Legislature(2021 - 2022)BARNES 124
04/15/2022 09:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Board of Veterinary Examiners | |
| HB405 | |
| HB406 | |
| HB407 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 405 | TELECONFERENCED | |
| *+ | HB 406 | TELECONFERENCED | |
| *+ | HB 407 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 174 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 15, 2022
9:05 a.m.
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Ivy Spohnholz, Co-Chair
Representative Calvin Schrage (via teleconference)
Representative David Nelson
Representative James Kaufman
MEMBERS ABSENT
Representative Liz Snyder
Representative Ken McCarty
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Board of Certified Real Estate Appraisers
Valery Kudryn Wasilla
- HEARD AND HELD
Real Estate Commission
Devon (Thomas) Doran Wasilla
Chad Stigen Palmer
- HEARD AND HELD
Board of Examiners in Optometry
Kathleen Rice, OD Kenai
- HEARD AND HELD
Board of Direct Entry Midwives
Hanna St. George Fairbanks
- HEARD AND HELD
Board of Social Work Examiners
Gabriel King North Pole
- HEARD AND HELD
BOARD OF VETERINARY EXAMINERS
Ciara Vollaro, DVM Palmer
- HEARD AND HELD
HOUSE BILL NO. 405
"An Act relating to the establishment of trusts; requiring the
filing of certain trust information; and requiring compliance
with a federal law."
- HEARD & HELD
HOUSE BILL NO. 406
"An Act relating to the validity of trusts involving persons
sanctioned by the United States Department of the Treasury; and
relating to the recording of documents conveying land to persons
sanctioned by the United States Department of the Treasury."
- HEARD & HELD
HOUSE BILL NO. 407
"An Act relating to commerce with Russia; relating to the use of
the ports in the state; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 405
SHORT TITLE: ESTABLISHMENT OF TRUSTS
SPONSOR(s): LABOR & COMMERCE
04/04/22 (H) READ THE FIRST TIME - REFERRALS
04/04/22 (H) L&C
04/08/22 (H) L&C AT 9:00 AM BARNES 124
04/08/22 (H) -- MEETING CANCELED --
04/15/22 (H) L&C AT 9:00 AM BARNES 124
BILL: HB 406
SHORT TITLE: MORATORIUM ON TRUSTS/PROPERTY ACQUISITION
SPONSOR(s): LABOR & COMMERCE
04/04/22 (H) READ THE FIRST TIME - REFERRALS
04/04/22 (H) L&C
04/08/22 (H) L&C AT 9:00 AM BARNES 124
04/08/22 (H) -- MEETING CANCELED --
04/15/22 (H) L&C AT 9:00 AM BARNES 124
BILL: HB 407
SHORT TITLE: PROHIBIT COMMERCE WITH RUSSIA
SPONSOR(s): LABOR & COMMERCE
04/04/22 (H) READ THE FIRST TIME - REFERRALS
04/04/22 (H) L&C
04/08/22 (H) L&C AT 9:00 AM BARNES 124
04/08/22 (H) -- MEETING CANCELED --
04/15/22 (H) L&C AT 9:00 AM BARNES 124
WITNESS REGISTER
VALERY KUDRYN, Appointee
Board of Certified Real Estate Appraisers
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
Wasilla, Alaska
POSITION STATEMENT: Testified as appointee to the Board of
Certified Real Estate Appraisers.
DEVON "THOMAS" DORAN, Appointee
Real Estate Commission
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
Wasilla, Alaska
POSITION STATEMENT: Testified as appointee to the Real Estate
Commission.
CHAD STIGEN, Appointee
Real Estate Commission
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
Palmer, Alaska
POSITION STATEMENT: Testified as appointee to the Real Estate
Commission.
KATHLEEN RICE, OD, Appointee
Board of Examiners in Optometry
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
Kenai, Alaska
POSITION STATEMENT: Testified as appointee to the Board of
Examiners in Optometry.
HANNA ST. GEORGE, Appointee
Board of Certified Direct-Entry Midwives
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
Fairbanks, Alaska
POSITION STATEMENT: Testified as appointee to the Board of
Certified Direct-Entry Midwives.
GABRIEL KING, Appointee
Board of Social Work Examiners
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
North Pole, Alaska
POSITION STATEMENT: Testified as appointee to the Board of
Social Work Examiners.
CIARA VOLLARO, DVM, Appointee
Board of Veterinary Examiners
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
Palmer, Alaska
POSITION STATEMENT: Testified as appointee to the Board of
Veterinary Examiners.
EVAN ANDERSON, Staff
Representative Zack Fields
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 405, provided a
PowerPoint presentation titled "House Bill 405" on behalf of the
House Labor and Commerce Standing Committee, sponsor.
RYAN GURULE, Policy Director
Financial Accountability and Corporate Transparency (FACT)
Coalition
Washington, DC
POSITION STATEMENT: Provided invited testimony in support of HB
405.
ROBERT SCHMIDT, Director
Division of Banking and Securities
Department of Commerce, Community, and Economic Development
(DEED)
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 405, answered
questions.
TRACY RENO, Chief Financial Examiner
Division of Banking and Securities
Department of Commerce, Community, and Economic Development
(DEED)
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 405, answered
questions.
EVAN ANDERSON, Staff
Representative Zack Fields
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 406, provided a
PowerPoint presentation titled "House Bill 406" on behalf of the
House Labor and Commerce Standing Committee, sponsor.
RYAN GURULE, Policy Director
Financial Accountability and Corporate Transparency Coalition
Washington, DC
POSITION STATEMENT: During the hearing on HB 406, provided
invited testimony with suggestions for the committee's
consideration.
EVAN ANDERSON, Staff
Representative Zack Fields
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 407, provided the
sectional analysis for the bill on behalf of the House Labor and
Commerce Standing Committee, sponsor.
STEVE WHITE, Captain, Executive Director
Marine Exchange of Alaska
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 407, provided
invited testimony via a PowerPoint presentation titled "Russian
Vessels in Alaska."
CLAYTON W.A. CHRISTY, Captain, President
Alaska Marine Pilots
POSITION STATEMENT: Dutch Harbor, Alaska During the hearing on
HB 407, provided invited testimony.
ACTION NARRATIVE
9:05:07 AM
CO-CHAIR IVY SPOHNHOLZ called the House Labor and Commerce
Standing Committee meeting to order at 9:05 a.m.
Representatives Kaufman, Nelson, Schrage (via teleconference),
Fields, and Spohnholz were present at the call to order.
^CONFIRMATION HEARING(S):
CONFIRMATION HEARING(S):
^Board of Certified Real Estate Appraisers
Board of Certified Real Estate Appraisers
^Real Estate Commission
Real Estate Commission
^Board of Examiners in Optometry
Board of Examiners in Optometry
^Board of Direct Entry Midwives
Board of Direct Entry Midwives
^Board of Social Work Examiners
Board of Social Work Examiners
^Board of Veterinary Examiners
Board of Veterinary Examiners
9:06:42 AM
CO-CHAIR SPOHNHOLZ announced that the first order of business
would be consideration of the governor's appointees to various
boards and commissions.
9:07:30 AM
VALERY KUDRYN, Appointee, Board of Certified Real Estate
Appraisers, Division of Corporations, Business and Professional
Licensing, Department of Commerce, Community, and Economic
Development (DCCED), testified as appointee to the Board of
Certified Real Estate Appraisers. He stated that he is a
residential appraiser and has done appraisals in the [Matanuska-
Susitna] Valley since 2010. During the year that he has served
on this board, he related, the board has re-looked at being able
to complete continuing education requirements online and
modernizing the qualifying education portion from only in person
to allowing for the other education opportunities that would
still be in line with the board's goal to strengthen public
trust in appraising. He said his primary goal in serving on the
board is to strengthen public trust in appraising by ensuring
competent appraisers are certified in the state and to ensure
common sense regulations are in place to assist with that.
9:08:53 AM
DEVON "THOMAS" DORAN, Appointee, Real Estate Commission,
Division of Corporations, Business and Professional Licensing,
Department of Commerce, Community, and Economic Development,
testified as appointee to the Real Estate Commission. She
stated she became licensed in 2003, obtained her broker's
license in 2007, and is a broker and owner of a real estate
office in the Matanuska-Susitna Valley. She said she has served
on local and state committees to give back to her real estate
community. She has always been interested in the Real Estate
Commission, she continued, because it has the most effect on
protecting the consumer and how business is conducted with
changing technology. The way she can serve the commission, she
explained, is that as a licensed and certified real estate
instructor she teaches continuing education classes, and a role
of the commission is to determine what kind of education should
be taken for the renewal cycle and she has already given input
on the guidelines for the continuing education requirements.
9:12:10 AM
CHAD STIGEN, Appointee, Real Estate Commission, Division of
Corporations, Business and Professional Licensing, Department of
Commerce, Community, and Economic Development, testified as
appointee to the Real Estate Commission. He stated that he
became licensed about eight years ago, received his broker's
license four years ago, and has brokered his own office since
then. Prior to becoming licensed he worked in construction, he
said, so he is interested in helping the commission from his
well-rounded experience with new subdivisions, land development,
property management, and new construction sales. Another reason
for his interest in the commission, Mr. Stigen continued, is the
need to get in front of protecting consumer privacy regarding
smart homes by helping the commission establish best practices
and educating licensees and consumers on how to properly handle
smart home products that are conveyed when a house is resold.
9:14:51 AM
KATHLEEN RICE, OD, Appointee, Board of Examiners in Optometry,
Division of Corporations, Business and Professional Licensing,
Department of Commerce, Community, and Economic Development,
testified as appointee to the Board of Examiners in Optometry.
She said she feels it is important to give back to the optometry
profession in more ways than just clinical care. She related
that during her nearly 17 years of experience she has worked in
the hospital setting, retail setting, and has owned her private
practice since 2015. Having worked in many different settings,
she added, she feels she can relate to optometrists in different
areas. Dr. Rice stated that in being on the board it is
important to ensure that the public is safe, that the profession
continues to be regulated, and to hold a standard of care so
that everyone in Alaska regardless of location can receive
similar care.
9:16:39 AM
HANNA ST. GEORGE, Appointee, Board of Certified Direct-Entry
Midwives, Division of Corporations, Business and Professional
Licensing, Department of Commerce, Community, and Economic
Development, testified as appointee to the Board of Certified
Direct-Entry Midwives. She related that she is the mother of 10
children and two foster children and has attended over 30 births
as a support figure. She said she is currently working on her
doula certification with a focus on post-partum support. As a
public member on this board for almost four years, Ms. St.
George continued, she has gained a deeper appreciation of what
being a midwife entails and the board is dedicated to keeping it
acceptable and safe for mothers and babies.
9:18:02 AM
GABRIEL KING, Appointee, Board of Social Work Examiners,
Division of Corporations, Business and Professional Licensing,
Department of Commerce, Community, and Economic Development,
testified as appointee to the Board of Social Work Examiners.
He said he is interested in serving on this board as a public
member. He related that he came to Alaska in 2016 as an
infantryman stationed on Fort Wainwright, and having been
honorably discharged in 2018, he now operates his photography
business full time, traveling across the state. He noted that
he is currently pursuing a bachelor's degree in political
science at the University of Alaska Fairbanks. Serving on the
Board of Social Work Examiners is a way to give back to his
community, Mr. King stated. Mental health and social services
are an integral component for everyone, he continued, and it is
imperative that everyone has safe and efficacious access to
quality providers in their respective program. He said this is
his first appointment to this board and he believes he can bring
fresh perspective to the many matters before the board.
9:19:37 AM
CIARA VOLLARO, DVM, Appointee, Board of Veterinary Examiners,
Division of Corporations, Business and Professional Licensing,
Department of Commerce, Community, and Economic Development,
testified as appointee to the Board of Veterinary Examiners.
She stated that she graduated from Western University of Health
Sciences [College of Veterinary Medicine]. She said she has
been practicing veterinary medicine since 2007 and is currently
an associate veterinarian and medical director at Tier 1
Veterinary Medical Center. Dr. Vollaro noted that this is her
first time serving on a board, and she is interested in serving
on this board to support the veterinary profession's rapid
growth and change, and to ensure that veterinarians continue to
provide high quality medicine.
9:20:45 AM,
CO-CHAIR SPOHNHOLZ opened public testimony on the governor's
appointees to various boards and commissions, then closed it
after ascertaining that no one wished to testify.
[Advancements of the appointees were held over.]
HB 405-ESTABLISHMENT OF TRUSTS
9:21:05 AM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 405, "An Act relating to the
establishment of trusts; requiring the filing of certain trust
information; and requiring compliance with a federal law."
CO-CHAIR SPOHNHOLZ noted that HB 405 is part of a package of
bills the committee is considering regarding Russian investment
in Alaska.
9:21:21 AM
CO-CHAIR FIELDS introduced HB 405 on behalf of the House Labor
and Commerce Standing Committee, sponsor. He stated that a
request was put in for this legislation shortly after Russia
invaded Ukraine, at which time people started asking themselves
about their roles as citizens in supporting the free people in
Ukraine and ensuring that Putin and his allies were not
inadvertently being given access to resources that they would
use to wage war on Ukraine. The idea of the bills before the
committee today, he explained, is to ensure that oligarchs
aligned with Putin or Putin's family are not able to shelter
wealth or generate wealth in Alaska. Two of the bills are on
trusts and property and one is on preventing offloading of
Russian imports at Alaska ports. He deferred to Mr. Evan
Anderson of his staff to provide details on the bill.
9:22:53 AM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, provided a PowerPoint presentation titled "House
Bill 405" on behalf of the House Labor and Commerce Standing
Committee, sponsor. He displayed the second slide, "HB 405:
Establishment of trusts," and stated that the bill would update
Alaska law to ensure trusts in Alaska will not be used to shield
assets of Russian oligarchs or other enemies of the United
States. He said the bill would ensure state trust law is
consistent with federal transparency requirements and would
provide clarity for industry as well as state and federal
regulators moving forward.
MR. ANDERSON discussed the graphic on the third slide, "What is
a trust?" He explained that the graphic is visual depiction of
the complex web of relationships formalized by a legal trust.
He said a basic trust is a three-way arrangement. A settlor
puts assets into a trust which is managed by a trustee,
typically a lawyer, on behalf of beneficiaries. One of the many
types of trusts is a discretionary trust where the trustee has
discretion to decide who gets what, when. The beneficiaries can
argue that until they receive a distribution they aren't
entitled to any of the trust assets because it is all up to the
trustee; the assets have been given away by the settlor, but
nobody is entitled to them yet. So, Mr. Anderson continued,
they are in what's considered ownerless limbo, ringfenced from
tax, from creditors, or from the rule of law. He clarified that
most of the people with trusts in Alaska are law-abiding U.S.
citizens who deserve to plan their estates and set assets into
trusts for their family members.
MR. ANDERSON spoke from the fourth slide, "History of Trusts in
Alaska," which read as follows [original punctuation provided]:
• Prior to the Alaska State Constitution, trust law
traces back to England in the Middle Ages
• 1959 1998: trust in Alaska operated as they do in
the vast majority of states
• 1998: Alaska became the second state in the country to
enact super-trust laws
• 1998 2021: Alaska initially captured national
investment. However, other states joined South Dakota
& Alaska including Nevada, Delaware, and Wyoming
enacting new laws to expand the authority of trusts.
Increased competition led to many of the larger
accounts leaving the state
• In October 2021, a series of leaks revealed that
Alaska & five other U.S. states have attracted vast
sums of wealth and could be sheltering funds for the
globe's most violent and corrupt criminals
MR. ANDERSON compared Alaska's trust laws to others around the
U.S. and the globe. He showed the fifth slide, "Financial
Secrecy Index," and stated that the Financial Secrecy Index
(FSI), prepared by the Tax Justice Network, is a globally
recognized measure of how secrecy laws impact global financial
flows. He said the orange color indicates the locations of the
best measure of secrecy and thereby the most global financial
flow. In 2022, he related, the U.S. was second behind the
Cayman Islands, with South Dakota, Alaska, Nevada, [Delaware,
and Wyoming] being the main contributors to that placement.
MR. ANDERSON turned to the chart on the sixth slide, "Choosing
the Correct Jurisdiction: An Objective Comparison," and noted
that the chart is marketing by the Bridgeford Trust Company, a
private firm based in South Dakota that publishes this
comparison information on its website; Alaska is number four on
this list. He said Bridgeford Trust Company specializes in
marketing South Dakota and other U.S. states to some of the
wealthiest families in Latin America.
MR. ANDERSON proceeded to the seventh slide, "Pandora Papers
show foreign money secretly floods U.S. Tax havens. Some of it
is tainted." He stated that the 2021 Pandora Papers reveal a
small slice of the extent to which American companies are
involved in global tax evasion, money laundering, and
corruption. He said one example in the Pandora Papers is the
story of Federico Kong Vielman [eighth slide], a Guatemalan
businessperson] with $13.5 million in assets held in trust in
South Dakota, according to leaks. Mr. Kong Vielman's palm oil
company was cited by the U.S. government for hiring workers for
inadequate pay with inadequate safety protection and his company
was also named as a contributor to toxic pollutants in a local
river. While Guatemalan courts acted on the other companies
named in that citation as causing the pollution, he continued,
they did not act against the Kong Vielman family.
MR. ANDERSON moved to the nineth slide, "Global Reform Efforts."
He stated that despite the very real possibility that U.S.
trusts are being used to shelter funds for oligarchs and
dictators, there is some good news. The global community has
taken major steps, especially in the last 10 years, to enact
reforms, he continued. The Financial Action Task Force (FATF)
issued recommendations in 2012. Initially an intergovernmental
initiative of the G7 countries in 1989, this intergovernmental
organization has grown to now include 39 global members,
including the U.S. Its recommendations set up a framework that
gives Alaska something to follow, he advised. Alaska can also
look to the European Union which has issued five anti-money-
laundering directives over the past few decades, most recently
requiring public disclosure of beneficial ownership information
for trusts. In 2018 the Bahamas enacted reforms, he continued.
Showing up in the Pandora Papers multiple times, much of the
accounts that left the Bahamas when the Bahamas enacted reforms
have moved into U.S. states, many of them South Dakota. As of
2020, Mr. Anderson pointed out, 17 of the least restrictive
jurisdictions for trusts anywhere in the world are U.S. states.
That is where federal regulations start to come in, he stated.
In 2021, the Corporate Transparency Act was signed into law by
President Biden. Last month, the United Kingdom (UK), another
of the most permissive places in the world for trusts, passed
the Economic Crime (Transparency & Enforcement) Act following
the Russian invasion of Ukraine.
MR. ANDERSON displayed the tenth slide, "Which US states have
the most trusts in the Pandora Papers?" He said it is South
Dakota by far, and Alaska is not named on the list of the top
five. But this is not a complete picture of the problem, he
continued. It is just one leak and the full extent to which
Alaska is involved is unknown.
MR. ANDERSON concluded with the eleventh slide. Regarding what
these policies have to do with Russia and its oligarchs, he said
it is known that Russian President Vladimir Putin built his war
effort with the profits from oil and gas, seafood, and other
trade bids. He read from a quote by Ian Gary, Executive
Director of the Financial Accountability and Corporate
Transparency (FACT) Coalition, which states: "The secrecy
currently afforded by the U.S. and other Western legal and
financial systems contributed to President Putin's empowerment."
9:31:29 AM
CO-CHAIR FIELDS added that Alaska's trust laws are currently so
opaque that it wouldn't be known if oligarchs are sheltering
their assets in the state, and hence the need for legislation.
CO-CHAIR SPOHNHOLZ reiterated that trusts are used by many law-
abiding citizens and the intention of HB 405 [and HB 406 and HB
407] is to address those who are using Alaska as a way of
avoiding the law.
REPRESENTATIVE KAUFMAN said he would like to see more clarity
around the problem stated because the legislation seems to be
impugning trusts. One person's secrecy is another person's
privacy, he continued, and many of those people are citizens who
deserve privacy.
CO-CHAIR FIELDS agreed that most people who use trusts are law-
abiding citizens that are using trusts for appropriately
legitimate reasons. The goal, he explained, is to ensure that
the small percentage of law breakers don't exploit a system in
which many law-abiding people participate. He said HB 405 and
HB 406 are largely transparency requirements that would do no
harm to everyone who is a law-abiding family trust holder.
9:34:02 AM
MR. ANDERSON provided the sectional analysis of HB 405. He
paraphrased from the document in the committee packet titled
"Sectional Analysis House Bill 405 Version A," which read as
follows [original punction provided]:
* Section 1. AS 13.36.005(a) amends existing
documentation requirements to require an address,
either business or residential address, as part of the
initial court filing.
* Sec. 2. AS 13.36 is amended by adding a new section
that requires new trusts to file establishment
paperwork with the Department of Commerce, Community,
& Economic Development, including the names of the
trustee, the settlor, the beneficiary, and the person
or individual filing the documentation. DCCED will
establish a fee for establishment.
This section affirms the confidential nature of trust
information. Public disclosure of private information
contained within trusts is unlawful. DCCED has non-
disclosure agreements in place for staff in other
departments to retain confidentiality. Non-disclosure
provisions could be expanded to Division of Banking &
Securities staff handling confidential trust
information.
This section allows DCCED to release trust information
to the U.S. Department of the Treasury. This is a
logical next step for protecting Alaska's trust
industry in the 21st century all are welcome here,
except war criminals and terrorists.
* Sec. 3. This section provides for an effective date.
This bill will not impact trusts established prior to
its effective date.
MR. ANDERSON pointed out that a draft [proposed] committee
substitute (CS) has been received, so there may be some changes
to present to the committee at the bill's next hearing.
Regarding Section 1, he said there have been lengthy discussions
with the Division of Legislative Legal Services because, under
existing structures in Alaska statute, no address is required
for filing if a trust does not have a business address
associated with it. Family trusts might have nothing to do with
a business, he continued, so this seemed like a clear loophole
that was easy to close. Regarding Section 2, Mr. Anderson
pointed out that public disclosure of private information
contained within trusts is unlawful and would remain unlawful
with the passage of HB 405.
9:36:44 AM
CO-CHAIR SPOHNHOLZ asked Mr. Anderson to address Representative
Kaufman's question.
MR. ANDERSON referred to the nineth slide regarding global
reforms where some jurisdictions around the globe are requiring
public disclosure of beneficial ownership information. But, he
advised, this is not the intention in HB 405 as that would be
going further than the Corporate Transparency Act, federal law
which does not require public disclosure of that information.
Rather, he continued, it creates a central registry through the
U.S. Department of Treasury, so there is no risk to
confidentiality of that information.
CO-CHAIR SPOHNHOLZ began invited testimony on HB 405.
9:37:44 AM
RYAN GURULE, Policy Director, Financial Accountability and
Corporate Transparency (FACT) Coalition, provided invited
testimony in support of HB 405. He noted that the FACT
Coalition is a nonpartisan alliance of members dedicated to
standing up structural reforms to combat harms flowing from
financial secrecy and vulnerabilities in the U.S. financial
system that facilitate money laundering, sanctions evasion,
corruption, tax dodging, and illicit financial flows.
MR. GURULE said the Pandora Papers offer concrete evidence that
the U.S. is a singular financial jurisdiction, an undesirable
status that erodes the tax bases of the U.S. and its allies,
undermines U.S. national security, compromises U.S. financial
markets, and weakens democracy in the U.S. and abroad. He said
the effects of these harms manifest not as academic concerns but
as direct impacts to local U.S. communities. The financial
secrecy afforded by the U.S. and its allies, he continued, has
previously enriched and empowered potentially adversarial
regimes, including Russian President Putin, giving his inner
circle a backdoor to evade earlier sanctions and emboldening
their corrupt and criminal behavior.
MR. GURULE related that, given the risks posed by financial
secrecy, the Biden Administration and bipartisan efforts in
Congress have prioritized bringing greater transparency to U.S.
legal entities in the fight against corruption. Dismantling
secretive systems that enable corrupt actors and tax dodgers to
avoid accountability can also make well-coordinated sanctions
targeting the wealth of Putin and oligarchs more effective today
and make it less likely for needing similar retaliatory efforts
against kleptocrats in the future.
MR. GURULE specified that anonymous shell companies and
arrangements capable of being formed or otherwise investing or
doing business in the U.S., pose one of the biggest
vulnerabilities to the U.S. financial system. He related that
an analysis by Global Financial Integrity found that, until
recently in all 50 states, more personal information was needed
to obtain a library card than to establish a legal entity that
can be used to facilitate tax evasion, money laundering, fraud,
and corruption.
MR. GURULE stated that the Pandora Papers specifically implicate
U.S. trusts as one of the most significant gaps in the U.S.
anti-money laundering regulatory regime. Alaska, he continued,
has its own sordid history with commoditizing financial secrecy,
making the proposed reforms discussed today even more critical.
MR. GURULE related that in the 1990's, struggling with depressed
oil prices, Alaska was looking for new ways to attract outside
capital investment. From that position, he said, Alaska
considered and passed changes to its trust laws first suggested
by a New York lawyer that would push the state far outside
existing trust laws and soon would result in Delaware, Nevada,
and South Dakota following Alaska into the rabbit hole. The
result, he continued, is a competition for foreign capital
seeking effective anonymity, not just protection for future
claims against heirs.
MR. GURULE said the benefits of this anonymity for out-of-state
tax-dodgers, corrupt politicians, and others seeking to avoid
public accountability has been obvious since the start. Whether
equivocal and offsetting benefits have been realized by Alaska's
citizenry or that of other states that are victims of the race-
to-the bottom for attracting shadow capital is more
questionable. As international tax and financial transparency
measures have begun to peel back secrecy in traditional tax
havens, he continued, cross-border deposits in U.S. financial
institutions, often held in trust or via other legal anonymous
vehicles, have substantially increased.
MR. GURULE advised that it is known from the Pandora Papers that
U.S. trusts are being heavily abused. For example, the same
secrecy afforded by Alaska created the impetus for a known human
rights' violator to relocate his trust assets from the Bahamas
to the U.S. The Pandora Papers, he noted, are just one leak of
data and should not be viewed as indicative of the entire
universe of problematic anonymous U.S. investment by corrupt or
criminal actors. Rather, he said, the Pandora Papers serve as
an indictment on the financial secrecy afforded by U.S. laws,
including those in Alaska.
MR. GURULE related that on 1/1/21 Congress took steps to address
threats posed by anonymous legal entities and passed the
bipartisan Corporate Transparency Act (CTA). He said this
measure requires corporations, limited liability companies, and
other similar entities formed or registering to do business in a
state by a filing with a secretary of state or similar office,
to disclose their true, natural owner to a secure directory
housed and maintained at Treasury's Financial Crimes Enforcement
Network (FinCEN).
MR. GURULE conveyed that the FACT Coalition previously filed
comments on best practices for establishing the directory in
response to FinCEN's first proposed rulemaking, including
addressing who should file disclosures, when they should file,
what information they should provide, and how certain exemptions
should be handled. He said FinCEN has announced that it plans
to issue a second proposed rulemaking addressing access to the
directory, including by state, tribal and local law enforcement
agencies. He noted that the FACT Coalition has advocated for
uncomplicated and complete access for authorized users.
MR. GURULE pointed out that the application of the CTA to
certain trusts remains unclear. He explained that for those
trusts which file only with local courts, or that do not file at
all in connection with formation or other key events, such as
relocating to Alaska, the CTA may apply to varying degrees based
on final rules when promulgated.
MR. GURULE stated that HB 405 takes important steps to clarify
the application of the Corporate Transparency Act to trusts
administered in Alaska. He said HB 405 also makes clear that
Alaska will have ready access to the information necessary to
ensure that its trust industry is attracting the type of
investment that does not put Alaskan citizens at risk of greater
national security threats or rising prices contributed to by
global geopolitical conflicts.
MR. GURULE offered the FACT Coalition's support for HB 405 and
Alaska's efforts to pivot from the secrecy rat-race toward being
a singular leader in promoting greater financial transparency.
He urged that the bill incorporate five policy recommendations
to ensure that HB 405 brings greater transparency to the trust
industry in Alaska in a way that does not afford workarounds to
bad actors and helps to bring about an end to the American tax-
haven: 1. At a minimum, beneficial ownership reporting should
apply to any trust governed by Alaskan law, administered in
whole or in part in Alaska or by an Alaskan trustee, or that
otherwise has situs in Alaska. Legacy trusts should be timely
incorporated into the regime, as should any relocating trust.
2. All relevant actors should be covered. A strong definition
of beneficial owners should look to control of trust governance
and assets and rights to, or control over, distributions of
trust assets, including for protectors, trustees, settlors or
grantors, and certain beneficiaries. 3. The bill should create
a clear, affirmative obligation for Alaskan trusts to file under
the CTA. 4. The bill should require ongoing reporting,
monitoring, and verification. Changes in beneficial ownership
should be reported in a timely fashion, and data best practices
should apply to the collection, storage, and authorized
dissemination of information collected under the bill.
Reporting burdens would be minimal in all but the most
complicated structures, which are likely purposefully opaque.
Employing standardized, best data practices would further reduce
reporting costs. 5. Additional secrecy rights should not be
created by the bill, and appropriate penalties or distribution
prohibitions should be considered for any party that provides
false information, directly or indirectly, or that fails to
provide required information.
MR. GURULE concluded by stating that federalism is made better
when states innovate in ways that reinforce democracy, open and
transparent markets, and national security. The opposite is
true, he said, when states compete for investment through
financial secrecy to lure potentially corrupt, illicit, or
criminal capital. Like Congress, he continued, the Alaska State
Legislature has an important role to play in ensuring that the
Alaskan and U.S. financial systems are not vehicles for tax
dodging, corruption, human rights abuses, or other financial
harms.
9:47:19 AM
CO-CHAIR FIELDS requested that Mr. Robert Schmidt address the
potential problems that could be had with such opacity of trusts
and the risk for abuse.
CO-CHAIR SPOHNHOLZ requested that Mr. Schmidt also address the
fiscal note. She recalled Mr. Schmidt stating that the division
already has a system that could be used for handling the
transparency elements incorporated within HB 405.
9:47:58 AM
ROBERT SCHMIDT, Director, Division of Banking and Securities,
Department of Commerce, Community, and Economic Development
(DEED), answered questions related to HB 405. He specified that
under its current role the Division of Banking and Securities
regulates trust companies; but the division does not regulate
trusts. He said the division performs safety and soundness
examinations of trust companies under Title 6, the banking
statutes. If a trust has assets on deposit in a state chartered
financial institution, he continued, the division also performs
safety and soundness examinations of those financial
institutions under Title 6. He pointed out that the division
does not examine, register, license, approve, or otherwise
review individual trusts which are governed by Title 13. He
said the division appreciates the concern that Alaska trust laws
may be used inappropriately, and that he will be speaking with
the committee next week on HB 408 which addresses that concern.
He advised that the committee must also balance and consider how
trusts are being used as an estate planning tool by everyday
Alaskans.
9:49:28 AM
TRACY RENO, Chief Financial Examiner, Division of Banking and
Securities, Department of Commerce, Community, and Economic
Development (DEED), answered questions related to HB 405. She
explained that the division's database is a repository for
information under which electronic documents and contact
information can be saved. She said the division, in looking at
HB 405, may need to consider and research some other things.
Regarding the Office of Foreign Assets Control (OFAC)
requirements, she advised that it is not one-and-done because
onboarding must be performed, certain things must be identified
with individuals, and when trusts are changed or amended the
information must be updated. She further advised that if the
division is required to check this information against OFAC or a
sanction list it would probably necessitate bringing on
additional vendors to check those lists periodically because
they change daily if not hourly depending on who is being
sanctioned, countries or individuals. The division can have a
repository to hold the information, she continued, but more
research will be needed if [the legislature] wants more to be
done, such as reaching out to OFAC to find out what the division
would have to do, how it would be recorded, and the liabilities
for employees if there is failure to identify someone on the
sanction list and it isn't recorded. She said the bill deals
with a situation that [the division] should be concerned about,
but more work is needed to get into the details.
9:51:35 AM
CO-CHAIR FIELDS offered his understanding that if HB 405 and HB
406 were enacted and it was required for these trusts to
disclose to the department who their beneficiaries are, if an
oligarch on a sanctions list is identified, the department would
then report that to the Treasury Department, and it is the
Treasury Department that would take action to freeze the assets.
MS. RENO responded that that is her unconfirmed understanding.
She said she would need to speak with OFAC to determine what
steps would need to be taken and how and when. She explained
that [the department] does not currently hold that personal
private information and report it to OFAC, which is under the
U.S. Department of the Treasury, so she doesn't know all the
steps that would need to be in place for that to happen.
9:53:08 AM
CO-CHAIR SPOHNHOLZ surmised there would be some sort of risk-
based analysis for determining which trusts need to be checked
against the bad actors that are being looked for.
MS. RENO pointed out that HB 405 says that every trust that is
established will have to file the paperwork with the department,
and the department would be running the information against the
OFAC list. She said every trust coming in that the department
is holding information on would have to be run periodically
through the database and through the sanctions list because
those lists change daily, so she assumes it would be an
automated system through a vendor.
CO-CHAIR SPOHNHOLZ surmised it could be done on an annual basis.
MS. RENO answered that she doesn't know the specifics, but she
thinks an OFAC requirement is that it must be done every so
often to report it within a certain time period so as to not be
held liable for criminal penalty.
CO-CHAIR SPOHNHOLZ said the committee will ask the department to
follow up with answers to its questions.
9:55:01 AM
CO-CHAIR FIELDS stressed that there is a very important state
role because if Alaska doesn't identify potential oligarchs who
might be sheltering wealth in the state, then the federal law is
rendered ineffective.
CO-CHAIR SPOHNHOLZ concurred.
[HB 405 was held over.]
HB 406-MORATORIUM ON TRUSTS/PROPERTY ACQUISITION
9:55:20 AM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 406, "An Act relating to the validity of
trusts involving persons sanctioned by the United States
Department of the Treasury; and relating to the recording of
documents conveying land to persons sanctioned by the United
States Department of the Treasury."
9:55:35 AM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, provided a PowerPoint presentation titled "House
Bill 406" on behalf of the House Labor and Commerce Standing
Committee, sponsor. He spoke from the fourteenth slide, "HB
406: Moratorium on Trusts / Property Acquisition." He explained
that HB 406 would: update Alaska law to ensure trusts held or
managed by enemies of the United States can no longer operate in
the state of Alaska; prohibit these individuals from acquiring
real estate, which is the biggest difference between HB 406 and
HB 405; and protect Alaskans' access to services provided by
trusts, such as estate planning, while ensuring foreign
adversaries cannot hide their wealth in Alaska.
MR. ANDERSON moved to the fifteenth slide, "Office of Foreign
Asset Control," and stated that the U.S. Department of the
Treasury has used economic power to freeze assets of enemies of
the U.S. since 1940 when Nazi Germany invaded Norway. He said
OFAC's authorities were expanded with the 2016 Global Magnitsky
Act and stressed that sanctions from OFAC target individuals,
not countries, deemed enemies of the U.S. He specified that
financial transactions with individuals on the sanctions list
are prohibited for U.S. citizens, which makes it even more
concerning that Alaska's trust laws could potentially conceal
some of these transactions. He stated that [in October 2021]
the Pandora Papers revealed that U.S. states like Alaska have
trust laws so strong that they may effectively conceal assets of
international criminals.
MR. ANDERSON displayed a photograph on the sixteenth slide
depicting Monaco's Monte Carlo Star, a luxury apartment complex
located between the casino [and the sea] and which has in front
of it a marina full of yachts. He said the complex was worth
$3.1 million when it was cited in the Pandora Papers. He
related that according to a recent report by the International
Consortium of Investigative Journalists (ICIJ), one of the
multi-million-dollar flats inside this building was purchased
through a Caribbean-based shell company in 2003 for Alina
Kabaeva, whom some reports have identified as the rumored mother
to a child of Russian President Putin.
MR. ANDERSON presented the seventeenth slide, "Why do criminals
like trusts?" He paraphrased a quote from ["The Puppet Masters"
report by the World Bank, October 2011], which states: "Trusts
prove such a hurdle to investigation, prosecution (or civil
judgment), and asset recovery that they are seldom prioritized
in corruption investigations. Investigators and prosecutors
tend not to bring charges against trusts, because of the
difficulty in proving their role in the crime".
MR. ANDERSON showed the nineteenth slide and said the photograph
includes Alisher Usmanov, a notorious Russian oligarch who until
recently was majority owner of Arsenal football club in the
United Kingdom (UK) and who is a major financier of Putin's
efforts in Russia. Mr. Anderson moved to the twentieth slide
and related that Mr. Usmanov made news a few weeks ago when his
spokesperson said that Mr. Usmanov's assets, including a yacht
and a London apartment, were out of reach of sanctions in the
UK, even though located in the UK, [because they had been
transferred into irrevocable trusts]. Mr. Anderson stated that
things can be done about these legal loopholes in Alaska by
taking steps to integrate the state's trusts into the existing
federal enforcement mechanisms.
10:00:14 AM
MR. ANDERSON reviewed the sectional analysis of HB 406. He
spoke from the document provided in the committee packet titled
"Sectional Analysis House Bill 406 Version B," which read as
follows [original punctuation provided]:
* Section 1. AS 13.36 is amended by adding a new
section that strips a trust of its legal status in the
State of Alaska if any individual associated with it
is named on the sanctions list by U.S. Department of
Treasury.
Trusts are a legal recognition of relationships
definitions for these relationships already exist in
statute:
- a settlor places their assets into trust
- a trustee or trustor holds the assets in their name,
but the assets do not belong to them, and they can not
[sic] financially benefit from them
- a beneficiary will receive distributions from the
assets held in trust
* Sec. 2. AS 40.17.070 is amended by adding a new
subsection to make it impossible for individuals on
the U.S. Department of Treasury sanctions list to
acquire, sell, or gift real property in the State of
Alaska.
The Recorders Office in Department of Natural
Resources is responsible for keeping records on real
estate transactions. The Recorders Office can utilize
the Office of Foreign Assets Control sanctions list to
avoid any future sale of Alaskan properties to
individuals on the sanctions list.
* Sec. 3. This section provides for an effective date.
This bill will not impact trusts established or real
estate transactions completed prior to its effective
date.
10:01:41 AM
CO-CHAIR SPOHNHOLZ opened invited testimony on HB 406.
10:01:56 AM
RYAN GURULE, Policy Director, Financial Accountability and
Corporate Transparency (FACT) Coalition, provided invited
testimony on HB 406. He urged that in promulgating HB 406 the
committee consider typical real estate anti-money laundering
typologies and creative corporate structuring that is available to
sanctioned individuals, such as the ability to purchase real estate
through trusts or other anonymous legal entities or arrangements,
or via nominees. He said HB 406 needs to contemplate and look past
legal blinders to identify problematic buyers. In other words, he
continued, HB 405 will help to ensure that HB 406 is effectively
implemented in Alaska as would similar measures with respect to
other typologies. This would ensure that sanctions against
oligarchs cannot be avoided through secrecy and that Alaska is
encouraging the type of investment that will ensure the long-term
growth of the Alaskan economy to the benefit of the Alaskan
citizenry.
10:03:55 AM
The committee took an at-ease from 10:03 a.m. to 10:04 a.m.
10:04:31 AM
CO-CHAIR FIELDS opined that international criminals who use
trusts to shield their assets are like vermin and it must be
ensured that they cannot come into Alaska. He said Alaska
cannot control what South Dakota or Nevada do, but Alaska can
protect itself as well as set a good example with its state
laws. These goals are important, he continued, because it is a
reality that Putin and other rogue regimes operate through
informal networks of hiding and generating wealth, including
through criminal organizations. Alaska must do its part to stop
someone like Putin from deriving funding for a criminal and
aggressive regime, he added.
10:05:36 AM
CO-CHAIR SPOHNHOLZ offered her belief that the committee process
will make the bill better. She stressed that the intent is not
to undermine individual Alaskans or good acting Americans who
want to establish trusts. She said the trust industry in Alaska
is an important part of the state's commercial spectrum and most
trusts are family trusts that are designed to make it easy to
convey assets. [The intent], she continued, is to ensure that
Alaska is not part of propping up bad actors that might take
advantage of Alaska's trust system.
[HB 406 was held over.]
HB 407-PROHIBIT COMMERCE WITH RUSSIA
10:07:06 AM
CO-CHAIR SPOHNHOLZ announced that the final order of business
would be HOUSE BILL NO. 407, "An Act relating to commerce with
Russia; relating to the use of the ports in the state; and
providing for an effective date."
CO-CHAIR SPOHNHOLZ noted that HB 407 is another bill in the
suite of legislation that the committee is considering from the
House Labor and Commerce Standing Committee.
10:07:14 AM
CO-CHAIR FIELDS introduced HB 407 on behalf of the House Labor
and Commerce Standing Committee, sponsor. He stated that HB 407
would prohibit the importation of Russian goods specifically by
using Alaska's powers of state to prohibit Russian boats from
docking at Alaskan ports and offloading goods and materials. He
noted that the late Alaska Congressman Don Young introduced an
important federal bill on this point, and that Congress has
taken swift action to assure that there is strong federal law
prohibiting the fueling of the Russian war machine through
Russian imports. He further noted that some of the assets of
some Russian oligarchs who were enriching Putin have been seized
by other nations. He recognized that there is a lot of commerce
in Alaska with Asia and Europe and said longshoreman across the
U.S. have on their own refused to unload Russian products at
ports. Alaska as a state should support democracy and the free
people of Ukraine, he said, and HB 407 will ensure that Alaskans
don't inadvertently provide financing to Putin and his
aggressive regime.
10:08:49 AM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, provided the sectional analysis for HB 407 on
behalf of the House Labor and Commerce Standing Committee,
sponsor. He paraphrased from the document provided in the
committee packet titled "Sectional Analysis House Bill 407
Version A," which read as follows [original punctuation
provided]:
* Section 1. AS 30.50 is amended by adding a new
section to prohibit all Russian ships from docking at
ports in Alaska.
This includes Russian-flagged vessels, ships that are
crewed by Russian nationals, and ships that carry
Russian cargo.
* Sec. 2. AS 45.45 is amended by adding a new section
that bans all imports and exports with Russia,
including seafood, alcohol, and oil & gas.
* Sec. 3. The uncodified law of the State of Alaska is
amended by adding a new section that permits specific
trade with Russia, including the docking of specific
vessels, if contracts were signed prior to the
effective date.
* Sec. 4. AS 30.50.030 and AS 45.45.940 are repealed.
Section 1 & 2 of this bill are automatically repealed
after 10 years.
* Sec. 5. The uncodified law of the State of Alaska is
amended by adding a new section that automatically
repeals the provisions of this bill banning commerce
with Russia, if the current security risk is resolved
and the U.S. Government lifts its sanctions on Russia.
* Sec. 6. If, under sec. 5(a) of this Act, sec. 4 of
this Act takes effect, it takes effect on the earlier
of either July 1, 2032; or the day on which DCCED
commissioner revises the statutes under Section 5(b)
Sec. 7. Except as provided in sec. 6 of this Act, this
Act takes effect immediately under 3 AS 01.10.070(c).
Provides for an effective date.
MR. ANDERSON expounded on Section 1 and explained that typically
the only information tracked is for flagged vessels. However,
he continued, vessels come into Alaska waters which are crewed
or carry Russian cargo, and these are not always tracked under
similar measures.
10:11:49 AM
CO-CHAIR SPOHNHOLZ opened invited testimony on HB 407.
10:11:59 AM
STEVE WHITE, Captain, Executive Director, Marine Exchange of
Alaska, provided invited testimony on HB 407 via a PowerPoint
presentation titled "Russian Vessels in Alaska." He displayed
the second slide, "Sovcomflot (SCF) Vessels 2010-current
'Russia's Largest Shipping Company.'" He stated that the Marine
Exchange does traffic analysis and sea traffic management, and a
traffic analysis was done on Russian ships and ships that are
associated with Russia or Russian companies, some of which was
done for the federal government. He said SCF, a Russian-owned
company with a focus on moving hydrocarbons, jet fuel, made 12
port calls at Anchorage over the last 10 years, including three
[in 2022]. He related that SCF ships are flagged by Liberia,
not Russia, but noted that flagging in another country is a
common practice. He said the black lines on the map delineate
traffic to Alaska and the white lines delineate traffic to
Canada and Washington.
CAPTAIN WHITE proceeded to the third slide, "SCF Tankers at
Alaska Ports 0 < COG < 180." He explained that the blue lines
on the map represent where the tankers came from, east to west,
to hit Alaska ports. But, he continued, they originated in
Korea and before they were in Korea they came from Russia. He
reiterated that SCF is a Russian owned company but is not
Russian flagged.
CAPTAIN WHITE moved to the fourth slide, "SCF Tankers at Alaska
Ports 180 < COG < 360." He explained that the red lines on the
map represent the tankers going back from the west to the east
and that they went to Russian ports instead of South Korea.
CAPTAIN WHITE showed the fifth slide, "Russian-flagged Vessels
Along the Border (2014 2021)." He said the two maps on the
slide show the massive amount of Russian flagged vessels that
came close to Alaska borders. He explained that the depictions
are of the Bering Strait with tracks in color by industry [blue
= fishing, black = tanker, green = cargo, orange = tug, fuchsia
= passenger/pleasure, and red = military/law enforcement]. He
drew attention to the map on the left and noted that the [solid
blue color] that looks like water is just the fishing activity.
He then brought attention to the extensive activity shown on the
map to the right and said it excludes the fishing activity. He
pointed out that the boat making port calls out of Nome
[depicted by the fuchsia-colored line] is listed as a
passenger/pleasure craft on the Automated Information System
(AIS), but that it is actually a research vessel which receives
its permits through the [U.S. Department of State]. Captain
White turned to the sixth slide, "Russian-flagged Vessels in AK
Ports 2010-current," and stated that there has not been a ton of
port calls in Alaska since 2010.
CAPTAIN WHITE displayed the seventh slide, "Russian Superyachts
2010-2021." He said these superyachts of oligarchs have visited
Southeast Alaska, with the last one in 2018. He offered his
belief that one of the vessels has been seized by another
country at this time. He pointed out that these superyachts are
not flagged by Russia, but rather Bermuda and Cayman Islands,
and advised that deeper analysis must often be done to figure
out where [vessels] come from.
CAPTAIN WHITE spoke to the eighth slide, "Russian Vessel Calls
at Alaska Ports 2010-current." He stated that not many cargo
ships come from overseas directly to Alaska - much of Alaska's
cargo comes from the bigger ports on the [U.S.] West Coast and
then to Alaska, and a lot of that is by barge rather than cargo
ship, especially in Southeast Alaska. So, he added, the control
points really are in the Lower 48. He summarized by noting that
over the past 11 years, there have been less than 20 commercial
visits from Russian ships which includes the Russian-owned ships
that are Liberian flagged, and less than 40 personal or pleasure
port calls in Alaska.
10:18:17 AM
REPRESENTATIVE KAUFMAN asked whether there would be some kind of
work around for an emergency if Alaska was to close its ports to
vessels owned by Russians. Responding to Captain White for
clarification, he asked whether there would be a safety valve
should there be a Russian vessel is in distress, but Alaska has
closed its ports to vessels owned by Russians.
CAPTAIN WHITE replied yes. He explained that anyone having a
problem can claim force majeure, which gives the right to pull
into port. He said this is a common practice internationally,
and it allows for that to happen for safety reasons, such as a
mechanical breakdown or humanitarian crisis.
REPRESENTATIVE KAUFMAN asked whether the bill as currently
written would allow that.
CAPTAIN WHITE responded that he doesn't know all the details of
the bill, but he doesn't think Alaska could write a bill that
would prevent force majeure.
10:19:56 AM
CO-CHAIR SPOHNHOLZ asked whether force majeure is international
law as well as U.S. law.
CAPTAIN WHITE confirmed that force majeure is international law.
He said it protects U.S. vessels like other vessels that operate
here; for example, a U.S. boat that needs to pull into a foreign
country for an emergency reason. It is for safety of life and
protection of the environment, he stated, and it is extreme
circumstances.
10:20:41 AM
CLAYTON W.A. CHRISTY, Captain, President, provided invited
testimony during the hearing on HB 407. He stated that Alaska
Marine Pilots is a small group comprised of 10 captains mandated
by the State of Alaska to provide pilotage services to vessels
plying the coastal waters of Region III, Western Alaska, to
assure the protection of shipping, human life and property, and
the marine environment. He noted that Region III encompasses
all state waters west of 156 degrees west longitude, which
includes the Alaska Peninsula, the Aleutian Islands, the west
coast of Alaska including the islands of the Bering Sea, and
along the northern coast to the Canadian border. He said Alaska
Marine Pilots provides firsthand the pilotage services to
foreign flagged vessels that are calling in Alaskan waters.
Over the years, he related, Alaska Marine Pilots has seen
Russian flagged oil tankers, Russian flagged research ships
calling into the Port of Nome and Port of Dutch Harbor, and
Russian flagged icebreakers calling into Dutch Harbor and
various other ports during the years when Shell was doing its
exploration in the Chukchi Sea.
10:22:23 AM
REPRESENTATIVE NELSON asked whether enactment of HB 407 would
cause any concerns or dangers to utilizing Russian flagged
icebreakers that are vital on the north side of Alaska.
CAPT. CHRISTY replied that, to his knowledge, this would not be
harmed by the bill.
10:23:15 AM
MR. ANDERSON recalled that about four or five years ago a
Russian icebreaker provided a fuel delivery to Nome when the
city had run out fuel. He stated that HB 407 does not currently
contain any provision for emergencies and that that change would
be welcomed.
REPRESENTATIVE NELSON said that is the incident he was referring
to, and he would look at that change until U.S. icebreakers are
put online.
[HB 407 was held over.]
10:25:24 AM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
10:25 a.m.