Legislature(2021 - 2022)SENATE FINANCE 532

01/31/2022 01:00 PM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 41 SHELLFISH PROJECTS; HATCHERIES; FEES TELECONFERENCED
Moved SCS CSHB 41(FIN) Out of Committee
+ HB 85 FINANCIAL INSTITUTIONS; LIABILITY TELECONFERENCED
Heard & Held
-- Invited Testimony --
-- Public Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                     January 31, 2022                                                                                           
                         1:16 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:16:51 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Bishop called the  Senate Finance Committee meeting                                                                    
to order at 1:16 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Donny Olson                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Natasha von Imhof                                                                                                       
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Dan  Ortiz,   Sponsor;  Representative  Bart                                                                    
LeBon,  Sponsor; Joseph  Byrnes, Staff,  Representative Bart                                                                    
LeBon.                                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Sam Rabung, Director of  Commercial Fisheries, Department of                                                                    
Fish and  Game, Juneau;  Robert Schmidt,  Director, Division                                                                    
of  Banking  and   Securities,  Anchorage;  Tiffany  Larson,                                                                    
Director  for Division  of  Spill  Prevention and  Response,                                                                    
Department of  Environmental Conservation,   Fairbanks; Sara                                                                    
Chambers, Director,  Division of Corporations,  Business and                                                                    
Professional  Licensing, Department  of Commerce,  Community                                                                    
and  Economic  Development;  Joe Schierhorn,  President  and                                                                    
CEO,  Northrim  Bank,  Juneau; David  Durham,  Mt.  McKinley                                                                    
Bank, Alaska Bankers Association, Fairbanks.                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSHB 41(FIN)                                                                                                                    
     SHELLFISH PROJECTS; HATCHERIES; FEES                                                                                       
                                                                                                                                
          SCS  CSHB 41(FIN)  was REPORTED  out of  committee                                                                    
          with two "do pass"  recommendations, and three "no                                                                    
          recommendation"  recommendations  and with  a  new                                                                    
          zero fiscal note from  the Department of Commerce,                                                                    
          Community  and  Economic   Development,  new  zero                                                                    
          fiscal note from Department of  Fish and Game, new                                                                    
          indeterminate fiscal note  from Department of Fish                                                                    
          and Game,  new indeterminate fiscal note  from the                                                                    
          Office  of  the  Governor, and  new  indeterminate                                                                    
          fiscal note from the Department of Revenue.                                                                           
                                                                                                                                
CSHB 85(FIN)                                                                                                                    
     FINANCIAL INSTITUTIONS; LIABILITY                                                                                          
                                                                                                                                
          CSHB 85(FIN)  was HEARD and HELD  in committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
CS FOR HOUSE BILL NO. 41(FIN)                                                                                                 
                                                                                                                                
     "An Act  relating to management  of enhanced  stocks of                                                                    
     shellfish; authorizing  certain nonprofit organizations                                                                    
     to engage  in shellfish enhancement  projects; relating                                                                    
     to  application fees  for salmon  hatchery permits  and                                                                    
     shellfish enhancement project  permits; relating to the                                                                    
     marketing  of  aquatic  farm  products  by  the  Alaska                                                                    
     Seafood  Marketing  Institute;  and  providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
1:18:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DAN ORTIZ,  SPONSOR, reintroduced  the bill.                                                                    
He stated  that the legislation was  a shellfish enhancement                                                                    
bill.  He remarked  that mariculture  was an  opportunity to                                                                    
expand  Alaskas  fishing  industry economy.  He stated  that                                                                    
certain things  must be  put in place  in order  to expedite                                                                    
the  mariculture  industry.  He   explained  that  the  bill                                                                    
allowed qualified  nonprofits to pursue  enhancements and/or                                                                    
restoration projects  involving shellfish  species including                                                                    
red and  blue king  crab; sea  cucumber; abalone;  and razor                                                                    
clams.  He  stated  that  the   bill  created  a  regulatory                                                                    
framework in  which the  Department of  Fish and  Game (DFG)                                                                    
could manage shellfish enhancement projects.                                                                                    
                                                                                                                                
1:20:51 PM                                                                                                                    
                                                                                                                                
Senator Olson  wondered whether there was  opposition to the                                                                    
bill.                                                                                                                           
                                                                                                                                
Representative   Ortiz   replied   that  there   were   some                                                                    
longstanding critics  over the years, and  stated that there                                                                    
were some  recent emails  from some folks  in the  state. He                                                                    
felt that the concerns had  been previously addressed in the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Senator  Olson  wondered   whether  there  were  subsistence                                                                    
groups opposed to the bill.                                                                                                     
                                                                                                                                
Representative Ortiz  replied that he  was not aware  of any                                                                    
subsistence groups opposed to the bill.                                                                                         
                                                                                                                                
Co-Chair Stedman  asked that DFG  present their  position on                                                                    
the bill.                                                                                                                       
                                                                                                                                
1:21:59 PM                                                                                                                    
                                                                                                                                
SAM RABUNG, DIRECTOR OF  COMMERCIAL FISHERIES, DEPARTMENT OF                                                                    
FISH AND  GAME, JUNEAU  (via teleconference), had  not heard                                                                    
from  the  governor  about  the position  on  the  bill.  He                                                                    
remarked  that the  governors   mariculture  task force  had                                                                    
identified the issue as one of its top five priorities.                                                                         
                                                                                                                                
Senator Wielechowski wondered whether  any DFG scientists or                                                                    
biologists were opposed to the legislation.                                                                                     
                                                                                                                                
Mr.  Rabung  replied  that  scientists  and  biologists  had                                                                    
opinions, and there were some  concerns about wild organisms                                                                    
to ensure that there were  safe measures. He felt that there                                                                    
were safeguards to address those concerns.                                                                                      
                                                                                                                                
Senator Wielechowski  asked for documentation in  writing of                                                                    
opposition from the scientists and biologists.                                                                                  
                                                                                                                                
Mr. Rabung  replied that there  was nothing in  writing, but                                                                    
there   were  continual   and  constant   conversations.  He                                                                    
stressed that  there were efforts  to take into  account all                                                                    
concerns, which  were built into the  permitting process. He                                                                    
stated that,  in the  long run,  more permits  were declined                                                                    
than were approved.                                                                                                             
                                                                                                                                
1:25:48 PM                                                                                                                    
                                                                                                                                
Senator Wielechowski  wondered whether the  department could                                                                    
make the scientists available to the legislature.                                                                               
                                                                                                                                
Mr.  Rabung  stated that  he  did  not have  concerns  about                                                                    
commercial fishing staff available for questions.                                                                               
                                                                                                                                
Senator Olson  wondered whether  the discussion  was ongoing                                                                    
discussions or outright opposition.                                                                                             
                                                                                                                                
Mr. Rabung  replied that it  was an ongoing  discussion, and                                                                    
the discussions would continue about permitting.                                                                                
                                                                                                                                
Senator Wielechowski queried  the definition of  traditional                                                                    
fisheries.                                                                                                                      
                                                                                                                                
Mr.  Rabung  replied  that  the  enhancement  projects  were                                                                    
intended to benefit existing  common property fisheries. The                                                                    
intention was for  them to be harvested  in already existing                                                                    
fisheries.                                                                                                                      
                                                                                                                                
Senator  Wielechowski  queried  the definition  of   already                                                                    
existing fisheries.                                                                                                             
                                                                                                                                
Mr. Rabung replied that enhancement  projects would have the                                                                    
resultant organisms from an existing fishery.                                                                                   
                                                                                                                                
1:29:40 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:30:23 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
1:30:33 PM                                                                                                                    
                                                                                                                                
Senator Wielechowski wondered whether  there was funding for                                                                    
the bill.                                                                                                                       
                                                                                                                                
Co-Chair Bishop replied that he  would cover the fiscal note                                                                    
later in the meeting, but  stated that each fiscal note were                                                                    
zero.                                                                                                                           
                                                                                                                                
Senator   Wielechowski  wondered   how  the   administration                                                                    
intended to fund the bill with zero fiscal notes.                                                                               
                                                                                                                                
Co-Chair  Bishop stated  that  the back  up  related to  the                                                                    
fiscal notes would answer the question.                                                                                         
                                                                                                                                
1:31:19 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:31:26 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
1:31:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Bishop highlighted the fiscal notes.                                                                                   
                                                                                                                                
Senator  Wilson  remarked  that   the  difference  with  the                                                                    
committee  substitutes was  the  removal of  purview of  the                                                                    
Alaska Seafood Marketing Institute (ASMI).                                                                                      
                                                                                                                                
Co-Chair Bishop  wondered whether  Senator Wilson  wanted to                                                                    
address the remaining fiscal notes.                                                                                             
                                                                                                                                
Senator Wilson  replied that he  would not, but  merely want                                                                    
to point to  the change that was not included  in the backup                                                                    
for the fiscal notes.                                                                                                           
                                                                                                                                
1:33:11 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:33:35 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
1:34:05 PM                                                                                                                    
                                                                                                                                
Co-Chair Bishop continued to address the fiscal notes.                                                                          
                                                                                                                                
Senator  Wilson  MOVED  to  REPORT  SCS  CSHB  41(FIN)  from                                                                    
committee  with  individual   recommendations  and  attached                                                                    
fiscal notes. There being NO OBJECTION, it was so ordered.                                                                      
                                                                                                                                
SCS CSHB 41(FIN) was REPORTED  out of committee with two "do                                                                    
pass"   recommendations,  and   three  "no   recommendation"                                                                    
recommendations and  with a  new zero  fiscal note  from the                                                                    
Department of Commerce,  Community and Economic Development,                                                                    
new zero fiscal  note from Department of Fish  and Game, new                                                                    
indeterminate fiscal note from  Department of Fish and Game,                                                                    
new  indeterminate  fiscal  note  from  the  Office  of  the                                                                    
Governor,  and  new  indeterminate   fiscal  note  from  the                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
CS FOR HOUSE BILL NO. 85(LandC)                                                                                               
                                                                                                                                
     "An Act  relating to the Alaska  Banking Code; relating                                                                    
     to mutual  savings banks; relating to  interstate state                                                                    
     banks   and  international   banks;  relating   to  the                                                                    
     pledging  of  bank  assets as  collateral  security  to                                                                    
     tribal organizations; relating to  the pledging of bank                                                                    
     assets for interest swap  agreements; relating to state                                                                    
     business licenses;  relating to persons who  make loans                                                                    
     secured   by  interests   in  vessels   or  facilities;                                                                    
     relating  to liability  for the  release or  threatened                                                                    
     release of hazardous substances;  relating to the Model                                                                    
     Foreign Bank  Loan Act; and providing  for an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
1:39:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BART LEBON,  SPONSOR,  introduced the  bill.                                                                    
changes  and  to  bring  regulatory  parity  between  state-                                                                    
chartered and national banks. He  stated that HB 85 provides                                                                    
Alaska's state banking regulator  tools to level the playing                                                                    
field  and  promote  healthy  competition  among  state  and                                                                    
national banks. Over the course  of the pandemic, the Alaska                                                                    
economy has been tested like  never before and has more than                                                                    
proven its  resilience. That is  thanks in no small  part to                                                                    
our  diverse  financial  system:   a  network  of  financial                                                                    
institutions  of all  sizes,  charters  and business  models                                                                    
that are  dedicated to providing  the products  and services                                                                    
that consumers and businesses need  to thrive. The diversity                                                                    
of  our  financial  system is  something  that  is  uniquely                                                                    
American. It  is important that we  preserve that diversity                                                                     
but we must  do so in a manner that  ensures a level playing                                                                    
field between providers of financial  services. Banks play a                                                                    
critical  role in  the Alaska  and United  States economies,                                                                    
channeling  funds  from  savers  to  borrowers  and  thereby                                                                    
facilitating  economic  activity.  The   U.S.  has  what  is                                                                    
referred to as  a "dual banking system," in  which banks can                                                                    
choose  to  apply  for  a   charter  from  a  state  banking                                                                    
authority  or  a federal  charter  from  the Office  of  the                                                                    
Comptroller  of  the Currency  (OCC),  a  bureau within  the                                                                    
Department of  the Treasury. A  bank's choice  of chartering                                                                    
authority  is  also a  choice  of  primary regulator;  state                                                                    
regulatory  agencies  serve  as the  primary  regulators  of                                                                    
state-chartered  banks, and  the OCC  serves as  the primary                                                                    
regulator of national banks. Over  time, due to increasingly                                                                    
broad powers  granted to  national banks  by the  OCC, state                                                                    
banks have experienced difficulty in remaining competitive                                                                      
with national banks.                                                                                                            
                                                                                                                                
1:42:23 PM                                                                                                                    
                                                                                                                                
JOSEPH BYRNES, STAFF, REPRESENTATIVE BART LEBON, discussed                                                                      
the Sectional Analysis:                                                                                                         
                                                                                                                                
     Sec. 1. AS 06.05.005(a)                                                                                                    
     Conforming language  to changes  made under  Section 10                                                                    
     to provide  Alaska chartered  banks parity  with credit                                                                    
     unions when establishing a bank branch.                                                                                    
                                                                                                                                
     Sec. 2. AS 06.05.005                                                                                                       
     Prohibits  the  Department  from placing  a  regulatory                                                                    
     limitation on  a credit card  that a state  bank issues                                                                    
     to an officer of a  state bank, the statutory authority                                                                    
     for which  is amended in  Section 5 and  the regulation                                                                    
     (3 AAC 02.121) annulled in Section 24.                                                                                     
     Prohibits  the  Department  from  adopting  regulations                                                                    
     relating to the setting of  time limits on the disposal                                                                    
     of real and personal  property, the statutory authority                                                                    
     for which  is amended in  Section 6 and  the regulation                                                                    
     (3 AAC 02.135) annulled in Section 24.                                                                                     
                                                                                                                                
     Sec. 3. AS 06.05.050                                                                                                       
     Publication  of   reports:  Directs  a  bank   to  post                                                                    
     statutorily required reports on  the bank's website and                                                                    
     makes it optional  to post those reports  in the bank's                                                                    
     physical lobby.                                                                                                            
                                                                                                                                
     This  change   recognizes  that  information   is  more                                                                    
     commonly  available on  the Internet  and provides  the                                                                    
     option  for publication  of  reports  online to  better                                                                    
     meet customer expectations. National  banks do not have                                                                    
     a similar  requirement to  post notices  of publication                                                                    
     of  financial and  other information  that state  banks                                                                    
     are required to report. In  2019, the FDIC repealed the                                                                    
     "lobby  notice"   rule,  which  had   required  posting                                                                    
     notices in  bank lobbies. 84  Fed. Reg. 9698  (Mar. 18,                                                                    
     2019)  (repealing 12  C.F.R. Part  350).  In the  final                                                                    
     rule, the FDIC noted  that reports are widely available                                                                    
     through bank websites.                                                                                                     
                                                                                                                                
     Sec. 4. AS 06.05.166(c)                                                                                                    
     Defines the  timeframe   not  later than 15 days    for                                                                    
     which  a  bank  must  notify the  Department  after  an                                                                    
     emergency  non-opening or  closing  of  the bank.  This                                                                    
     change  provides   additional  clarity   for  reporting                                                                    
     requirements.                                                                                                              
                                                                                                                                
     Sec. 5. AS 06.05.210(a)                                                                                                    
     Increases the  amount a  director or  executive officer                                                                    
     of a state  bank may borrow to $500,000  (from $100K or                                                                    
     $250K  for a  primary  residence).  This change  aligns                                                                    
     with  the  regulatory  limit established  for  national                                                                    
     banks,  which  is  $500,000. 12  C.F.R.  ?  215.4(b)(2)                                                                    
     ("Regulation O").                                                                                                          
                                                                                                                                
     Sec. 6. AS 06.05.245                                                                                                       
     Disposition of property not needed  in the conduct of a                                                                    
     banking  business: Removes  the Department's  authority                                                                    
     to  set  a time  limit  on  the  disposal of  real  and                                                                    
     personal  property.  Instead,  the carrying  value  and                                                                    
     right-down  will  be  dictated  by  Generally  Accepted                                                                    
     Accounting   Principles  (GAAP).   Federal  regulations                                                                    
     allow national  banks to dispose  of other  real estate                                                                    
     owned according to GAAP. 12 C.F.R. ? 34.83(a).                                                                             
                                                                                                                                
     Sec. 7. AS 06.05.260                                                                                                       
     Allows  a   state  bank  to   pledge  bank   assets  as                                                                    
     collateral  security  to   secure  funds  deposited  by                                                                    
     consortiums of federally recognized  tribes in the same                                                                    
     way as  national banks, which are  authorized to pledge                                                                    
     bank  assets as  collateral  security  to secure  funds                                                                    
     deposited  by federally  recognized  Indian tribes.  12                                                                    
     U.S.C. ? 90.                                                                                                               
                                                                                                                                
     Sec. 8. AS 06.05.260                                                                                                       
     Adds  a  new  subsection  to replace  the  Division  of                                                                    
     Banking's  Parity  Orders   12-B  (3-6)  regarding  the                                                                    
     pledging of  assets for  interest rate  swaps. National                                                                    
     banks are  regulated by Section  610 of  the Dodd-Frank                                                                    
     Wall  Street Reform  and Consumer  Protection Act,  and                                                                    
     implementing  regulations at  12 C.F.R.  Part 32.  This                                                                    
     change achieves  parity by  authorizing state  banks to                                                                    
     pledge assets for interest rate  swaps according to the                                                                    
     same regulations as national banks.                                                                                        
                                                                                                                                
          Adds a new subsection to define:                                                                                      
          ? "federally recognized tribe" as an Indian tribe                                                                     
          under the Federally Recognized Indian Tribe List                                                                      
          Act of 1994; and                                                                                                      
          ? "interest rate swap agreement" as a stream of                                                                       
          future interest payments that are exchanged for                                                                       
          another stream of future interest payments.                                                                           
                                                                                                                                
     Sec. 9. AS 06.05.355(a)                                                                                                    
     Requires all banks to become a  member of the FDIC as a                                                                    
     condition  for receiving  a  Certificate of  Authority;                                                                    
     Intended to maintain trust and  level the playing field                                                                    
     for the  banking industry. All  national banks  must be                                                                    
     members of the FDIC. 12 C.F.R. ? 5.20.                                                                                     
                                                                                                                                
     Sec. 10. AS 06.05.399                                                                                                      
     Changes  of  location;  branch banks.  Provides  Alaska                                                                    
     chartered   banks  parity   with  credit   unions  when                                                                    
     establishing  a   bank  branch.  Banks   are  currently                                                                    
     subject   to    stricter   bank    branch   application                                                                    
     requirements  under 3  AAC 02.215.  The Division  would                                                                    
     establish  in   regulations  similar   requirements  of                                                                    
     credit unions as  in 3 AAC 03.260. [Same  as section 19                                                                    
     for Mutual Banks]                                                                                                          
                                                                                                                                
     Sec. 11. AS 06.05.438(a)                                                                                                   
     Reduces  the number  of required  meetings of  a bank's                                                                    
     board  from 10  to 4  per  calendar year.  There is  no                                                                    
     required number  of board meetings for  national banks.                                                                    
     12 C.F.R. ? 5.20. Sec. 12. AS 06.05.555(a)                                                                                 
     Conforming language  to changes  made under  Section 10                                                                    
     to provide  Alaska chartered  banks parity  with credit                                                                    
     unions when establishing a bank branch.                                                                                    
                                                                                                                                
1:48:33 PM                                                                                                                    
                                                                                                                                
Mr. Burns continued with the Sectional Analysis:                                                                                
                                                                                                                                
     Sec. 13. AS 06.05.990(4)                                                                                                   
     Removes  "remote service  unit"  (ATM,  etc.) from  the                                                                    
     definition  of   "branch  bank"  and   defines  "remote                                                                    
     service unit" directly under this section.                                                                                 
                                                                                                                                
     Sec. 14. AS 06.15.180                                                                                                      
     Allowing  mutual   banks  to  have   similar  borrowing                                                                    
     options as state banks. AS  06.05.205 establishes a 15-                                                                    
     percent limit on state banks.                                                                                              
                                                                                                                                
     Sec. 15. AS 06.15.190                                                                                                      
     Expands the deposits that mutual  banks can accept. The                                                                    
     federal   Depository   Institutions  Deregulation   and                                                                    
     Monetary  Control Act  of 1980  expanded the  authority                                                                    
     for  national mutual  banks  to  accept deposits.  This                                                                    
     change  authorizes state  mutual  banks  to accept  the                                                                    
     same deposits as national mutual banks.                                                                                    
                                                                                                                                
     Sec. 16. AS 06.15.220                                                                                                      
     Allows trustees to delegate  their authority to approve                                                                    
     interest on deposits.                                                                                                      
                                                                                                                                
     Sec. 17. AS 06.15.240                                                                                                      
     Provides   mutual  banks   with  the   same  investment                                                                    
     opportunities as  state banks under AS  06.05.270. This                                                                    
     change adopts  nearly identical language:  "In addition                                                                    
     to loans and acquisitions  expressly authorized by this                                                                    
     chapter,  a state  bank may  deal  in, underwrite,  and                                                                    
     invest in for its own  account the obligations that the                                                                    
     department by  regulation authorizes  the bank  to deal                                                                    
     in, underwrite, or  invest in for its  own account." AS                                                                    
     06.05.270(a).                                                                                                              
                                                                                                                                
     Sec. 18. AS 06.15.250                                                                                                      
     Provides   mutual   banks   with   the   same   lending                                                                    
     opportunities as  state banks. This change  removes the                                                                    
     mortgage  lending limit  that applies  to mutual  banks                                                                    
     and  authorizes   mutual  banks  to  invest   in  first                                                                    
     mortgages subject  to the same lending  limits as state                                                                    
     banks in AS 06.05.205-.206.                                                                                                
                                                                                                                                
     Sec. 19. AS 06.15.290                                                                                                      
     Changes  of  location;  branch banks.  Provides  mutual                                                                    
     banks parity  with state banks  and credit  unions when                                                                    
     establishing a bank branch.  Alaska chartered banks are                                                                    
     currently subject  to stricter bank  branch application                                                                    
     requirements  under 3  AAC 02.215.  The Division  would                                                                    
     establish  in   regulations  similar   requirements  of                                                                    
     credit unions as  in 3 AAC 03.260. [Same  as section 10                                                                    
     for state banks]                                                                                                           
                                                                                                                                
     Sec. 20. AS 43.70.105(a)                                                                                                   
     Exempts  depository  institutions   (banks  and  credit                                                                    
     unions)  from   the  requirement  to   obtain  business                                                                    
     licenses  for  all  headquarter and  branch  locations.                                                                    
     Currently,   state-chartered  institutions   receive  a                                                                    
     Certificate  of  Authority   through  the  Division  of                                                                    
     Banking   and   Securities.  Until   each   institution                                                                    
     receives  this  certificate,   they  may  not  transact                                                                    
     business.   This  change   would  eliminate   duplicate                                                                    
     licensing, thus reducing regulatory burden.                                                                                
                                                                                                                                
     Sec. 21. AS 46.03.822(a)                                                                                                   
     Adds reference to the new language in section 22.                                                                          
                                                                                                                                
     Sec. 22. AS 46.03.822                                                                                                      
     Conforms state law  to the Comprehensive, Environmental                                                                    
     Response,  Compensation,  and  Liability  Act  (CERCLA)                                                                    
     standard for  lender liability. CERCLA  Section 101(20)                                                                    
     contains a  secured creditor exemption  that eliminates                                                                    
     owner  or  operator  liability  for  lenders  who  hold                                                                    
     ownership  in a  CERCLA facility  primarily to  protect                                                                    
     their  security  interest  in that  facility,  provided                                                                    
     they  do  not "participate  in  the  management of  the                                                                    
     facility." Generally,  participation in  the management                                                                    
     applies  if a  bank  exercises decision-making  control                                                                    
     over   a   property's  environmental   compliance,   or                                                                    
     exercises control  at a level  similar to a  manager of                                                                    
     the facility  or property. Participation  in management                                                                    
     does not  include actions  such as  conducting property                                                                    
     inspections,  requiring a  response  action to  address                                                                    
     contamination,    providing   financial    advice,   or                                                                    
     renegotiating  or   restructuring  the  terms   of  the                                                                    
     security interest. The  secured creditor exemption also                                                                    
     provides  that  foreclosure  on  a  property  does  not                                                                    
     result  in  liability for  a  bank,  provided the  bank                                                                    
     takes  "reasonable  steps"  to  divest  itself  of  the                                                                    
     property  "at  the earliest  practicable,  commercially                                                                    
     reasonable  time,  on commercially  reasonable  terms."                                                                    
     Generally, a bank can  maintain business activities and                                                                    
     close  down operations  at a  property as  long as  the                                                                    
     property  is   listed  for   sale  shortly   after  the                                                                    
     foreclosure  date  or   at  the  earliest  practicable,                                                                    
     commercially reasonable time.                                                                                              
                                                                                                                                
     Sec. 23. Repealed Sections                                                                                                 
          ? Repeals AS 06.05.265  Liability of directors for                                                                    
         certain loans. Overbroad and unnecessary.                                                                              
          ?  Repeals  AS  06.10.010-050 Model  Foreign  Bank                                                                    
          Loan Act. The Act  exempts out-of-state banks from                                                                    
          Alaska  taxation for  certain  business types  and                                                                    
          became  obsolete   in  1984   due  to   other  tax                                                                    
          measures.    The    Act    is    an    unnecessary                                                                    
          administrative burden.                                                                                                
          ?  Repeals  AS  06.15.150,  160  and  170  Surplus                                                                    
          requirements,    additions,    and    limitations.                                                                    
          Repealing these statutes  would provide parity and                                                                    
          allow  a   mutual  savings   bank  to   follow  AS                                                                    
          06.05.305 for  capital requirements.  AS 06.05.305                                                                    
          establishes  surplus requirements,  additions, and                                                                    
          limitations for state banks.                                                                                          
          ?  Repeals AS  06.15.230  Withdrawal of  Deposits:                                                                    
          Language no longer  relevant after deregulation of                                                                    
          Thrifts and Savings and Loans.                                                                                        
          Sec. 24. Annulled Regulations                                                                                         
          ? Annuls  3 AAC 02.121 Credit  cards for officers:                                                                    
          Removes  the regulation  limiting uncollateralized                                                                    
          credit card balances up to  $10,000 for an officer                                                                    
          of a state bank. See Sections 2 and 5.                                                                                
          ? Annuls 3 AAC 02.135  Disposition of property not                                                                    
          needed  for banking  business. The  carrying value                                                                    
          and  write-down   of  property  will   instead  be                                                                    
          dictated   by    Generally   Accepted   Accounting                                                                    
         Principles (GAAP). See Sections 2 and 6.                                                                               
                                                                                                                                
     Sec. 25. Applicability                                                                                                     
     Uncodified law  for sections  3, 4, 6,  9, 10,  12, 16,                                                                    
     18, and 19.                                                                                                                
                                                                                                                                
     Cites   definition   locations   for   "branch   bank",                                                                    
     "department",  "international bank",  "interstate state                                                                    
     bank", "mutual bank" and "state bank".                                                                                     
                                                                                                                                
     Sec. 26. Transition                                                                                                        
     Provides a  transition period  relating to  sections 1,                                                                    
     10,  12,  and  19;  provides  the  Department  time  to                                                                    
     promulgate  regulations for  changes of  bank locations                                                                    
     and establishing branch banks.                                                                                             
                                                                                                                                
     Sec. 27. Delayed Effective Date                                                                                            
     Sets a  delayed effective date  of January 1,  2023 for                                                                    
     sections 1,  10, 12, and  19 to provide  the Department                                                                    
     time  to promulgate  regulations  for  changes of  bank                                                                    
     locations and establishing branch banks.                                                                                   
                                                                                                                                
     Sec. 28. Immediate Effective Date                                                                                          
     Sets  an  immediate  effective date  for  all  sections                                                                    
     except  for sections  1, 10,  12, and  19, relating  to                                                                    
     changes  of  bank  locations  and  establishing  branch                                                                    
     banks.                                                                                                                     
                                                                                                                                
1:55:30 PM                                                                                                                    
                                                                                                                                
Senator Wilson  asked for more  information about  Section 7                                                                    
and Section  8. He  surmised that Section  7 allowed  for an                                                                    
exemption  for federal  recognized tribes,  and queried  the                                                                    
current process.                                                                                                                
                                                                                                                                
Representative   LeBon  stated   that   Northrim  Bank   was                                                                    
available  for  explanation.  He   shared  that  banks  were                                                                    
required  by certain  depositors  to  secure their  deposits                                                                    
with assets of the bank.                                                                                                        
                                                                                                                                
Senator  Wilson  asked  for  an  example  of  an  occurrence                                                                    
related to Section o8 of the bill.                                                                                              
                                                                                                                                
Representative  LeBon  shared  that  the  state  banks  were                                                                    
looking for equality and parody with the federal banks.                                                                         
                                                                                                                                
1:59:51 PM                                                                                                                    
                                                                                                                                
ROBERT   SCHMIDT,   DIRECTOR,   DIVISION  OF   BANKING   AND                                                                    
SECURITIES, ANCHORAGE  (via teleconference),  announced that                                                                    
interest  rate   swaps  would  allow  for   state  chartered                                                                    
depository  financial   institutions  to  do  the   same  as                                                                    
federally chartered financial institutions.                                                                                     
                                                                                                                                
Senator Wielechowski wondered  whether state-chartered banks                                                                    
would  treat the  interest rate  swaps differently  than the                                                                    
national banks.                                                                                                                 
                                                                                                                                
Representative  LeBon  replied  that national  banking  laws                                                                    
changed  over time,  while the  state banking  laws remained                                                                    
the same without proposed legislation.                                                                                          
                                                                                                                                
Senator  Olson  wondered   whether  the  federal  recognized                                                                    
tribes had offered an opinion on the legislation.                                                                               
                                                                                                                                
Representative LeBon had not heard of any opposition.                                                                           
                                                                                                                                
Senator Wielechowski  looked at  Section 14,  and understood                                                                    
that   the   current   aggregate   amount   of   outstanding                                                                    
liabilities  may not  exceed  5 percent,  but  there was  an                                                                    
increase to 15 percent. He  queried the rationale behind the                                                                    
change.                                                                                                                         
                                                                                                                                
Mr. Schmidt replied that Section  14 was merely matching the                                                                    
state banks with the federal banks.                                                                                             
                                                                                                                                
Senator Wielechowski  looked at  Section 4, and  queried the                                                                    
concerns on the provision.                                                                                                      
                                                                                                                                
Mr. Schmidt stated  that the provision made  a more concrete                                                                    
line, and stated that 15  days was easier to understand than                                                                    
 as  soon  as  possible.   He  stated  that  there  were  no                                                                    
concerns with the change.                                                                                                       
                                                                                                                                
Senator  Wielechowski looked  at  page 10,  and noticed  the                                                                    
phrase,  a  person who  holds or held  interest in  a vessel                                                                    
facility to  secure a loan.   He surmised that there  was an                                                                    
exemption  for a  person, and  queried the  definition of  a                                                                    
person.  He  thought the  bill  was  limited to  banks,  but                                                                    
wondered if there was a broader inclusion.                                                                                      
                                                                                                                                
Mr.  Schmidt   replied  that  it  could   include  corporate                                                                    
entities and  any person,  bank, or  credit union  that help                                                                    
property as collateral for a loan.                                                                                              
                                                                                                                                
Senator Wielechowski  asked for Department  of Environmental                                                                    
Conservation (DEC) to be available for comment.                                                                                 
                                                                                                                                
2:07:19 PM                                                                                                                    
                                                                                                                                
TIFFANY LARSON,  DIRECTOR FOR  DIVISION OF  SPILL PREVENTION                                                                    
AND  RESPONSE,  DEPARTMENT  OF  ENVIRONMENTAL  CONSERVATION,                                                                    
FAIRBANKS  (via teleconference),  stated that  the inclusion                                                                    
of language  matched the federal level  language for broader                                                                    
inclusivity.                                                                                                                    
                                                                                                                                
2:08:01 PM                                                                                                                    
                                                                                                                                
Senator  Wielechowski  was  concerned about  "laundering  of                                                                    
liability."  He  wondered  whether DEC  had  concerns  about                                                                    
liability.                                                                                                                      
                                                                                                                                
Ms. Larson replied section 22(o)  act as a lender, foreclose                                                                    
on  the  property and  then  act  fast to  avoid  liability.                                                                    
Liability  remains  on  the  property  whether  or  not  the                                                                    
property was foreclosed on. The  language allows a contender                                                                    
to find help addressing the contamination.                                                                                      
                                                                                                                                
Senator Wielechowski offered a  hypothetical and asked where                                                                    
the legal obligation lay.                                                                                                       
                                                                                                                                
Ms.  Larson  said  that the  liability  extended  to  owner,                                                                    
operator, or contaminator. She believed  that the lender was                                                                    
exempt up until the point of contamination.                                                                                     
                                                                                                                                
Senator   Wilson   asked   about  PFAS   contamination   and                                                                    
regulations.                                                                                                                    
                                                                                                                                
Co-Chair Bishop  reframed the  question. He  queried whether                                                                    
if  the  bank   load  money  on  a   property  whether  PFAS                                                                    
contamination  would   stay  with  the  originator   of  the                                                                    
contamination and  the bank  would be  held harmless  on the                                                                    
loan.                                                                                                                           
                                                                                                                                
Representative  LeBon  replied  that the  responsible  party                                                                    
could be any  number of people. He offered  a personal story                                                                    
of contamination liability.                                                                                                     
                                                                                                                                
2:14:51 PM                                                                                                                    
                                                                                                                                
Senator  Wilson  understood  there was  no  requirement  for                                                                    
disclosure of PFAS to a new owner.                                                                                              
                                                                                                                                
Ms. Larson said that the new owner would be responsible.                                                                        
                                                                                                                                
Senator  Wilson expressed  concern with  the absence  of the                                                                    
requirement to disclose contamination information.                                                                              
                                                                                                                                
Senator Wielechowski  felt that shell companies  could be an                                                                    
issue. He thought  that once a property  was contaminated by                                                                    
a shell corporation the corporation could escape liability.                                                                     
                                                                                                                                
Representative LeBon  said that  language could  be expanded                                                                    
to include protection for individuals.                                                                                          
                                                                                                                                
Senator Wielechowski asked about  Section 23 - liability for                                                                    
certain loans.                                                                                                                  
                                                                                                                                
Representative    LeBon    shared   that    directors    had                                                                    
responsibility for operation of their banks.                                                                                    
                                                                                                                                
2:19:41 PM                                                                                                                    
                                                                                                                                
Senator Wilson  spoke to Section  20 and wondered  about the                                                                    
number of locations and reduction in state revenue.                                                                             
                                                                                                                                
SARA CHAMBERS, DIRECTOR,  DIVISION OF CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY  AND  ECONOMIC DEVELOPMENT  (via  teleconference),                                                                    
estimated that  approximately 50 business licenses  would be                                                                    
foregone with  the legislation. She  stated that  there were                                                                    
approximately five primary  corporations with many branches.                                                                    
She  stated that  the cost  of the  business license  was so                                                                    
minimal that the  annual loss of revenue to  the state would                                                                    
be less than $1500.                                                                                                             
                                                                                                                                
Co-Chair Bishop opened invited testimony.                                                                                       
                                                                                                                                
2:21:34 PM                                                                                                                    
                                                                                                                                
JOE  SCHIERHORN, PRESIDENT  AND CEO,  NORTHRIM BANK,  JUNEAU                                                                    
(via  teleconference), stated  that there  were three  state                                                                    
chartered   banks  and   all  three   banks  supported   the                                                                    
legislation.  He noted  that the  association had  worked on                                                                    
the development  of the legislation.  He felt that  the bill                                                                    
would  help  banks  to better  serve  Alaskans.  He  offered                                                                    
posthumous thanks  to a fellow  colleague. He also  spoke to                                                                    
pledging assets. He  said that the reason  for the provision                                                                    
was to  give institutions the  ability to pledge  assets for                                                                    
federally recognized tribes.                                                                                                    
                                                                                                                                
2:27:14 PM                                                                                                                    
                                                                                                                                
Mr.  Schierhorn  spoke  to Senator  Wielechowski's  question                                                                    
about Section 23 and the  repealing liability was covered in                                                                    
other areas.                                                                                                                    
                                                                                                                                
Senator Wielechowski  was curious about the  loans under the                                                                    
statute and what the nature of the violation would be.                                                                          
                                                                                                                                
Mr.  Schierhorn said  he could  get the  information to  the                                                                    
committee.                                                                                                                      
                                                                                                                                
2:29:54 PM                                                                                                                    
                                                                                                                                
DAVID   DURHAM,   MT.    MCKINLEY   BANK,   ALASKA   BANKERS                                                                    
ASSOCIATION,  FAIRBANKS (via  teleconference), testified  in                                                                    
support of  the bill. He  detailed the specifics of  how the                                                                    
bill would benefit the                                                                                                          
                                                                                                                                
Mr. Schmidt testified in support of the bill.                                                                                   
                                                                                                                                
Co-Chair Bishop OPENED and CLOSED public testimony.                                                                             
                                                                                                                                
CSHB 85(FIN) was HEARD and HELD in committee for further                                                                        
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
2:37:05 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:37 p.m.                                                                                          

Document Name Date/Time Subjects
HB 41 Public Testimony Hillstrand OPPOSE .pdf SFIN 1/31/2022 1:00:00 PM
HB 41
HB 41 Work Draft ver. G 5.13.2021.pdf SFIN 5/17/2021 9:00:00 AM
SFIN 1/31/2022 1:00:00 PM
HB 41
HB 41 Explanation of Changes ver I to G 5.13.2021.pdf SFIN 5/17/2021 9:00:00 AM
SFIN 1/31/2022 1:00:00 PM
HB 41
HB 41 Letters of Support as of 04.26.2021.pdf SFIN 5/14/2021 1:00:00 PM
SFIN 1/31/2022 1:00:00 PM
SRES 5/12/2021 3:30:00 PM
HB 41
HB 41 Legal Memo Thompson 042221.pdf HFIN 4/26/2021 1:30:00 PM
SFIN 1/31/2022 1:00:00 PM
HB 41
HB 85 Letters of Support 04.21.2021.pdf SFIN 1/31/2022 1:00:00 PM
HB 85
HB 85 Sectional Analysis ver. W 01.21.2022.pdf SFIN 1/31/2022 1:00:00 PM
HB 85
HB 85 Summary of Changes version B to version W 01.21.2022.pdf SFIN 1/31/2022 1:00:00 PM
HB 85
HB 85 Sponsor Statement 03.16.2021.pdf SFIN 1/31/2022 1:00:00 PM
HB 85
HB 41 Public Testimony Koeneman.pdf SFIN 1/31/2022 1:00:00 PM
HB 41
HB 85 Response to Questions in Senate Finance 02.16.2022_.pdf SFIN 1/31/2022 1:00:00 PM
HB 85