                                
COMMISSIONER DRYGAS deferred to Mr. Hemenway.                                                                                   
                                                                                                                                
MR. HEMENWAY  noted that from  2005 to  2010, a higher  number of                                                               
cases were  appealed and decisions  published; after  2010, there                                                               
was a decrease in the number of decisions published.                                                                            
                                                                                                                                
REPRESENTATIVE HUGHES restated her question.                                                                                    
                                                                                                                                
MR.  HEMENWAY observed  that  there was  a  new commission  chair                                                               
appointed in 2010.                                                                                                              
                                                                                                                                
4:04:23 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON   opened  public  testimony   on  HB  214.     After                                                               
ascertaining  that   no  one  wished  to   testify,  Chair  Olson                                                               
announced that public testimony would remain open.                                                                              
                                                                                                                                
[HB 214 was held over.]                                                                                                         
                                                                                                                                
4:04:54 PM                                                                                                                    
                                                                                                                                
The committee took an at ease from 4:04 p.m. to 4:07 p.m.                                                                       
                                                                                                                                
        HB 194-AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                     
                                                                                                                                
4:07:16 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE BILL NO.  194, "An Act repealing and  reenacting the Alaska                                                               
Securities   Act,  including   provisions   relating  to   exempt                                                               
securities   and  transactions;   relating  to   registration  of                                                               
securities, firms, and  agents that offer or  sell securities and                                                               
investment  advice;   relating  to  administrative,   civil,  and                                                               
criminal enforcement provisions,  including restitution and civil                                                               
penalties for violations; allowing  certain civil penalties to be                                                               
used for an investor training  fund; establishing increased civil                                                               
penalties  for  harming   older  Alaskans;  retaining  provisions                                                               
concerning corporations organized under  the Alaska Native Claims                                                               
Settlement  Act; amending  Rules 4,  5,  54, 65,  and 90,  Alaska                                                               
Rules of Civil Procedure; and providing for an effective date."                                                                 
                                                                                                                                
4:07:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  moved  to adopt  the  proposed  committee                                                               
substitute  (CS)  for  HB 194,  labeled  29-GH1060\E,  Bannister,                                                               
3/11/16  as the  working  document.   There  being no  objection,                                                               
Version E was before the committee.                                                                                             
                                                                                                                                
4:08:12 PM                                                                                                                    
                                                                                                                                
KEVIN  ANSELM,  Director,  Division of  Banking  and  Securities,                                                               
Anchorage Office,  Department of  Commerce, Community  & Economic                                                               
Development, said she would discuss the changes to HB 194.                                                                      
                                                                                                                                
4:09:54 PM                                                                                                                    
                                                                                                                                
The committee took an at ease from 4:09 p.m. to 4:10 p.m.                                                                       
                                                                                                                                
4:10:49 PM                                                                                                                    
                                                                                                                                
MS.  ANSELM  paraphrased  from   the  following  brief  sectional                                                               
analysis  for the  proposed CS  for HB  194, Version  E [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     SECTIONS 1  - 14  (pp. 1-11) include  the corresponding                                                                    
     changes  to  statutes that  refer  to  former AS  45.55                                                                    
     provisions that have been moved to AS 45.56.                                                                               
                                                                                                                                
     SECTIONS  15  -  24  (pp. 11-24)  modify  AS  45.55  as                                                                    
     necessary to  delete references  to statutes  that have                                                                    
     no bearing  on the Alaska Native  Claims Settlement Act                                                                    
     corporations because of the enactment of AS 45.56.                                                                         
                                                                                                                                
     SECTION 25 (p. 14) Proposed new Chapter AS 45.56                                                                           
                                                                                                                                
     Article 1. General Provisions (pp. 14-15)                                                                                  
                                                                                                                                
     Sec. 45.56.105.  Securities registration  requirement -                                                                    
     same as current law  (AS 45.55.070). Securities must be                                                                    
     registered  before  offer   or  sale  unless  federally                                                                    
     covered or specifically exempt from registration.                                                                          
                                                                                                                                
     Article 2.  Exemptions from Registration  of Securities                                                                    
     (pp. 15-29)                                                                                                                
     Sec. 45.56.205. Exempt securities  - generally the same                                                                    
     as current  law (AS 45.55.900(a)) with  a few additions                                                                    
     including  securities issued  by an  insurance company;                                                                    
     certain  options,  warrants  and rights  that  are  not                                                                    
     federal  covered securities;  certain cooperatives  and                                                                    
     equipment trust certificates.                                                                                              
     Sec.  45.56.210.  Exempt   transactions  -  similar  to                                                                    
     current   law   AS   45.55.900(b),   reorganized   with                                                                    
     additions  reflecting  transactions allowed  under  the                                                                    
     Uniform Securities Act of 2002 (USA).                                                                                      
     Sec. 45.56.220.  Small intrastate  securities offerings                                                                    
     (referred  to  as  "Crowdfunding") Allows  Alaskans  to                                                                    
     invest up  to $5,000  per person,  per offering,  in an                                                                    
     Alaskan  business.  Businesses  can   raise  up  to  $1                                                                    
     million per offering and requires  a notice filing with                                                                    
     the   state  and   certain  investor   disclosures  and                                                                    
     protections. Sec.  45.56.230. Disqualifier  - prohibits                                                                    
     persons who  have been subject to  regulatory action or                                                                    
     participated   in  certain   crimes   from  using   the                                                                    
     available    exemptions     from    the    registration                                                                    
     requirement.                                                                                                               
     Sec. 45.56.240. Waiver and  modification - broadens the                                                                    
     administrator's   authority   to    waive   or   change                                                                    
     requirements or conditions for exemptions.                                                                                 
     Sec.   45.56.250.   Denial,   suspension,   revocation,                                                                    
     condition,   or  limitation   of  exemptions   -  same,                                                                    
     although the  appeal rights and hearing  information is                                                                    
     moved to Article 6.                                                                                                        
                                                                                                                                
     Article  3.  Registration   of  Securities  and  Notice                                                                    
     Filing of  Federal Covered  Securities. (pp.  29-42) No                                                                    
     significant changes to  registration provisions from AS                                                                    
     45.55. Material changes are noted by section.                                                                              
                                                                                                                                
     Sec.    45.56.305.     Securities    registration    by                                                                    
     coordination -  registration statement must be  on file                                                                    
     with the  Administrator for 20  days unless  reduced by                                                                    
     regulation.  10   days  is  the   current  requirement.                                                                    
     References to prompt notice by telegram are deleted.                                                                       
     Sec.    45.56.310.     Securities    registration    by                                                                    
     qualification  - adds  a  new  requirement that  filers                                                                    
     disclose  pending  litigation that  materially  affects                                                                    
     the  issuer   or  litigation  that   is  known   to  be                                                                    
     contemplated by governmental authorities.                                                                                  
     Sec.  45.56.320.  Securities   registration  filings  -                                                                    
     allows  the   administrator  to  set  escrow   time  by                                                                    
     regulation or order for certain  securities issued to a                                                                    
     promoter or  to other persons at  a price substantially                                                                    
     less than the public offering price.                                                                                       
     Sec.  45.56.330.  Notice   filing  of  federal  covered                                                                    
     securities - allows imposition of late fees.                                                                               
     Sec.   45.56.340.  Viatical   settlement  interests   -                                                                    
     combines current  AS 45.55.120  and AS  45.55.905(c) to                                                                    
     explain the joint regulation of  these interests by the                                                                    
     Securities  and  Insurance  statutes.  Sec.  45.56.350.                                                                    
     Waiver and modification  - administrator allowed waiver                                                                    
     authorities consolidated from other sections.                                                                              
     Sec. 45.56.360.  Denial, suspension, and  revocation of                                                                    
     securities   registration   -   adds   requirement   to                                                                    
     establish  regulations explaining  what conduct  may be                                                                    
     fraud   upon    purchasers;   unreasonable   discounts,                                                                    
     compensation,  profits  (including options,  etc.)  and                                                                    
     terms that are unfair, unjust or inequitable.                                                                              
                                                                                                                                
     Article    4.   Broker-dealers,    Agents,   Investment                                                                    
     Advisers,   Investment  Adviser   Representatives,  and                                                                    
     Federal Covered Investment Advisers. (pp. 42-66)                                                                           
                                                                                                                                
     Firm,    salesperson,    and    adviser    registration                                                                    
     (licensing)   provisions  are   reorganized  into   one                                                                    
     article,  making  it  more user-friendly  than  current                                                                    
     law. Notable changes are listed below.                                                                                     
     Sec. 45.56.405.  Broker-dealer registration requirement                                                                    
     and exemptions  - includes  a new  "snowbird exemption"                                                                    
     to  facilitate  ongoing  broker-customer  relationships                                                                    
     with customers  who have established a  second or other                                                                    
     residence and  clarifies the  number of  transactions a                                                                    
     broker-dealer   may   effect   annually  (3)   if   not                                                                    
     registered in Alaska.                                                                                                      
     Sec.  45.56.410.   Limited  registration   of  Canadian                                                                    
     broker-dealers and  agents - changed annual  renewal to                                                                    
     December 31 from December 1.                                                                                               
     Sec. 45.56.420.  Registration exemption for  merger and                                                                    
     acquisition  broker   -  this  new   provision  exempts                                                                    
     mergers  and  acquisitions  brokers  from  registration                                                                    
     (licensing)  requirements  because  these  transactions                                                                    
     are  typically between  knowing  parties with  adequate                                                                    
     legal  counsel  and  scrutiny.  The  exemption  is  not                                                                    
     available   if   the   broker  actually   handles   the                                                                    
     securities  exchanged in  the transaction  or otherwise                                                                    
     represents  an issuer  or public  shell company,  or is                                                                    
     subject to Securities and Exchange Commission action.                                                                      
     Sec.  45.56.430.  Agent  registration  requirement  and                                                                    
     exemptions  - the  rewrite of  this section  includes a                                                                    
     statement  of  the  types   of  business  covered  here                                                                    
     instead of in a definitional section.                                                                                      
     Sec.   45.56.435.   Investment   adviser   registration                                                                    
     requirement and exemptions -  includes a new "snowbird"                                                                    
     exemption that  matches the broker-dealer  exemption in                                                                    
     Sec. 45.56.405.                                                                                                            
     Sec.   45.56.440.  Investment   adviser  representative                                                                    
     registration   requirement  and   exemptions  -   these                                                                    
     provisions  mirror  the  broker-dealer agents  in  Sec.                                                                    
     45.56.430.                                                                                                                 
     Sec.  45.56.445.  Federal  covered  investment  adviser                                                                    
     notice filing  requirement -  these provisions  are not                                                                    
     separately stated in the current law.                                                                                      
     Sec. 45.56.450.  Registration by  broker-dealer, agent,                                                                    
     investment    adviser,     and    investment    adviser                                                                    
     representative   -  combines   provisions  in   current                                                                    
     statute  and  regulations  and  extends  the  automatic                                                                    
     registration   from   30   to  45   days   unless   the                                                                    
     registration is denied.                                                                                                    
     Sec. 45.56.455.  Succession and change  in registration                                                                    
     of  broker-dealer  or  investment adviser  -  clarifies                                                                    
     that   an  organizational   change  can   generally  be                                                                    
     completed by  amendment instead  of a  new registration                                                                    
     (for  instance  a  sole   proprietorship  moving  to  a                                                                    
     limited liability company).                                                                                                
     Sec.   45.56.460.   Termination    of   employment   or                                                                    
     association   of    agent   and    investment   adviser                                                                    
     representative   and   transfer    of   employment   or                                                                    
     association   -   requires   the  registrant   file   a                                                                    
     notification   with  the   division.   Allows  for   an                                                                    
     immediate temporary  effective registration with  a new                                                                    
     firm  when there  is  no  new disciplinary  information                                                                    
     added.                                                                                                                     
     Sec. 45.56.465.  Withdrawal of registration  of broker-                                                                    
     dealer,  agent,  investment   adviser,  and  investment                                                                    
     adviser representative - extends  the effective date of                                                                    
     registration  withdrawal up  to  60 days  and allows  a                                                                    
     revocation proceeding to commence within one year.                                                                         
     Sec. 45.56.470.  Filing fees - are  established and may                                                                    
     be paid through a designee by regulation.                                                                                  
     Sec.  45.56.475.   Post  registration   requirements  -                                                                    
     allows    establishing    continuing    education    by                                                                    
     regulation.                                                                                                                
     Sec.   45.56.480.   Denial,   revocation,   suspension,                                                                    
     withdrawal,  restriction, condition,  or limitation  of                                                                    
     registration  -  in  addition  to  current  provisions,                                                                    
     allows  the  administrator   to  bar  registration  and                                                                    
     includes  actions  taken  by  other  regulators.  Civil                                                                    
     penalty  for  registrants  is  increased  from  $2,500-                                                                    
     $10,000 per violation to up to $100,000 per violation.                                                                     
                                                                                                                                
     Article 5. Fraud and Liabilities. (pp. 66-69)                                                                              
                                                                                                                                
     Sec.  45.56.505. General  fraud  - same  as current  AS                                                                    
     45.55.010.  Sec.   45.56.510.  Prohibited   conduct  in                                                                    
     providing investment  advice - allows  administrator to                                                                    
     define prohibited conduct by regulation.                                                                                   
     Sec. 45.56.520.  Misleading filings  - same  as current                                                                    
     AS 45.55.160.                                                                                                              
     Sec.    45.56.530.     Misrepresentations    concerning                                                                    
     registration  or   exemption  -  same  content   as  AS                                                                    
     45.55.170.                                                                                                                 
     Sec. 45.56.540.  Evidentiary burden  - same  content as                                                                    
     AS 45.55.900(c).                                                                                                           
     Sec.  45.56.550.   Filing  of  sales   and  advertising                                                                    
     literature - same content as AS 45.55.150.                                                                                 
     Sec.   45.56.560.  Qualified   immunity  -   registered                                                                    
     persons  are not  liable to  other registered  persons,                                                                    
     under state  defamation laws, for  statements contained                                                                    
     in  disclosure records  required to  be filed  with the                                                                    
     administrator for  purposes of licensing  and potential                                                                    
     discipline. This  provision encourages  full disclosure                                                                    
     to the administrator.                                                                                                      
                                                                                                                                
     Article  6. Administration  and  Judicial Review.  (pp.                                                                    
     69-89)                                                                                                                     
                                                                                                                                
     Sec.   45.56.605.    Administration   -    allows   the                                                                    
     administrator   to  develop   and  implement   investor                                                                    
     education  initiatives and  accept grants  or donations                                                                    
     for investor education.                                                                                                    
     Sec.  45.56.610. Administrative  files  and opinions  -                                                                    
     requires the administrator keep  records according to a                                                                    
     retention  schedule and  outlines publicly  disclosable                                                                    
     documents.                                                                                                                 
     Sec.  45.56.615.  Public   records;  confidentiality  -                                                                    
     clarifies and specifies record confidentiality.                                                                            
     Sec. 45.56.620.  Uniformity and cooperation  with other                                                                    
     agencies  -  expands  opportunity for  cooperation  and                                                                    
     sharing    with    governmental    units,    regulatory                                                                    
     organizations   for  collaborative   efforts  including                                                                    
     regulation, enforcement and  coordination to reduce the                                                                    
     burden of raising capital by small business.                                                                               
     Sec.  45.56.625.  Securities   investor  education  and                                                                    
     training  fund  -  Creates a  securities  and  investor                                                                    
     education and training fund within  the general fund to                                                                    
     provide funds for investor education.  33% of the money                                                                    
     received in  civil penalties may  be used  for investor                                                                    
        education and training if so appropriated by the                                                                        
     legislature.                                                                                                               
      Sec. 45.56.630. Service of process - same as current                                                                      
     AS 45.55.980.                                                                                                              
     Sec. 45.56.635. Applicability of the chapter - same as                                                                     
     current AS 45.55.980.                                                                                                      
                                                                                                                                
4:30:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  returned attention to  proposed Section                                                               
45.56.625  and  asked  whether  licensees  could  pay  for  their                                                               
education and  training, instead of  the state, as do  members of                                                               
the Alaska Bar Association.                                                                                                     
                                                                                                                                
MS.  ANSELM said  those  who violate  the  Alaska Securities  Act                                                               
should pay for investor education  through one-third of the civil                                                               
penalties  they are  assessed,  and  that is  the  source of  the                                                               
funds.                                                                                                                          
                                                                                                                                
REPRESENTATIVE COLVER asked what  is currently being collected in                                                               
fines.                                                                                                                          
                                                                                                                                
MS. ANSELM advised that there  are two kinds of securities cases:                                                               
consent orders  result when the division  negotiates with parties                                                               
in  violation,  and  civil penalties  are  assessed;  non-consent                                                               
securities fines  imposed from 2012-2015, under  the current law,                                                               
totaled  $525,000.   She noted  that  the maximum  penalty for  a                                                               
violation is  currently $25,000;  if the  limit was  removed, the                                                               
potential  fines would  total $7.7  million and  $3.4 million  in                                                               
restitution.   In further response to  Representative Colver, she                                                               
confirmed  that  the  revised  fines are  part  of  the  proposed                                                               
statute, which would increase the  maximum from $25,000 for total                                                               
violations, to $100,000 per violation.                                                                                          
                                                                                                                                
REPRESENTATIVE COLVER  observed that  the regulation  changes and                                                               
increase  in  revenue  are  not  reflected  in  the  fiscal  note                                                               
[document not identified].                                                                                                      
                                                                                                                                
MS. ANSELM  stated that  enforcement actions  are unknown  to the                                                               
division; in  fact, there are  times when few actions  are taken,                                                               
thus revenue to the division is indeterminate.                                                                                  
                                                                                                                                
REPRESENTATIVE  COLVER   suggested  that   if  the   fiscal  note                                                               
reflected more revenue the legislature  would be more amenable to                                                               
regulatory   reform.     The   business   community  seeks   less                                                               
bureaucracy and  to increase productivity, and  he encouraged the                                                               
legislature to  support the  business sector  as the  state heads                                                               
for "a  bit of bad  weather, and anything we  can do to  keep our                                                               
corporations healthy is, is something we need to be working on."                                                                
                                                                                                                                
4:36:58 PM                                                                                                                    
                                                                                                                                
MS. ANSELM agreed to further discuss the bill's fiscal note.                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  surmised that  in addition  to $100,000                                                               
per violation,  through criminal  proceedings the  division could                                                               
recapture losses and collect restitution.                                                                                       
                                                                                                                                
MS. ANSELM explained that it  is difficult to collect any amount,                                                               
and  she  described three  pending  cases  in the  court  system:                                                               
Fortune  Oil and  Gas,  a  Texas corporation,  caused  a loss  to                                                               
Alaskan  investors  of  over  $3 million,  and  orders  from  the                                                               
division have  been ignored; Global Arena  Capital Corporation, a                                                               
New  York  firm, cold-called  and  pitched  an investment  to  an                                                               
elderly  resident  who  lost  $16,000,  and  who  only  recovered                                                               
$10,000; two Alaskans formed a  firm and collected $40,000 from a                                                               
fellow   Alaskan  for   the  new   company,  which   subsequently                                                               
dissolved, and an  agreement for rescission was  reached, but the                                                               
investor was never paid.                                                                                                        
                                                                                                                                
4:42:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked for an  idea of how many "bad actors"                                                               
have money  to pay the state  or their victims, and  how many are                                                               
judgement-proof.                                                                                                                
                                                                                                                                
MS. ANSELM answered  that many are judgement-proof,  but there is                                                               
money behind  the three aforementioned perpetrators.   In further                                                               
response  to  Representative  LeDoux,   she  advised  that  civil                                                               
penalties are  paid to the  general fund  and a provision  in the                                                               
bill  directs  restitution to  the  investor,  and penalties  for                                                               
violations to  the state.   Ms. Anselm returned to  the sectional                                                               
analysis [original punctuation provided]:                                                                                       
                                                                                                                                
     Sec.    45.56.640.    Regulations,    forms,    orders,                                                                    
     interpretative  opinions,   and  hearings   -  combines                                                                    
     existing AS 45.55.950 and  45.55.970 and clarifies that                                                                    
     GAAP  compliant   financial  statements  may   only  be                                                                    
     required as allowed by federal law.                                                                                        
     Sec. 45.56.645. Investigations  and subpoenas - similar                                                                    
     to   existing   AS   45.55.910   and   allows   broader                                                                    
     cooperation with other regulators.                                                                                         
     Sec. 45.56.650.  Administrative enforcement -  time for                                                                    
     a respondent  to make  a request  for hearing  after an                                                                    
     action is  taken is extended  from 15 days to  30 days.                                                                    
     Civil penalties are increased from  $2,500 for a single                                                                    
     violation  and $25,000  for  multiple  violations to  a                                                                    
     maximum of $100,000 for a  single violation with no cap                                                                    
     for  multiple  violations. If  a  victim  is an  "older                                                                    
     person" (a  person over 60  years old),  the respondent                                                                    
     is subject  to treble  damages. Restitution  and actual                                                                    
     costs   of   investigation    may   be   ordered.   The                                                                    
     administrator   may   deny   the  use   of   securities                                                                    
     exemptions   under    Article   2    and   registration                                                                    
     (licensing)  exemptions under  Article  4  if a  person                                                                    
     violates the  Act. The  administrator may  petition the                                                                    
     Superior Court to  enforce a final order  and the Court                                                                    
     may hold  a person in  contempt for violating  an order                                                                    
     of the administrator, punishable  by up to $100,000 per                                                                    
     violation, in addition  to any administrative penalties                                                                    
     that were originally assessed.                                                                                             
     Sec. 45.56.655.  Civil enforcement -  the administrator                                                                    
     may seek  remedies such as  asset freezes, an  order of                                                                    
     rescission, restitution,  and civil penalties of  up to                                                                    
     $100,000 per violation, and all  damages may be trebled                                                                    
     if  the victim  is an  "older person"  (person over  60                                                                    
     years of age).                                                                                                             
     Sec.  45.56.660. Civil  liability -  outlines instances                                                                    
     where  the  seller  is  liable  to  the  purchaser  and                                                                    
     potential remedies  (actual damages  including interest                                                                    
     as determined  by the court); also  describes instances                                                                    
     where  the buyer  may  be liable  to  the seller.  Sec.                                                                    
     45.56.665. Rescission offers  - outlines the rescission                                                                    
     offer  process, including  a new  requirement that  the                                                                    
     offeror must  demonstrate the ability  to pay  and then                                                                    
     actually pay as promised.                                                                                                  
     Sec.   45.56.670.   Criminal  enforcement   -   knowing                                                                    
     violations  of  the Act  and  fraud  are punishable  as                                                                    
     class  C   felonies  punishable  under   AS  12.55.125.                                                                    
     Unknowing   violations  are   punishable  as   class  A                                                                    
     misdemeanors  and  fine  of  not  more  than  $100,000.                                                                    
     Individuals who  alter or  destroy evidence  are guilty                                                                    
     of  a  class C  felony  and  a  fine  of not  more  the                                                                    
     $500,000 or both.                                                                                                          
     Sec. 45.56.675.  Judicial review  - appellants  have 30                                                                    
     days to request review of a final order.                                                                                   
                                                                                                                                
4:49:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX returned attention to proposed Section                                                                    
45.56.670 [text previously provided] and asked for an example of                                                                
an unknowing violation.                                                                                                         
                                                                                                                                
MS. ANSELM  explained that if a  person can prove that  they were                                                               
unaware  of securities  laws,  even when  they  should have  been                                                               
aware, a lesser fine is assessed.   She returned to the sectional                                                               
analysis [original punctuation provided]:                                                                                       
                                                                                                                                
     Article   7.  Miscellaneous   and  Additional   General                                                                    
     Provisions. (pp. 89-100)                                                                                                   
                                                                                                                                
     Sec. 45.56.710.  Reimbursement of expenses  incident to                                                                    
     examination or investigation - same as AS 45.55.915.                                                                       
     Sec.  45.56.720. Electronic  records  and signatures  -                                                                    
     facilitates   filing   of    electronic   records   and                                                                    
     signatures. Consumers must consent  and have the option                                                                    
     to withdraw such consent.                                                                                                  
     Sec.  45.56.730. References  to  federal  statutes -  a                                                                    
     list of all federal statutes referenced in the Act.                                                                        
     Sec. 45.56.740. References to  federal agencies - notes                                                                    
     that a reference  to an agency of the  United States is                                                                    
     also a reference to a successor agency.                                                                                    
     Sec. 45.56.900. Definitions.                                                                                               
      - Updates federal citations                                                                                               
      - New definitions include:                                                                                                
      - Disqualifier                                                                                                            
      - Filing                                                                                                                  
      - Institutional investor (reflects federal law)                                                                           
      - Insurance company                                                                                                       
      - Insured                                                                                                                 
      - International Banking Institution                                                                                       
      - Offer to purchase                                                                                                       
      - Older  person -  a person  that is  age 60  or older                                                                    
     (from AS 47.65.290(6))                                                                                                     
      - Price amendment                                                                                                         
      - Record                                                                                                                  
      - Self-regulatory organization                                                                                            
      - Sign                                                                                                                    
                                                                                                                                
     Sec. 45.56.995. Short title. This  chapter may be cited                                                                    
     as the Alaska Securities Act.                                                                                              
                                                                                                                                
     SECTIONS 26 - 28  (pp. 101-105). Citations are modified                                                                    
     to  reflect Chapter  45.56 in  place  of Chapter  45.55                                                                    
     references; federal law citations are updated.                                                                             
                                                                                                                                
     SECTION  29 (p.  105) -  Repeals statutes  that are  no                                                                    
     longer needed in AS 45.55  because they do not apply to                                                                    
     Alaska Native  Claims Settlement Act  corporation proxy                                                                    
     solicitations.                                                                                                             
                                                                                                                                
     SECTION  30  (p. 105)  -  Amends  indirect Court  Rules                                                                    
     relating to changes in AS 45.56.                                                                                           
                                                                                                                                
     SECTION  31 (pp.  105-106) -  Allows the  department to                                                                    
     adopt transition regulations.                                                                                              
                                                                                                                                
     SECTION 32  (pp. 106-107)  - Amends  the law  to effect                                                                    
     transition  and application  of AS  45.55 for  existing                                                                    
     proceedings, existing rights and duties.                                                                                   
                                                                                                                                
     SECTION 33  (p. 107) - Reviser's  instruction to rename                                                                    
     AS  45.55  to  Alaska   Native  Claims  Settlement  Act                                                                    
     Corporations Proxy  Solicitations and  Initial Issuance                                                                    
     of Stock.                                                                                                                  
                                                                                                                                
     SECTION  34 (p.  107) -  Conditional effect  of certain                                                                    
     provisions upon constitutionally  required vote of each                                                                    
     house. SECTION 35 - July 1, 2016 effective date.                                                                           
                                                                                                                                
4:54:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX returned attention  to proposed Section 45.                                                               
56.305 [text  previously provided],  and asked whether  email was                                                               
substituted for prompt notice by telegram.                                                                                      
                                                                                                                                
MS. ANSELM said yes.                                                                                                            
                                                                                                                                
REPRESENTATIVE  LEDOUX  directed  attention to  proposed  Section                                                               
45.56.310  [text previously  provided]  and  recalled a  proposed                                                               
change that  would require disclosure of  any litigation, whether                                                               
or not contemplated by a government authority.                                                                                  
                                                                                                                                
MS. ANSELM agreed to make this change.                                                                                          
                                                                                                                                
REPRESENTATIVE  LEDOUX  directed  attention to  proposed  Section                                                               
45.56.560   [text  previously   provided],  and   confirmed  that                                                               
qualified  immunity would  not be  granted if  there is  reckless                                                               
disregard of the truth, or a known untruth.                                                                                     
                                                                                                                                
MS. ANSELM said absolutely.                                                                                                     
                                                                                                                                
REPRESENTATIVE JOSEPHSON  directed attention to  proposed Section                                                               
45.56.670  [text previously  provided], and  asked whether  there                                                               
are  [Alaska Statutes]  Title 11  crimes that  could be  filed in                                                               
addition to the class C felony in the proposed statute.                                                                         
                                                                                                                                
MS. ANSELM deferred to the Department of Law.                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  surmised  that  the  impetus  for  the                                                               
proposed bill  was that the  pertinent legislation  was outdated,                                                               
and asked whether HB 194 was based on a model.                                                                                  
                                                                                                                                
MS. ANSELM  said the bill is  a combination of a  2002 model act,                                                               
modifications from  other states,  experiences in Alaska,  and an                                                               
increase in investor protection.                                                                                                
                                                                                                                                
[HB 194 was held over.]                                                                                                         
                                                                                                                                
5:00:00 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
5:00 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB214 ver W.PDF HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Sponsor Statement.pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Sectional Analysis.pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Fiscal Note-DOA-DRM-03-11-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Fiscal Note-DOLWD-WCAC-03-08-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Supporting Documents-Letter-WCCA 2-01-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Draft Proposed Blank CS ver E.pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Summary of Changes-Draft Proposed Blank CS ver E .pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB214 Sectional Analysis-Draft Proposed Blank CS ver E .pdf HL&C 3/14/2016 3:15:00 PM
HB 214
HB194 Supporting Documents-Snowbird Exemptions.pdf HL&C 3/14/2016 3:15:00 PM
HB 194
HB194 Supporting Documents-Letter-NASAA 01-29-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 194
HB194 Fiscal Note-DOA-PDA-02-05-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 194
HB194 Draft Proposed CS ver E.pdf HL&C 3/14/2016 3:15:00 PM
HB 194
HB194 Sectional Analysis Draft Proposed CS ver E.pdf HL&C 3/14/2016 3:15:00 PM
HB 194
HB194 Supporting Documents-Crosswalk version E.pdf HL&C 3/14/2016 3:15:00 PM
HB 194
HB313 ver A.pdf HL&C 3/14/2016 3:15:00 PM
HB 313
HB313 Sponsor Statement.pdf HL&C 3/14/2016 3:15:00 PM
HB 313
HB313 Fiscal Notes-DOLWD-WHA-02-18-19.pdf HL&C 3/14/2016 3:15:00 PM
HB 313
HB313 Supporting Documents-Letter-KPBSD 02-19-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 313
HB313 Supporting Documents-Letter CPH 03-11-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 313
HB313 Opposing Documents-Letter AFL-CIO 03-14-16.pdf HL&C 3/14/2016 3:15:00 PM
HB 313
HB214 Supporting Documents-Summary of WCAC Cases since 2005.PDF HL&C 3/14/2016 3:15:00 PM
HB 214