Legislature(2015 - 2016)BELTZ 105 (TSBldg)

02/18/2016 01:30 PM LABOR & COMMERCE

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-- Public Testimony --
Moved SB 18 Out of Committee
Heard & Held
Heard & Held
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 18, 2016                                                                                        
                           1:31 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Cathy Giessel, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Johnny Ellis                                                                                                            
Senator Kevin Meyer                                                                                                             
MEMBERS ABSENT                                                                                                                
Senator Mia Costello, Chair                                                                                                     
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 18                                                                                                              
"An Act exempting a health  care sharing ministry from regulation                                                               
as an insurer."                                                                                                                 
     - MOVED  SB 18 OUT OF COMMITTEE                                                                                            
SENATE BILL NO. 158                                                                                                             
"An Act  relating to  real estate  broker licensure;  relating to                                                               
the  real  estate  commission; and  providing  for  an  effective                                                               
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 141                                                                                                             
"An Act relating  to possession of an  electronic smoking device,                                                               
e-liquid  or  e-liquid  product, vapor  product,  or  alternative                                                               
tobacco  product  by  a  minor   and  to  selling  or  giving  an                                                               
electronic smoking  device, e-liquid  or e-liquid  product, vapor                                                               
product, or alternative tobacco product to a minor."                                                                            
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 108                                                                                                             
"An  Act  repealing and  reenacting  the  Alaska Securities  Act,                                                               
including   provisions   relating   to  exempt   securities   and                                                               
transactions; relating to registration  of securities, firms, and                                                               
agents  that  offer or  sell  securities  and investment  advice;                                                               
relating  to  administrative,  civil,  and  criminal  enforcement                                                               
provisions,  including   restitution  and  civil   penalties  for                                                               
violations; allowing  certain civil penalties  to be used  for an                                                               
investor  training fund;  establishing increased  civil penalties                                                               
for  harming  older  Alaskans;  retaining  provisions  concerning                                                               
corporations organized under the  Alaska Native Claims Settlement                                                               
Act; amending Rules  4, 5, 54, 65, and 90,  Alaska Rules of Civil                                                               
Procedure; and providing for an effective date."                                                                                
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 136                                                                                                             
"An  Act  requiring electronic  submission  of  a tax  return  or                                                               
report  with  the  Department  of   Revenue;  repealing  the  tax                                                               
reduction for  local levies for  the commercial  vessel passenger                                                               
excise tax;  amending the definition  of 'voyage';  and providing                                                               
for an effective date."                                                                                                         
     - REMOVED FROM AGENDA                                                                                                      
SENATE BILL NO. 134                                                                                                             
"An  Act  relating to  the  taxation  of income  of  individuals;                                                               
repealing  tax credits  applied  against the  tax on  individuals                                                               
under  the  Alaska Net  Income  Tax  Act;  and providing  for  an                                                               
effective date."                                                                                                                
     - REMOVED FROM AGENDA                                                                                                      
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 18                                                                                                                   
SHORT TITLE: HEALTH CARE SHARE MINISTRY NOT INSURANCE                                                                           
SPONSOR(s): SENATOR(s) COGHILL                                                                                                  
01/21/15       (S)       PREFILE RELEASED 1/16/15                                                                               
01/21/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/15       (S)       HSS, L&C                                                                                               
02/18/15       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
02/18/15       (S)       Heard & Held                                                                                           
02/18/15       (S)       MINUTE (HSS)                                                                                           
03/11/15       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
03/11/15       (S)       Moved SB 18 Out of Committee                                                                           
03/11/15       (S)       MINUTE (HSS)                                                                                           
03/13/15       (S)       HSS RPT 4DP 1NR                                                                                        
03/13/15       (S)       DP: STEDMAN, GIESSEL, KELLY, STOLTZE                                                                   
03/13/15       (S)       NR: ELLIS                                                                                              
04/02/15       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
04/02/15       (S)       Heard & Held                                                                                           
04/02/15       (S)       MINUTE (L&C)                                                                                           
02/18/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 158                                                                                                                  
SHORT TITLE: REAL ESTATE BROKER LICENSURE REQS                                                                                  
SPONSOR(s): LABOR & COMMERCE                                                                                                    
01/25/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/16       (S)       L&C                                                                                                    
02/04/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/04/16       (S)       Scheduled but Not Heard                                                                                
02/18/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 141                                                                                                                  
SHORT TITLE: E-CIGS: SALE TO AND POSSESSION BY MINOR                                                                            
SPONSOR(s): STEVENS                                                                                                             
01/19/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/16       (S)       L&C, JUD                                                                                               
02/04/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/04/16       (S)       Heard & Held                                                                                           
02/04/16       (S)       MINUTE (L&C)                                                                                           
02/18/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 108                                                                                                                  
SHORT TITLE: AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
04/13/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/13/15       (S)       L&C, JUD, FIN                                                                                          
02/09/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/09/16       (S)       Scheduled but Not Heard                                                                                
02/11/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/11/16       (S)       Heard & Held                                                                                           
02/11/16       (S)       MINUTE (L&C)                                                                                           
02/18/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
JORDAN SHILLING, Staff                                                                                                          
Senator John Coghill                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions related to SB 108 on                                                                  
behalf of the sponsor.                                                                                                          
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community and Economic Development                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions related to SB 108.                                                                    
WESTON EILER, Staff                                                                                                             
Senate Labor and Commerce Committee and Senator Mia Costello                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced SB 158.                                                                                       
JANEY HOVENDEN, Director                                                                                                        
Division of Corporations, Business, and Professional Licensing                                                                  
Department of Commerce, Community and Economic Development                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions related to SB 158.                                                                    
NANCY BLASHLEY DAVIS, Chair                                                                                                     
Real Estate Commission                                                                                                          
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of SB 158.                                                                          
ERROL CHAMPION, Chair                                                                                                           
Legislative Issues Committee                                                                                                    
Alaska Association of Realtors                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided supporting information for SB 158.                                                              
TIM LAMPKIN, Staff                                                                                                              
Senator Gary Stevens                                                                                                            
Alaska State Legislature                                                                                                        
POSITION STATEMENT:  Presented information related to SB 141 on                                                               
behalf of the sponsor.                                                                                                          
DR JAY BUTLER, Chief Medical Doctor                                                                                             
Department of Health and Social Services                                                                                        
Anchorage, Alaska,                                                                                                              
POSITION STATEMENT:  Answered questions related to SB 141.                                                                    
JOE DARNELL Manager                                                                                                             
Underage Tobacco Enforcement                                                                                                    
Department of Health and Social Services (DHSS)                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions related to SB 141.                                                                    
ANGELA CARROLL, Chapter Leader                                                                                                  
SmokeFree Alternative Trade Association                                                                                         
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Stated support for SB 141.                                                                               
EMILY NENON, Alaska Government Relations Director                                                                               
American Cancer Society/Cancer Action Network                                                                                   
Anchorage, Alaska,                                                                                                              
POSITION STATEMENT:  Testified in support of SB 141.                                                                          
KEVIN ANSELM, Director                                                                                                          
Division of Banking and Securities                                                                                              
Department  of  Commerce,   Community  and  Economic  Development                                                               
Anchorage, Alaska,                                                                                                              
POSITION STATEMENT:  Provided a sectional analysis of SB 108.                                                                 
ACTION NARRATIVE                                                                                                              
1:31:01 PM                                                                                                                  
VICE CHAIR  CATHY GIESSEL  called the  Senate Labor  and Commerce                                                             
Standing Committee meeting  to order at 1:31 p.m.  Present at the                                                               
call  to  order were  Senators  Ellis,  Stevens, and  Vice  Chair                                                               
Giessel. Senator Meyer arrived soon thereafter.                                                                                 
         SB 18-HEALTH CARE SHARE MINISTRY NOT INSURANCE                                                                     
1:31:45 PM                                                                                                                    
VICE  CHAIR GIESSEL  announced the  consideration of  SB 18.  She                                                               
noted that the  bill was first heard 4/2/15  and public testimony                                                               
was closed.                                                                                                                     
1:32:19 PM                                                                                                                    
JORDAN SHILLING, Staff, Senator  John Coghill, summarized that SB                                                               
18 defines health  care sharing ministries and  exempts them from                                                               
insurance statutes. They are currently  not regulated because the                                                               
Division of Insurance does not view them as insurance.                                                                          
VICE CHAIR GIESSEL questioned the need for the legislation.                                                                     
MR.  SHILLING  replied  it  is   to  prevent  the  regulation  of                                                               
something that is not regarded  as insurance. It is a faith-based                                                               
community of individuals who have  agreed to share medical costs.                                                               
He noted that  the Affordable Healthcare Act  provides a specific                                                               
exemption from  the individual mandate  for existing  health care                                                               
sharing ministries.                                                                                                             
1:33:52 PM                                                                                                                    
SENATOR STEVENS asked what services are provided.                                                                               
MR.  SHILLING said  the medical  costs they  would cover  are the                                                               
same that  insurance would normally  cover. He noted  the packets                                                               
contain  a summary  of  what constitutes  a  health care  sharing                                                               
VICE CHAIR GIESSEL welcomed Senator Meyer to the committee.                                                                     
She highlighted the distinguishing  characteristic is that health                                                               
care sharing ministries aren't actually  insurance so there is no                                                               
guarantee the medical costs will be covered.                                                                                    
MR. SHILLING agreed; the participants  know up-front that this is                                                               
not insurance and there is no guarantee of payment.                                                                             
VICE CHAIR GIESSEL added that there  is a pooling of resources to                                                               
share expenses as opposed to guaranteeing coverage.                                                                             
MR. SHILLING agreed.                                                                                                            
SENATOR  ELLIS asked  if there  is  any disclosure  or notice  to                                                               
participants that there is no guarantee of coverage.                                                                            
1:35:51 PM                                                                                                                    
MR.   SHILLING  explained   that   the  disclosure   is  on   the                                                               
SENATOR  ELLIS  asked  what the  decision-making  process  is  to                                                               
determine what services are covered.                                                                                            
MR. SHILLING  explained that when  a member needs health  care, a                                                               
letter  is sent  to all  the members  in the  pool outlining  the                                                               
specific  need  and  the  suggested  contribution.  Members  then                                                               
voluntarily  send in  their contribution.  He  didn't know  which                                                               
procedures are excluded under each health care sharing ministry.                                                                
VICE CHAIR GIESSEL asked Ms.  Wing-Heier if the division supports                                                               
the legislation.                                                                                                                
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community  and Economic Development  (DCCED), explained                                                               
that  health  care  sharing ministries  that  were  in  existence                                                               
before 1999  were a carve-out  of the Affordable Care  Act (ACA).                                                               
They must  be a 501(c)(3),  members must share common  ethical or                                                               
religious beliefs,  they cannot  discriminate based on  the state                                                               
or  resident's  employment,  and   a  member  cannot  lose  their                                                               
membership if they develop a  medical condition. The organization                                                               
is subject to an annual  audit by an independent certified public                                                               
accountant (CPA).  Last year, health care  sharing ministries had                                                               
a  nationwide   membership  of  about   375,000  and   this  year                                                               
membership has grown to about 550,000.                                                                                          
MS. WING-HEIER  said the only  potential concern, which  is based                                                               
on  social media,  is  that  people are  looking  to health  care                                                               
sharing ministries instead  of looking at the ACA.  If there were                                                               
complaints  or the  division thought  a  ministry was  soliciting                                                               
members outside  their religious  belief or ethics,  the attorney                                                               
general would  have the authority  to look at the  ministry under                                                               
trade practices provisions.                                                                                                     
1:39:53 PM                                                                                                                    
SENATOR STEVENS asked how many  of these ministries are in Alaska                                                               
and their names.                                                                                                                
MS. WING-HEIER  replied there  were just  under 4,000  members in                                                               
Alaska  last  year   and  the  main  ministries   in  Alaska  and                                                               
nationwide are Medi-Share and Samaritan Ministries.                                                                             
SENATOR MEYER asked where the bulk of the ministries are located                                                                
MS. WING-HEIER answered they're operating in all 50 states.                                                                     
1:41:56 PM                                                                                                                    
SENATOR STEVENS moved to report  SB 18, labeled 29-LS0107\H, from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
VICE CHAIR  GIESSEL announced  that without  objection, SB  18 is                                                               
reported from the Senate Labor and Commerce Standing Committee.                                                                 
1:42:23 PM                                                                                                                    
At ease                                                                                                                         
            SB 158-REAL ESTATE BROKER LICENSURE REQS                                                                        
1:44:07 PM                                                                                                                    
VICE CHAIR  GIESSEL announced  the consideration  of SB  158. She                                                               
noted that this is the first hearing.                                                                                           
WESTON  EILER, Staff,  Senate Labor  and  Commerce Committee  and                                                               
Senator  Mia Costello,  stated that  SB  158 was  brought to  the                                                               
committee by  the real estate  industry in Alaska.  He introduced                                                               
the legislation paraphrasing the following sponsor statement:                                                                   
     Senate  Bill 158  raises  the application  requirements                                                                    
     for a  real estate broker  license in Alaska.  The bill                                                                    
     requires  applicants seeking  to become  a real  estate                                                                    
     broker  to have  been  a real  estate  licensee for  48                                                                    
     month  rather than  24 months.  It  also increases  the                                                                    
     continuing education requirements  for a broker license                                                                    
     applicant from  15 hours to  30 hours. Senate  Bill 158                                                                    
     will improve  the standards  and training  necessary to                                                                    
     become  a broker  and provide  the  public with  better                                                                    
     protection when engaging in real estate transactions.                                                                      
     In Alaska, a  real estate licensee is tied  to a broker                                                                    
     and works  for the broker  or an associate broker  in a                                                                    
     branch   office.   The   broker  is   responsible   for                                                                    
     supervision of the real licensee  and even receives the                                                                    
     employee's   license  from   the  Alaska   Real  Estate                                                                    
     Commission  and returns  it to  the  commission if  the                                                                    
     relationship  with  the   broker  is  terminated.  Real                                                                    
     estate   brokers  are   responsible  for   real  estate                                                                    
     brokerage  trust accounts  that  include earnest  money                                                                    
     deposits,  security deposits,  collected rental  money,                                                                    
     and other money collected in  the trust until the funds                                                                    
     are  distributed  according  to  the terms  of  a  real                                                                    
     estate transaction.                                                                                                        
     These  are  major   responsibilities  that  affect  the                                                                    
     public  when involved  in  a  real estate  transaction.                                                                    
     Added  training and  experience will  help protect  the                                                                    
     public  as brokers  become better  prepared to  perform                                                                    
     the duties required of a broker.                                                                                           
     This  bill  is  supported  by the  Alaska  Real  Estate                                                                    
     Commission, Alaska's  licensing agency, and  the Alaska                                                                    
     Association of Realtors.                                                                                                   
MR.  EILER  noted the  letters  of  support  in the  packet,  and                                                               
referenced   a  spreadsheet   of   the   education  and   license                                                               
requirements  in  all  the  states.   It  shows  that  the  time,                                                               
education, and experience  required in Alaska is  much lower than                                                               
other states.  SB 158 will  bring Alaska into line  with national                                                               
standards, he said.                                                                                                             
SENATOR MEYER asked  if this is being done to  match other states                                                               
or to address a problem.                                                                                                        
MR.  EILER  replied  the  industry   requested  this  because  of                                                               
unfortunate consequences  when someone perhaps was  operating out                                                               
of their  depth. He added, "It  is more being brought  forward to                                                               
just  help  rectify  and  ensure   merit  and  qualification  for                                                               
SENATOR  STEVENS  asked  how  and   where  a  licensee  gets  the                                                               
additional education.                                                                                                           
MR.  EILER  offered  to  provide  a list  of  what  is  currently                                                               
available  and suggested  individuals in  the room  could provide                                                               
1:50:29 PM                                                                                                                    
SENATOR STEVENS said  he'd like to be sure this  isn't an onerous                                                               
VICE CHAIR GIESSEL  asked Ms. Hovenden what problem  SB 158 seeks                                                               
to fix.                                                                                                                         
1:51:15 PM                                                                                                                    
JANEY  HOVENDEN, Director,  Division  of Corporations,  Business,                                                               
and  Professional Licensing,  Department  of Commerce,  Community                                                               
and  Economic Development,  related that  this is  something that                                                               
the  industry has  been requesting  for some  time. Doubling  the                                                               
requirement  for  education  and  experience  will  provide  more                                                               
public safety measures that the industry says are needed.                                                                       
SENATOR  STEVENS  asked  how  and   where  a  licensee  gets  the                                                               
additional education and who pays for it.                                                                                       
MS. HOVENDEN replied  the licensees would be required  to pay for                                                               
the  additional   education.  She  offered  to   follow  up  with                                                               
information  about   how  and  where   the  education   would  be                                                               
SENATOR STEVENS asked if individuals  would be required to take a                                                               
test.  If  so,  who  audits  the  test  and  where  would  it  be                                                               
MS. HOVENDEN said she'd have to check on that.                                                                                  
1:53:23 PM                                                                                                                    
VICE CHAIR GIESSEL opened public testimony.                                                                                     
1:53:38 PM                                                                                                                    
NANCY  BLASHLEY  DAVIS,  Chair, Alaska  Real  Estate  Commission,                                                               
Sitka, Alaska, testified  in support of SB 158.  She related that                                                               
the commission  received testimony from 15-20  licensees that two                                                               
years experience  and 15 hours  of continuing education  does not                                                               
necessarily prepare  someone to become  an associate broker  or a                                                               
broker. A  broker does  things like  handling trust  accounts and                                                               
procedure manuals in addition to  monitoring the licensees. These                                                               
things aren't necessarily learned as a licensee.                                                                                
She confirmed that Alaska is near  the bottom of all 50 states in                                                               
the amount  of continuing  education it  requires, and  this will                                                               
bring  Alaska closer  to what  other states  are doing.  The bill                                                               
also increases  from two years  to four  years the time  before a                                                               
licensee  can  become  an  associate  broker  or  a  broker.  The                                                               
industry  feels  this will  provide  better  protections for  the                                                               
MS.  DAVIS told  the  committee that  the  classes are  available                                                               
online; they must be presented  to the Real Estate Commission and                                                               
the topics  approved. Individuals must  take and pass a  test and                                                               
fulfill  the continuing  education requirements  in order  to get                                                               
the broker or  associate broker license. She  explained that each                                                               
real estate  business is  owned by  one broker  and can  have any                                                               
number of  associate brokers and  licensees. She opined  that the                                                               
additional knowledge  and experience will  save time and  cost to                                                               
the commission because there will  be fewer cases to investigate.                                                               
She noted  the bill has no  fiscal impact and reported  that each                                                               
licensee  must   pay  for  their   classes.  She   discussed  the                                                               
availability  of  classes   highlighting  that  instructors  will                                                               
travel  to a  community if  there is  sufficient interest  in the                                                               
class.  Larger  communities  have  more  options  and  accredited                                                               
classes are also offered at real estate conventions.                                                                            
She  related  her personal  experience  that  she had  two  years                                                               
experience before  she opened her brokerage  and didn't initially                                                               
feel qualified  to handle  trust accounts.  She was  fortunate to                                                               
have a good mentor, but that's not always the case.                                                                             
2:00:05 PM                                                                                                                    
SENATOR  STEVENS  asked  for   assurance  that  these  additional                                                               
requirements don't become  onerous for someone living  in a rural                                                               
MS. DAVIS explained  that the university can proctor  the test in                                                               
Sitka so  travel isn't necessary.  She didn't know  about smaller                                                               
communities  farther   north  but  assumed  the   test  could  be                                                               
proctored at an education facility in the community.                                                                            
VICE CHAIR GIESSEL asked if anyone had spoken against the bill.                                                                 
MS. DAVIS answered she is unaware of any opposition.                                                                            
2:02:34 PM                                                                                                                    
ERROL  CHAMPION,  Chair,  Legislative  Issues  Committee,  Alaska                                                               
Association of  Realtors, Juneau,  Alaska, noted that  his letter                                                               
of support was  in the packets. Addressing  earlier questions, he                                                               
clarified that the bill does not  change the broker test; it just                                                               
changes the required hours of  continuing education from 15 hours                                                               
to 30 hours  and extends the time before a  licensee can apply to                                                               
take the  broker test from two  years to four years.  He provided                                                               
licensure  data as  of the  end of  January: 414  broker licenses                                                               
were  renewed, 361  associate broker  licenses were  renewed, and                                                               
there  were  1,630  licensees.  He  shared  his  experience  with                                                               
documents that weren't absolutely correct  but didn't rise to the                                                               
level where the  consumer filed a complaint with  the Real Estate                                                               
Commission. He  knows that  the number  of complaints  is growing                                                               
but that's  to be expected  when the average licensee  does fewer                                                               
than six transactions per year.  This doesn't provide much hands-                                                               
on experience,  particularly with the advent  of foreclosures and                                                               
short sales,  he said.  The broker  has much  more responsibility                                                               
and there should be more  training in accounting. The Real Estate                                                               
Commission agrees this legislation is needed.                                                                                   
2:06:52 PM                                                                                                                    
SENATOR  MEYER   asked  the  difference  between   a  broker,  an                                                               
associate broker, and a licensee.                                                                                               
MR.  CHAMPION  explained that  everyone  is  a licensee  and  any                                                               
licensee can  become an associate  broker or broker.  The statute                                                               
provides  that there  will  be  only one  broker  and one  broker                                                               
license in  an office, but there  can be any number  of associate                                                               
brokers. The training and experience requirements are the same.                                                                 
SENATOR MEYER asked if a broker can have listings.                                                                              
MR. CHAMPION confirmed  that a broker can  represent clients that                                                               
are either buying or selling.  He noted that the statute provides                                                               
that only the broker can handle the funds.                                                                                      
SENATOR MEYER  asked if  someone could build  homes and  be their                                                               
own broker.                                                                                                                     
MR. CHAMPION  clarified that a  contractor is able to  sell homes                                                               
he/she builds without a broker license.                                                                                         
SENATOR MEYER asked if this is all disclosed to the buyer.                                                                      
MR.  CHAMPION answered  yes; both  parties must  sign a  consumer                                                               
pamphlet that they know who a broker or licensee represents.                                                                    
SENATOR MEYER asked how the commission is divided.                                                                              
MR. CHAMPION  explained that  the listing  broker decides  how to                                                               
distribute the commission. It's negotiable  and is paid broker to                                                               
SENATOR STEVENS asked  if the broker assumes  legal and financial                                                               
responsibility for every transaction going through the office.                                                                  
MR. CHAMPION  answered yes; statute  provides that the  broker is                                                               
responsible  for the  contents  and integrity  of  every file  in                                                               
every transaction.                                                                                                              
2:13:08 PM                                                                                                                    
VICE CHAIR GIESSEL asked Director Hovenden  if she had a sense of                                                               
the number  of complaints filed  with the Real  Estate Commission                                                               
and the commission's liquidity.                                                                                                 
MS. HOVENDEN agreed to follow up  and send the numbers to Senator                                                               
Costello's  office.  Her recollection  is  that  the Real  Estate                                                               
Commission is in good standing.                                                                                                 
2:15:47 PM                                                                                                                    
SENATOR MEYER  asked Mr.  Eiler the reason  that the  term "must"                                                               
was  changed to  "shall" on  page 1,  line 5.  He commented  that                                                               
shall seems to be a weaker terms.                                                                                               
WESTON   EILER  deferred   the  question   until  he   talked  to                                                               
legislative legal.                                                                                                              
2:16:43 PM                                                                                                                    
VICE  CHAIR  GIESSEL  held  SB   158  in  committee  with  public                                                               
testimony open.                                                                                                                 
         SB 141-E-CIGS: SALE TO AND POSSESSION BY MINOR                                                                     
2:16:59 PM                                                                                                                    
VICE  CHAIR GIESSEL  announced the  consideration of  SB 141. She                                                               
noted this is the second hearing.                                                                                               
2:17:27 PM                                                                                                                    
SENATOR  GARY STEVENS,  Alaska State  Legislature, sponsor  of SB                                                               
141, stated that this is not a  tax bill or an attempt to control                                                               
adult use  of e-cigarettes. It  is a  bill that seeks  to control                                                               
the use of these devices by minors.                                                                                             
2:17:54 PM                                                                                                                    
TIM   LAMPKIN,  Staff,   Senator  Gary   Stevens,  Alaska   State                                                               
Legislature,  displayed  an  informational  slideshow  about  the                                                               
types and uses  of e-cigarettes as he summarized  that the intent                                                               
of SB  141 is to protect  youths. He informed the  committee that                                                               
smoking e-cigarettes  or vaping  is the  latest fad  among youths                                                               
and an entire  subculture exists around the  activity. He related                                                               
that e-cigarette use began in  1963, but didn't take root because                                                               
tobacco  smoking  was  more   fashionable.  However,  as  tobacco                                                               
consumption  has  declined,  e-cigarettes  have  resurfaced.  The                                                               
market  is  exploding  and  is  under  regulated.  The  sponsor's                                                               
concern is  that this will serve  as a gateway product  that will                                                               
ultimately result in more youths beginning to smoke.                                                                            
He  noted  that  a  committee   substitute  is  forthcoming  that                                                               
broadens definitions for these products.                                                                                        
2:19:50 PM                                                                                                                    
MR. LAMKIN  walked through the  following sectional  analysis for                                                               
SB 141, version H:                                                                                                              
     Section 1:  AS 11.76.105(a)  Adds to existing  law that                                                                    
     prohibits   minors   from  possessing   cigarettes   or                                                                    
     tobacco,  to  also  prohibit possession  of  electronic                                                                    
     cigarettes and any component thereof.                                                                                      
     Section 2:  AS 11.76.109(a)  Adds to existing  law that                                                                    
     it is  an offense not  only to sell, exchange,  or give                                                                    
     electronic   cigarettes,  or   any  related   component                                                                    
     thereof, to a minor.                                                                                                       
     Section 3:  AS 11.76.109(b)  Provides an  exception for                                                                    
     minors  possessing  e-cigarettes,  given the  minor  is                                                                    
     using an  e-cigarette for an approved  medical purpose,                                                                    
     such as smoking cessation, and  is provided by a parent                                                                    
     or prescribed by a doctor.                                                                                                 
He noted that some will argue  that these products do not contain                                                               
nicotine, but that hasn't been established for certain.                                                                         
     Section  4:  AS   11.81.900(b)  Makes  new  definitions                                                                    
     regarding E-cigarette components as follows:                                                                               
          (67) Defines "alternative tobacco product" to                                                                         
     include   a    substance   containing    nicotine,   or                                                                    
     synthesized to resemble nicotine.                                                                                          
          (68) Defines "electronic smoking device" to                                                                           
     include  its  mechanical  components and  the  chemical                                                                    
     substances it aerosolizes.                                                                                                 
          (69) Defines "e-liquid or e-liquid product" as a                                                                      
     liquid  intended  to  be  aerosolized  and  inhaled  in                                                                    
     conjunction with an electronic smoking device.                                                                             
          (70) Defines "vapor product" as a device that,                                                                        
     when its components are assembled,  is used to simulate                                                                    
He  reiterated that  a committee  substitute is  forthcoming that                                                               
broadens definitions for these products.                                                                                        
     Section 5: Is the  effective date, applying to offenses                                                                    
     committed only after the effective date of the bill.                                                                       
SENATOR MEYER  thanked Mr.  Lamkin for  clarifying that  it isn't                                                               
clear whether or not these products contain nicotine.                                                                           
MR.  LAMKIN  related  that  there  are  no  existing  regulations                                                               
requiring labeling  or testing these  products so it's  not clear                                                               
what they contain.                                                                                                              
SENATOR MEYER  commented that regardless of  whether they contain                                                               
nicotine or not,  they still contain ingredients that  may not be                                                               
safe for kids under age 19.                                                                                                     
MR. LAMKIN agreed adding that the  industry is new and moving too                                                               
quickly  to have  accurate data.  He noted  that some  will argue                                                               
that the data set is too small to form conclusions.                                                                             
SENATOR  STEVENS said  the jury  is  still out  about whether  e-                                                               
cigarettes will  help break  a nicotine  addiction. He  asked Mr.                                                               
Lamkin  to  talk about  how  an  underage  person can  access  e-                                                               
cigarettes to treat an addiction to nicotine.                                                                                   
MR.  LAMKIN  offered  his  understanding that  the  state  has  a                                                               
hotline that a  youth can call to access  cessation products. The                                                               
bill  also  provides  exceptions   for  youth  to  have  nicotine                                                               
products  if  they're  used  specifically  for  a  pharmaceutical                                                               
purpose to  quit smoking.  Parents can  also provide  the product                                                               
without  a  prescription.  He deferred  further  comment  to  Dr.                                                               
VICE CHAIR GIESSEL noted that  Spice isn't mentioned, although it                                                               
is sometimes used in an e-cigarette.                                                                                            
MR. LAMKIN  said it's not  specifically mentioned  because that's                                                               
not  the  focus  of  the  bill, but  it  theoretically  could  be                                                               
DR JAY  BUTLER, Chief  Medical Doctor,  Department of  Health and                                                               
Social Services  (DHSS), Anchorage, Alaska, stated  that there is                                                               
little  known  about the  long-term  effects  of e-cigarettes  so                                                               
there's still  a lot to  learn. Addressing the question  of using                                                               
e-cigarettes  as  cessation  devices,  he said  he  believes  the                                                               
provision  for that  is  linked  to FDA  approval,  so the  state                                                               
programs will rely on that. "As  a provider, that's where I would                                                               
go first. But  I have certainly counseled patients  who have quit                                                               
again  and  again  and  again  to  consider  non-smoking  tobacco                                                               
products as  an alternative," he  said. Anecdotally, he  is aware                                                               
of  people switching  to smokeless  or e-cigarettes  as a  way to                                                               
stop or at least cut down on smoking.                                                                                           
He acknowledged the  concern about not knowing  what substance is                                                               
in  the vaping  product  and  said he  expects  to see  marijuana                                                               
liquids in vaping  devices in the near future. He  noted that the                                                               
trials for  that product are not  using vaporization as a  way to                                                               
administer it.  He also noted  anecdotally that  products labeled                                                               
automobile  air fresheners  and used  in refillable  vape devices                                                               
actually did contain Spice.                                                                                                     
2:27:58 PM                                                                                                                    
SENATOR STEVENS asked  for confirmation that people  under age 18                                                               
won't be able to legally possess  marijuana even if it's legal in                                                               
DR. BUTLER  agreed and then  pointed out that  the odor of  a THC                                                               
containing  solution isn't  necessarily distinctive.  Some online                                                               
products are even touted to be odorless.                                                                                        
SENATOR STEVENS  asked for help  understanding whether or  not e-                                                               
cigarettes can be a cessation device.                                                                                           
DR. BUTLER said  there is anecdotal evidence to  that effect, but                                                               
the fundamental question is what  is in the e-cigarette. Products                                                               
that  are  FDA approved  have  a  known  amount of  nicotine  and                                                               
absorption  rate so  it's  easier  to titrate  the  dose down  as                                                               
needed. He noted  that some vaping products  have labeled amounts                                                               
of  nicotine, but  there is  no  assurance that  the consumer  is                                                               
getting what's  on the  label. He  agreed with  earlier testimony                                                               
that Great Britain  approved a product as a  cessation device but                                                               
his understanding  is that  there is no  similar filing  with the                                                               
FDA in the U.S.                                                                                                                 
SENATOR STEVENS thanked Dr. Butler for his work.                                                                                
2:31:23 PM                                                                                                                    
JOE  DARNELL, Manager,  Underage Tobacco  Enforcement, Department                                                               
of  Health   and  Social  Services  (DHSS),   Anchorage,  Alaska,                                                               
introduced himself.                                                                                                             
SENATOR MEYER asked  if the law prohibiting possession  or use of                                                               
tobacco by  a minor  is being  enforced. He  also asked  what the                                                               
penalty is  and if it's possible  to collect from a  youth who is                                                               
age 16 or 17.                                                                                                                   
MR. DARNELL explained that possession of  tobacco by a minor is a                                                               
$50 fine,  and sometimes  the court  allows community  service or                                                               
tobacco training  in lieu  of the fine.  He anticipates  the same                                                               
thing happening  with the vaping products.  School administrators                                                               
have mentioned  problems on school  campuses because there  is no                                                               
law addressing  vaping products. As  a policy, the device  may be                                                               
confiscated but it has to be returned.                                                                                          
SENATOR MEYER asked:  1) how many tobacco  violations are written                                                               
in  a year  and 2)  how  it's possible  to tell  that someone  is                                                               
vaping when they're outside.                                                                                                    
MR.  DARNELL said  his  office works  with  merchants to  prevent                                                               
underage  sales  so  they don't  regularly  issue  citations.  He                                                               
agreed that  you couldn't tell  if someone was vaping  if they're                                                               
outside, and expressed  concern that vaping is  bringing back the                                                               
social norm that smoking is acceptable.                                                                                         
SENATOR MEYER asked if vaping products are allowed in bars.                                                                     
MR. DARNELL  said he believes that  vaping is allowed in  bars in                                                               
Anchorage  and  he knows  that  Juneau  added to  its  smoke-free                                                               
ordinance  to include  vaping.  Vaping is  also  allowed in  vape                                                               
MR. LAMPKIN added his understanding that  it is largely up to the                                                               
owner of the establishment to set  the policy for vaping. He also                                                               
pointed out that some products are both smokeless and odorless.                                                                 
2:38:04 PM                                                                                                                    
ANGELA  CARROLL,  Chapter  Leader,  SmokeFree  Alternative  Trade                                                               
Association,  Wasilla,   Alaska,  stated  support  for   SB  141,                                                               
emphasizing  that vaping  products  should not  be accessible  to                                                               
individuals younger than the legal smoking age.                                                                                 
2:38:50 PM                                                                                                                    
EMILY  NENON,  Alaska  Government  Relations  Director,  American                                                               
Cancer  Society/Cancer Action  Network  (ACS  CAN), testified  in                                                               
support of SB  141. She highlighted that  venders of e-cigarettes                                                               
do not  have the same  license requirements as venders  that sell                                                               
tobacco  so there  isn't  a good  way to  enforce  a penalty  for                                                               
selling to  youth. She echoed  concern about the trend  for youth                                                               
to use electronic-cigarettes and noted  that this is reflected in                                                               
ACS  CAN's youth  risk behavior  survey data  for Alaska.  It's a                                                               
trend that should be addressed before it gets worse, she said.                                                                  
VICE CHAIR  GIESSEL asked if  there is particulate matter  in the                                                               
MR. NENON answered  yes; ultrafine particles come off  the end of                                                               
the e-cigarette. Given that there  are hundreds of these products                                                               
on the  market, it is impossible  to say exactly what  is in each                                                               
one, he  said. However,  ones that have  been analyzed  have been                                                               
found to contain neurotoxins, which is found in nicotine.                                                                       
VICE CHAIR GIESSEL  asked if she'd seen data  indicating that the                                                               
particulate  matter may  exacerbate asthma  or other  respiratory                                                               
MS. NENON  said yes and offered  to provide the fact  sheets that                                                               
show evidence of short-term impacts on the respiratory system.                                                                  
SENATOR  STEVENS  asked  if e-cigarettes  have  to  be  purchased                                                               
through an adult at a shop.                                                                                                     
MS. NENON said she appreciates  that that is what the legislation                                                               
would require,  but she's heard  anecdotally that some  youth are                                                               
getting them online.                                                                                                            
SENATOR  STEVENS commented  that Internet  sales is  an important                                                               
2:44:11 PM                                                                                                                    
SENATOR  ELLIS  related that  it  was  former Representative  Kay                                                               
Brown  who  introduced  legislation   to  ban  cigarette  vending                                                               
machines  in all  places except  where people  over age  21 could                                                               
have  access.  He  recalled  that  when  he  first  came  to  the                                                               
legislature there was  a cigarette vending machine  on the ground                                                               
floor of the  capitol building and students from  the high school                                                               
would  walk up  or take  the bus  to get  their nicotine  fix. He                                                               
added,  "I  was  a  proud  co-sponsor  of  that  legislation  and                                                               
needless to  say we've come a  long way in our  consciousness and                                                               
commitment to health, especially with young people."                                                                            
2:45:42 PM                                                                                                                    
VICE CHAIR  GIESSEL closed  public testimony and  held SB  141 in                                                               
committee awaiting a committee substitute (CS).                                                                                 
        SB 108-AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                     
2:46:12 PM                                                                                                                    
VICE CHAIR GIESSEL announced the consideration of SB 108.                                                                       
2:46:45 PM                                                                                                                    
KEVIN  ANSELM,  Director,  Division of  Banking  and  Securities,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED), walked  through the sectional  analysis for SB  108. She                                                               
advised  that in  addition  to the  sectional  analysis, she  may                                                               
refer to the Alaska Securities  Act, Penalties, Court Rules Table                                                               
of Contents that  provides a guide of the  significant changes to                                                               
the current  law, and  a side-by-side  that compares  the present                                                               
and   proposed   law   section-by-section  and   gives   specific                                                               
information in comparison to the existing Securities Act.                                                                       
She clarified  that references to  the Uniform Securities  Act of                                                               
2002 (USA) means the recent  Uniform Act. The existing Alaska Act                                                               
is based on the 1956 Uniform  Securities Act with a few revisions                                                               
since it was passed in 1959.                                                                                                    
She reminded the committee that the statutory provisions are                                                                    
reordered in SB 108 and will hopefully make it easier for                                                                       
industry and investors to locate information.                                                                                   
SECTIONAL ANALYSIS of SB 108:                                                                                                   
            Article 1. General Provisions (pp. 1-2)                                                                           
     Sec. 45.56.105.  Securities registration  requirement -                                                                  
     same  as current  law (45.55.070).  Securities must  be                                                                    
     registered  before  offer   or  sale  unless  federally                                                                    
     covered or specifically exempt from registration.                                                                          
     Article 2.  Exemptions from Registration  of Securities                                                                  
     (pp. 2-17)                                                                                                               
     Sec. 45.56.205. Exempt securities  - generally the same                                                                  
     as current  law, AS 45.55.900(a)  with a  few additions                                                                    
     including  securities issued  by an  insurance company;                                                                    
     certain  options,  warrants  and rights  that  are  not                                                                    
     federal  covered securities;  certain cooperatives  and                                                                    
     equipment trust certificates.                                                                                              
     Sec.  45.56.210. Exempt  transactions  - generally  the                                                                  
     same as  current law AS 45.55.900(b),  reorganized with                                                                    
     additions  reflecting  transactions allowed  under  the                                                                    
     Uniform Securities Act of 2002 (USA).                                                                                      
     Sec. 45.56.220.  Small intrastate  securities offerings                                                                  
     (referred to  as "Crowdfunding")  - Allows  Alaskans to                                                                  
     invest up  to $5,000  per person,  per offering,  in an                                                                    
     Alaskan  business.  Businesses  can   raise  up  to  $1                                                                    
     million per offering and requires  a notice filing with                                                                    
     the   state  and   certain  investor   disclosures  and                                                                    
     Sec.  45.56.230. Disqualifier  - prohibits  persons who                                                                  
     have been subject to  regulatory action or participated                                                                    
     in certain  crimes from using the  available exemptions                                                                    
     from    the    registration   requirement    (including                                                                    
     Sec. 45.56.240. Waiver and  modification - broadens the                                                                  
     administrator's   authority   to    waive   or   change                                                                    
     requirements or conditions for exemptions.                                                                                 
     Sec.   45.56.250.   Denial,   suspension,   revocation,                                                                  
     condition,   or  limitation   of  exemptions   -  same,                                                                  
     although the  appeal rights and hearing  information is                                                                    
     moved to Article 6.                                                                                                        
     Article  3.  Registration   of  Securities  and  Notice                                                                  
     Filing of Federal Covered Securities. (pp. 17-29)                                                                        
     Note:   No   significant    changes   to   registration                                                                    
     provisions from  AS 45.55.  Material changes  are noted                                                                    
     by section.                                                                                                                
     Sec.    45.56.305.     Securities    registration    by                                                                  
     coordination -  registration statement must be  on file                                                                  
     with the  Administrator for 20  days unless  reduced by                                                                    
     regulation.   Currently,   a    10   day   requirement.                                                                    
     References to prompt notice by telegram are deleted.                                                                       
     Sec.    45.56.310.     Securities    registration    by                                                                  
     qualification  - adds  a  new  requirement that  filers                                                                  
     disclose  pending  litigation that  materially  affects                                                                    
     the  issuer   or  litigation  that   is  known   to  be                                                                    
     contemplated by governmental authorities.                                                                                  
     Sec.  45.56.320.  Securities   registration  filings  -                                                                  
     allows  the   administrator  to  set  escrow   time  by                                                                    
     regulation or order for certain  securities issued to a                                                                    
     promoter or  to other persons at  a price substantially                                                                    
     less than the public offering price.                                                                                       
     Sec.  45.56.330.  Notice   filing  of  federal  covered                                                                  
     securities - allows imposition of late fees.                                                                             
     Sec.   45.56.340.  Viatical   settlement  interests   -                                                                  
     combines current  AS 45.55.120  and AS  45.55.905(c) to                                                                    
     explain the  joint regulation of these  interest by the                                                                    
     Securities and Insurance statutes.                                                                                         
     Sec.    45.56.350.    Waiver   and    modification    -                                                                  
     Administrator  allowed waiver  authorities consolidated                                                                    
     from other sections.                                                                                                       
     Sec. 45.56.360.  Denial, suspension, and  revocation of                                                                  
     securities   registration   -   adds   requirement   to                                                                  
     establish  regulations explaining  what conduct  may be                                                                    
     fraud   upon    purchasers;   unreasonable   discounts,                                                                    
     compensation,  profits  (including options,  etc.)  and                                                                    
     terms that are unfair, unjust or inequitable.                                                                              
2:55:40 PM                                                                                                                    
VICE CHAIR GIESSEL requested the definition of "viatical."                                                                      
MS. ANSELM explained  that it relates to  a financial transaction                                                               
in  which  a  company  buys  life  insurance  policies  from  the                                                               
terminally  ill at  less than  face value.  She noted  that these                                                               
became popular during the AIDS epidemic                                                                                         
     Article    4.   Broker-dealers,    Agents,   Investment                                                                  
     Advisers,   Investment  Adviser   Representatives,  and                                                                  
     Federal Covered Investment Advisers. (pp. 29-54)                                                                         
     Firm,    salesperson,    and    adviser    registration                                                                    
     (licensing)   provisions  are   reorganized  into   one                                                                    
     article,  making  it  more user-friendly  than  current                                                                    
     law. Notable changes are listed below.                                                                                     
     Sec. 45.56.405.  Broker-dealer registration requirement                                                                  
     and exemptions  - includes  a new  "snowbird exemption"                                                                  
     to  facilitate  ongoing  broker-customer  relationships                                                                    
     with customers  who have established a  second or other                                                                    
     residence and  clarifies the  number of  transactions a                                                                    
     broker-dealer   may   effect   annually  (3)   if   not                                                                    
     registered in Alaska.                                                                                                      
     Sec.  45.56.410.   Limited  registration   of  Canadian                                                                  
     broker-dealers and  agents - changed annual  renewal to                                                                  
     December 31 from December 1.                                                                                               
     Sec. 45.56.420.  Registration exemption for  merger and                                                                  
     acquisition  broker   -  this  new   provision  exempts                                                                  
     mergers  and  acquisitions  brokers  from  registration                                                                    
     (licensing)  requirements  because  these  transactions                                                                    
     are  typically between  knowing  parties with  adequate                                                                    
     legal  counsel  and  scrutiny.  The  exemption  is  not                                                                    
     available   if   the   broker  actually   handles   the                                                                    
     securities  exchanged in  the transaction  or otherwise                                                                    
     represents  an issuer  or public  shell company,  or is                                                                    
     subject to Securities and Exchange Commission action.                                                                      
     Sec.  45.56.430.  Agent  registration  requirement  and                                                                  
     exemptions  - the  rewrite of  this statute  includes a                                                                  
     statement  of  the  types   of  business  covered  here                                                                    
     instead of in a definitional section.                                                                                      
     Sec.   45.56.435.   Investment   adviser   registration                                                                  
     requirement and exemptions -  Includes a new "snowbird"                                                                  
     exemption that  matches the broker-dealer  exemption in                                                                    
     Sec 45.56.405.                                                                                                             
     Sec.   45.56.440.  Investment   adviser  representative                                                                  
     registration   requirement  and   exemptions  -   these                                                                  
     provisions  mirror  the  broker-dealer agents  in  Sec.                                                                    
     Sec.  45.56.445.  Federal  covered  investment  adviser                                                                  
     notice filing  requirement - these provisions  were not                                                                  
     separately stated in the current law.                                                                                      
     Sec. 45.56.450.  Registration by  broker-dealer, agent,                                                                  
     investment    adviser,     and    investment    adviser                                                                  
     representative   -  combines   provisions  in   current                                                                  
     statute  and  regulations  and  extends  the  automatic                                                                    
     registration   from   30   to  45   days   unless   the                                                                    
     registration is denied.                                                                                                    
     Sec. 45.56.455.  Succession and change  in registration                                                                  
     of  broker-dealer  or  investment adviser  -  clarifies                                                                  
     that   an  organizational   change  can   generally  be                                                                    
     completed by  amendment instead  of a  new registration                                                                    
     (for  instance  a  sole   proprietorship  moving  to  a                                                                    
     limited liability company).                                                                                                
     Sec.   45.56.460.   Termination    of   employment   or                                                                  
     association   of    agent   and    investment   adviser                                                                  
     representative   and   transfer    of   employment   or                                                                  
     association   -  requires   the   registrant  files   a                                                                  
     notification  with the  division.  Allows an  immediate                                                                    
     temporary effective  registration with a new  firm when                                                                    
     no new disciplinary information is added.                                                                                  
     Sec. 45.56.465.  Withdrawal of registration  of broker-                                                                  
     dealer,  agent,  investment   adviser,  and  investment                                                                  
     adviser representative - extends  the effective date of                                                                  
     registration  withdrawal up  to  60 days  and allows  a                                                                    
     revocation proceeding to commence within one year.                                                                         
     Sec. 45.56.470.  Filing fees - are  established and may                                                                  
     be paid through a designee by regulation.                                                                                  
     Sec.  45.56.475.   Post  registration   requirements  -                                                                  
     allows    establishing    continuing    education    by                                                                    
     Sec.   45.56.480.   Denial,   revocation,   suspension,                                                                  
     withdrawal,  restriction, condition,  or limitation  of                                                                  
     registration  -  in  addition  to  current  provisions,                                                                  
     allows  the  administrator   to  bar  registration  and                                                                    
     includes  actions  taken  by  other  regulators.  Civil                                                                    
     penalty  for  registrants  is  increased  from  $2,500-                                                                    
     $10,000 per violation to up to $100,000 per violation.                                                                     
     Article 5. Fraud and Liabilities. (pp. 54-56)                                                                            
     Sec.  45.56.505. General  fraud  - same  as current  AS                                                                  
     Sec.   45.56.510.  Prohibited   conduct  in   providing                                                                  
     investment  advice  -  allows administrator  to  define                                                                  
     prohibited conduct by regulation.                                                                                          
     Sec. 45.56.520.  Misleading filings  - same  as current                                                                  
     AS 45.55.160.                                                                                                              
     Sec.    45.56.530.     Misrepresentations    concerning                                                                  
     registration  or   exemption  -  same  content   as  AS                                                                  
     Sec. 45.56.540.  Evidentiary burden  - same  content as                                                                  
     AS 45.55.900(c).                                                                                                           
     Sec.  45.56.550.   Filing  of  sales   and  advertising                                                                  
     literature - same content as AS 45.55.150.                                                                               
     Sec.   45.56.560.  Qualified   immunity  -   registered                                                                  
     persons  are not  liable to  other registered  persons,                                                                    
     under state  defamation laws, for  statements contained                                                                    
     in  disclosure records  required to  be filed  with the                                                                    
     administrator for  purposes of licensing  and potential                                                                    
     discipline. This  provision encourages  full disclosure                                                                    
     to the administrator.                                                                                                      
3:05:42 PM                                                                                                                    
SENATOR STEVENS asked if it's difficult for a person to get                                                                     
MS. ANSELM explained  that they register both  the securities and                                                               
the persons who sell them. Some  securities are exempt and do not                                                               
need  to be  registered. For  securities that  are registered  by                                                               
qualification,  the division  works with  other states  that have                                                               
the  same  security  offering,  offers  comments  and  opines  on                                                               
whether  the  disclosure  is  adequate.  As  far  as  determining                                                               
whether  it  is  a  good   investment  or  not  and  whether  the                                                               
investment has  merit, the state of  Alaska is not a  merit state                                                               
but  rather  a   full  disclosure  state.  An   investor  has  an                                                               
opportunity  to look  at the  relevant information  and determine                                                               
whether or not an investment is appropriate for them.                                                                           
SENATOR STEVENS  asked how  Alaska compares  to merit  states and                                                               
how many have that classification.                                                                                              
MS.  ANSELM  recalled  there are  nine  merit  states,  including                                                               
Washington and Oregon.                                                                                                          
SENATOR STEVENS  assumed it would  be expensive for  the division                                                               
to determine merit.                                                                                                             
MS.  ANSELM  confirmed  it  would  require  more  review  of  the                                                               
registration  statements.  This  would  require  more  background                                                               
checking than is done currently.  Full disclosure doesn't require                                                               
a determination that the investment  has merit. The division does                                                               
not do  site visits, but  does ask a  lot of questions  to obtain                                                               
full disclosure.  She added that  the test  for a merit  state is                                                               
fair, just and equitable.                                                                                                       
SENATOR  STEVENS expressed  concern that  Sec 220,  Crowdfunding,                                                               
seems to  open an entirely  new field and questioned  whether the                                                               
state wanted to get into this.                                                                                                  
MS. ANSELM said she understands  the concern; it's been expressed                                                               
in other  states that  have entered  the Crowdfunding  arena. She                                                               
said  it's helpful  that the  Crowdfunding will  be with  Alaska-                                                               
based  businesses so  it  will be  easier  to check  backgrounds.                                                               
Depending on  the Crowdfunding provisions  that pass,  there will                                                               
be  an application  procedure that  requires full  information on                                                               
the backgrounds of  each of the control  persons. The expectation                                                               
is that the division will be able  to do a good job of discerning                                                               
that the proper disclosures have been made.                                                                                     
SENATOR  STEVENS  asked if  the  division  will treat  investment                                                               
opportunities  for   Crowdfunding  differently  than   for  other                                                               
investment opportunities.                                                                                                       
MS. ANSELM  said yes; the  application process will  be different                                                               
and  deposits must  be made  in a  financial institution  that is                                                               
authorized  to do  business in  the state.  The banks  also do  a                                                               
vetting and  the division will  coordinate that  information. She                                                               
added  that it's  relatively  easy  to check  on  people who  are                                                               
residents of Alaska.                                                                                                            
3:11:45 PM                                                                                                                    
Continuation of sectional analysis of SB 108:                                                                                   
     Article  6. Administration  and  Judicial Review.  (pp.                                                                  
     Sec. 45.56.605.  Administration - allows  acceptance of                                                                  
     grants or donations for  investor education and creates                                                                    
     a securities  and investor education and  training fund                                                                    
     with 33%  of civil  penalties received.  Clarifies that                                                                    
     variable annuities  are subject  to both  the Insurance                                                                    
     law  and  the  Securities  Act. (See  also  Article  7,                                                                    
     Section 2)                                                                                                                 
     Sec.  45.56.610. Administrative  files  and opinions  -                                                                  
     requires the administrator keep  records according to a                                                                    
     retention  schedule and  outlines publicly  disclosable                                                                    
     Sec.  45.56.615.  Public   records;  confidentiality  -                                                                  
     clarifies and specifies record confidentiality.                                                                            
     Sec. 45.56.620.  Uniformity and cooperation  with other                                                                  
     agencies  -  expands  opportunity for  cooperation  and                                                                  
     sharing    with    governmental    units,    regulatory                                                                    
     organizations   for  collaborative   efforts  including                                                                    
     regulation, enforcement and  coordination to reduce the                                                                    
     burden of raising capital by small business.                                                                               
     Sec. 45.56.625.  Jurisdiction - application of  the law                                                                  
     to interstate or international transactions.                                                                               
     Sec. 45.56.630.  Service of process  - same  as current                                                                  
     AS 45.55.980.                                                                                                              
     Sec. 45.56.635. Applicability of  the chapter - same as                                                                  
     current AS 45.55.980.                                                                                                      
     Sec.    45.56.640.    Regulations,    forms,    orders,                                                                  
     interpretative  opinions,   and  hearings   -  combines                                                                  
     existing AS 45.55.950 and  45.55.970 and clarifies that                                                                    
     GAAP  compliant   financial  statements  may   only  be                                                                    
     required as allowed by federal law.                                                                                        
     Sec. 45.56.645. Investigations  and subpoenas - similar                                                                  
     to   existing   AS   45.55.910   and   allows   broader                                                                    
     cooperation with other regulators.                                                                                         
     Sec. 45.56.650.  Administrative enforcement -  time for                                                                  
     a respondent  to make  a request  for hearing  after an                                                                    
     action is  taken is extended  from 15 days to  30 days.                                                                    
     Civil penalties are increased from  $2,500 for a single                                                                    
     violation  and $25,000  for  multiple  violations to  a                                                                    
     maximum of $100,000 for a  single violation with no cap                                                                    
     for  multiple  violations. If  a  victim  is an  "older                                                                    
     Alaskan" (a  person over 60 years  old), the respondent                                                                    
     is subject  to treble  damages. Restitution  and actual                                                                    
     costs   of   investigation    may   be   ordered.   The                                                                    
     administrator   may   deny   the  use   of   securities                                                                    
     exemptions   under    Article   2    and   registration                                                                    
     (licensing)  exemptions under  Article  4  if a  person                                                                    
     violates the  Act. The  administrator may  petition the                                                                    
     Superior Court to  enforce a final order  and the Court                                                                    
     may hold  a person in  contempt for violating  an order                                                                    
     of the administrator, punishable  by up to $100,000 per                                                                    
     violation, in addition  to any administrative penalties                                                                    
     that were originally assessed.                                                                                             
     Sec. 45.56.655.  Civil enforcement -  the administrator                                                                  
     may seek  remedies such as  asset freezes, an  order of                                                                    
     rescission, restitution,  and civil penalties of  up to                                                                    
     $100,000 per violation, and all  damages may be trebled                                                                    
     if the  victim is  an "older  Alaskan" (person  over 60                                                                    
     years old).                                                                                                                
     Sec.  45.56.660. Civil  liability -  outlines instances                                                                  
     where  the  seller  is  liable  to  the  purchaser  and                                                                    
     potential  remedies  (actual damages  generally);  also                                                                    
     describes instances  where the  buyer may be  liable to                                                                    
     the seller.                                                                                                                
     Sec.  45.56.665.  Rescission   offers  -  outlines  the                                                                  
     rescission offer  process, including a  new requirement                                                                    
     that the  offeror must demonstrate  his or  her ability                                                                    
     to pay and then actually pay as promised.                                                                                  
     Sec.   45.56.670.   Criminal  enforcement   -   knowing                                                                  
     violations  of  the Act  and  fraud  are punishable  as                                                                    
     class  C   felonies  punishable  under   AS  12.55.125.                                                                    
     Unknowing   violations  are   punishable  as   class  A                                                                    
     misdemeanors  and  fine  of  not  more  than  $100,000.                                                                    
     Individuals who  alter or  destroy evidence  are guilty                                                                    
     of  a  class C  felony  and  a  fine  of not  more  the                                                                    
     $500,000 or both.                                                                                                          
     Sec. 45.56.675.  Judicial review  - appellants  have 30                                                                  
     days to request review of a final order.                                                                                   
3:19:19 PM                                                                                                                    
SENATOR MEYER asked if the industry had voice opposition to the                                                                 
proposed changes.                                                                                                               
MS. ANSELM said  no, but consumers have said they'd  like to have                                                               
stronger  penalties.  She  noted  cases  pending  now  where  the                                                               
penalties don't seem to fit  the violations. For example, Fortune                                                               
Oil  received  about  $4.2  million   in  fraudulent  gains  from                                                               
investors, many  from Alaska,  and the  maximum penalty  for that                                                               
enforcement action was $25,000.                                                                                                 
Continuation of sectional analysis of SB 108:                                                                                   
     Article   7.  Miscellaneous   and  Additional   General                                                                  
     Provisions. (pp. 78-109)                                                                                                 
     Sec. 45.56.710.  Reimbursement of expenses  incident to                                                                  
     examination or investigation - same as AS 45.55.915.                                                                     
     Sec.  45.56.720. Electronic  records  and signatures  -                                                                  
     facilitates   filing   of    electronic   records   and                                                                    
     signatures. Consumers must consent  and have the option                                                                    
     to withdraw such consent.                                                                                                  
     Sec.  45.56.730. References  to  federal  statutes -  a                                                                  
     list of all federal statutes referenced in the Act.                                                                        
     Sec. 45.56.740. References to  federal agencies - notes                                                                  
     that references  to an agency  of the United  States is                                                                    
     also  a reference  to a  successor agency.  Senate Bill                                                                    
     108 Sectional Analysis January 25, 2016 Page 6                                                                             
     Sec. 45.56.900. Definitions.                                                                                             
     - Updates federal citations                                                                                                
     - New definitions include:                                                                                                 
        · Disqualifier                                                                                                          
        · Filing                                                                                                                
        · Institutional investor (reflects federal law)                                                                         
        · Insurance company                                                                                                     
        · Insured                                                                                                               
        · International Banking Institution                                                                                     
        · Offer to purchase                                                                                                     
        · Older Alaskan - a person residing in the state                                                                        
               that is age 60 or older (from AS                                                                                 
        · Price amendment                                                                                                       
        · Record                                                                                                                
        · Self-regulatory organization                                                                                          
        · Sign                                                                                                                  
     Sec. 45.56.735. Short title. This  chapter may be cited                                                                  
     as the Alaska Securities Act.                                                                                              
     Sections 2 - 35  (pp. 89-109) include the corresponding                                                                  
     changes  to  statutes that  refer  to  former AS  45.55                                                                  
     provisions that have been moved to AS 45.56.                                                                             
     SECTION  2 -  SECTION  6 -  Citations  are modified  to                                                                  
     reflect  Chapter  45.56  in   place  of  Chapter  45.55                                                                    
     references and terms are updated.                                                                                          
     SECTION  7-  SECTION 8  -  Modifies  AS 21.96  variable                                                                  
     annuity and viatical provisions.                                                                                           
     SECTION  9 -  SECTION 15  - Citations  are modified  to                                                                  
     reflect  Chapter  45.56  in   place  of  Chapter  45.55                                                                    
     references and terms are updated.                                                                                          
     SECTION  16  -  SECTION  25  -  Modifies  AS  45.55  as                                                                  
     necessary to  delete references  to statutes  that have                                                                    
     no bearing  on the Alaska Native  Claims Settlement Act                                                                    
     corporations because of the enactment of AS 45.56.                                                                         
     SECTION 26  - SECTION  28 -  Citations are  modified to                                                                  
     reflect  Chapter  45.56  in   place  of  Chapter  45.55                                                                    
     references and correct federal law references.                                                                             
     SECTION  29  -  Repeals  statutes that  are  no  longer                                                                  
     needed in AS 45.55 because  they do not apply to Alaska                                                                    
     Native   Claims   Settlement  Act   corporation   proxy                                                                    
     SECTION 30  - Amends  indirect Court Rules  relating to                                                                  
     changes in AS 45.56.                                                                                                       
     SECTION 31 - Allows  the department to adopt transition                                                                  
     regulations to implement the Act.                                                                                          
     SECTION 32  - Amends the  law to effect  transition and                                                                  
     application  of  AS  45.55  for  existing  proceedings,                                                                    
     existing rights and duties.                                                                                                
     SECTION 33  - Reviser's instruction to  rename AS 45.55                                                                  
     to  Alaska Native  Claims  Settlement Act  Corporations                                                                    
     Proxy Solicitations.                                                                                                       
     SECTION  34  -  Conditional   Effect.  Certain  of  the                                                                  
     changes to the Securities Act  will only take effect if                                                                    
     Court  Rule changes  in Section  24 is  passed by  two-                                                                    
     thirds majority vote of each the House and Senate.                                                                         
3:24:41 PM                                                                                                                    
VICE CHAIR GIESSEL thanked Ms. Anselm for the overview.                                                                         
SENATOR STEVENS  said he needs  to know more  about Crowdfunding.                                                               
He asked,  "Why is it  in here? Who asked  for it? Who  needs it?                                                               
What  are the  negatives  and positives?  What  are other  states                                                               
VICE CHAIR  GIESSEL asked  Ms. Anselm to  forward the  answers to                                                               
those questions  to Chair  Costello before  the next  hearing and                                                               
she will distribute them to members.                                                                                            
MS. ANSELM agreed.                                                                                                              
3:25:42 PM                                                                                                                    
VICE CHAIR GIESSEL held SB 108 in committee.                                                                                    
3:25:55 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Vice  Chair  Giessel  adjourned the  Senate  Labor  and  Commerce                                                               
Standing Committee meeting at 3:25 p.m.                                                                                         

Document Name Date/Time Subjects
SB 18 - Version H.PDF SL&C 2/18/2016 1:30:00 PM
SB 18
SB 18 - Fiscal Note.pdf SL&C 2/18/2016 1:30:00 PM
SB 18
SB 18 - Sponsor Statement.pdf SL&C 2/18/2016 1:30:00 PM
SB 18
SB 108 - Fiscal Note DCCED.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 108 - Fiscal Note DOA.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 108 - Testimony - R. Banks - Alaska Securitites Act Reform-Crowdinvesting.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 108 Sectional Analysis.pdf SL&C 2/18/2016 1:30:00 PM
SB 108
SB 141 - Fiscal Note.pdf SL&C 2/18/2016 1:30:00 PM
SB 141
SB 108.PDF SL&C 2/18/2016 1:30:00 PM
SB 108
SB 141 - Sectional Analysis.pdf SL&C 2/18/2016 1:30:00 PM
SB 141
SB 141 - Sponsor Statement.pdf SL&C 2/18/2016 1:30:00 PM
SB 141
SB 141.PDF SL&C 2/18/2016 1:30:00 PM
SB 141
SB 158 - Assoc. Realtor Letter.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158 - Comparative Education Experience Other States.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158 - Fiscal Note.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158 - Real Estate Commission Letter.pdf SL&C 2/18/2016 1:30:00 PM
SB 158
SB 158.PDF SL&C 2/18/2016 1:30:00 PM
SB 158
Public Comment - Concerns with SB 158.pdf SL&C 2/18/2016 1:30:00 PM
SB 158