Legislature(1993 - 1994)
03/02/1993 02:35 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
March 2, 1993
2:35 p.m.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator Steve Rieger, Vice-Chairman
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Drue Pearce
Senator Judy Salo
OTHERS PRESENT
Senator Jay Kerttula
COMMITTEE CALENDAR
SENATE BILL NO. 99
"An Act relating to the improvement of state finances
through reduction of operating costs of certain state
agencies and establishment of certain fees; and providing
for an effective date."
SENATE BILL NO. 86
"An Act relating to funds transfers under the Uniform
Commercial Code; changing Alaska Rule of Civil Procedure 82;
and providing for an effective date."
SENATE BILL NO. 112
"An Act relating to the Uniform Commercial Code; amending
Alaska Rules of Civil Procedure 8 and 82, and Alaska Rule of
Evidence 402; and providing for an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 99 - See Labor & Commerce minutes dated 2/16/93 and
2/23/93.
SB 86 - NONE.
SB 112 - NONE.
WITNESS REGISTER
Josh Fink, Committee Aide
Senator Tim Kelly
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified on SB 99.
Bill Kelder, Aide
Senator Jay Kerttula
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified on SB 86.
Arthur Peterson
Uniform Law Commissioner for Alaska
Dillon & Finley
One Sealaska Plaza, Suite 202
Juneau, Alaska 99801
POSITION STATEMENT: Testified on SB 86.
Gerald Kurtz, Attorney
Uniform Law Commissioner for Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified on SB 86.
Pat Crandall
National Bank of Alaska
Alaska Bankers Association
123 Seward Street
Juneau, Alaska 99801
POSITION STATEMENT: Supported SB 86.
Willis Kirkpatrick, Director
Banking, Securities and Corporations
Commerce and Economic Development
P.O. Box 110806
Juneau, alaska 99811-0806
POSITION STATEMENT: Testified on SB 86.
ACTION NARRATIVE
TAPE 93-16, SIDE A
Number 001
CHAIRMAN TIM KELLY called the Labor and Commerce Committee
meeting to order at 2:35 p.m.
SENATOR KELLY returned SB 99 (FINANCIAL ADMINISTRATION OF
STATE GOVERNMENT) by request of the Governor, to committee,
and asked his committee aide, JOSH FINK, to give an update
on the bill.
MR. FINK said the fiscal notes would all have to be updated,
and he reviewed the substantive changes in the committee
substitute. He explained the first change was in Section
44, which did not appear in the earlier version, but would
change the manner in which hunting and fishing license
vendors are compensated.
MR. FINK reported the second change in Sections 46 and 72,
would establish a statutory two-year term for both initial
and renewal certificates of fitness, rather than allowing
the Department of Labor to determine the terms by
regulation. He explained that Section 72 is a transitional
provision to allow the department to switch from the current
one and three year terms to the new two-year terms. In
addition, the department was given the power to adopt
regulations to implement the transition.
SENATOR KELLY clarified the present draft of SB 99 was
designated as the J version.
MR. FINK explained Section 47 was rewritten to establish the
fees by statute rather than regulation and Section 48
establishes the fee by statute and eliminates an exception
for state employees.
MR. FINK said Section 49 would set the fee for an employment
agency permit at $100 for two years, the duration of the
permit is set in statute, and the application fee is
retained at $10.
MR. FINK said the last changes were in Sections 66 and 67,
and he described a mix of statute and regulation for setting
fees by the Division of Parks.
SENATOR RIEGER referred to page 20, lines 9 through 23, and
asked if the $1 admission would always be the same, and he
was told the admission could not be other than $1. SENATOR
RIEGER also expressed concern on line 16, (12), because he
thought there are places where a parking fee should not be
charged.
SENATOR KELLY, in reference to line 22, thought $2 for each
person over 10 years of age was excessive. MR. FINK said
the age should be 18 years of age.
SENATOR RIEGER moved to adopt CS FOR SENATE BILL NO.
99(L&C). Without objections, so ordered.
SENATOR RIEGER moved to adopt the change in line 22 of page
20 to read: $2 for each person over 18 years of age.
Without objections, so ordered.
SENATOR RIEGER still found objections with Section 33 on
page 11, line 3, which would allow the Office of Public
Advocacy to charge and collect fees and also waive
collection in certain instances. SENATOR KELLY thought it
might be changed in the Finance committee, but MR. FINK said
a letter of intent had been delivered to the office which
discusses SENATOR RIEGER'S concerns.
Number 120
SENATOR RIEGER moved to pass CS FOR SENATE BILL NO. 99(L&C)
from committee with individual recommendations. Without
objections, so ordered.
SENATOR KELLY introduced SB 86 (FUND TRANSFERS UNDER THE
UNIFORM COMMERCIAL CODE) and asked who was going to explain
the bill. BILL KELDER, Aide to SENATOR KERTTULA, said a
copy of the explanation had been delivered to the committee
member offices, but he deferred to ARTHUR PETERSON, who is a
Uniform Law Commissioner for Alaska. GERALD KURTZ, who is
also a Uniform Law Commissioner for Alaska, was Off-Net from
Anchorage on the teleconference network.
MR. PETERSON explained that although he was now an attorney
in private practice with Dillon & Findley, he was appearing
in his role as a Uniform Law Commissioner for Alaska. He
testified in support of SB 86 and urged the committee to
favorably report it from committee.
Number 164
MR. PETERSON said the bill was supported by the American Bar
Association, the American Law Institute, the American
Bankers Association, and was developed by the National
Conference of Commissioners and Uniform State Laws.
MR. PETERSON said the purpose of the bill was to recognize
modern electronic technology and modern business practices.
He said it would provide legislative answers to the great
number of questions that arise in the new way of doing
business, is vastly preferable to the current system, and
has been enacted by 44 states. Enactment by all states
would retain this subject for handling by the states and
would preclude federal intervention.
MR. PETERSON said the bill covered two areas, wholesale wire
transfers, and non-consumer automated payments, which are
similar. He explained it parallels, and is consistent with,
a related federal act and with the rules that govern the two
principle national wire systems, the FedWire and the CHIPS
(Clearing House Interbank Payment Systems).
MR. PETERSON said he preferred to answer questions at this
point, and he noted another Uniform Law Commissioner for
Alaska, GERALD KURTZ, who has a great deal of experience in
commercial law, was on the teleconference from Anchorage.
Number 201
SENATOR RIEGER questioned the national act, and MR. PETERSON
explained the federal act was the Electronics Transfer Act,
which covers only consumer transactions, such as an
automated teller machine or credit card transactions. He
also explained this act is uniform among all the other
states and with the two national wire systems. The only
changes he noted were to comply with Alaska's requirements
of style and numbering adjustments; otherwise, it is the
national version.
SENATOR KELLY invited MR. KURTZ in Anchorage, to testify on
SB 86.
MR. KURTZ reviewed some of the provisions specific to
Alaska, and he thought it was important that 44 other states
had adopted the act. He explained it was quite critical to
those business people, who were trying to hold down the cost
of business and consumer transactions and keep up with the
rest of the world on the subject of both SB 86 and SB 112.
PETE CRANDALL, representing the National Bank of Alaska and
the Alaska Bankers Association, urged the committee's
support of SB 86. He explained it would provide clear lines
of responsibility for all parties utilizing electronic funds
transfers and would reduce, or eliminate, legal disputes
between all parties that conduct business in this manner.
He said it could also eliminate disputes that could arise
between the State of Alaska and other states, since it
provides clear, fair, and sound rules for all parties - not
just bankers.
Number 269
SENATOR KELLY asked WILLIS KIRKPATRICK if the Division of
Banking supported the bill, and MR. KIRKPATRICK responded
they supported the bill - and it had no fiscal note.
SENATOR RIEGER asked MR. CRANDALL what happened when funds
were erroneously sent, and who was responsible for the loss
of interest in the transaction.
MR. CRANDALL explained both the senders and the receivers
have some responsibilities, but the act would clearly define
the rules, and he gave an example.
SENATOR RIEGER said he was looking from the standpoint of
the owner of the funds, who directs the bank to transfer
some funds, if the deal goes wrong. He asked if he would
still get his interest, and at what rate of interest, while
the problem is being sorted out.
MR. PETERSON assured SENATOR RIEGER he would not suffer
because the bank, or whoever made the error, would bear the
burden of his loss, but the rate of interest would be under
law of the state. He quoted the supporting Alaska statute,
AS 45.45.10, which is essentially market rate.
SENATOR KELLY asked for further questions.
SENATOR LINCOLN quoted SENATOR KERTTULA as expecting the
bill to bring the state laws into compliance with federal
law, otherwise, the federal government will perform the
regulatory and enforcement duties related to the fund
transfers. She asked for a meaning of his quote.
Number 299
MR. PETERSON referred to his previous testimony that the
federal government wishes to be assured that all states deal
with fund transfers in the same way for a nation-wide
system. He explained if the states don't conform, then
either Congress or the appropriate federal regulatory
agencies would intervene. He also explained it was
important for Alaska to have a model version of the act, and
he said the two federal wire services had adopted the
language produced by the Uniform Law Commissioners. He said
the state statute is consistent with federal law on the
books, but he expressed the fear that if the states don't
act, the federal government would expand its area of
regulation.
SENATOR LINCOLN, in reference to those states without
similar legislation, asked if their regulations would be
replaced by the federal government.
MR. PETERSON explained if the states fail to act, they would
place their commercial climate at a great disadvantage. He
explained that if all states cannot implement the Uniform
Act, that encourages the federal government to intervene, if
they feel it is required.
SENATOR KELLY noted a list of those 45 states who have acted
on the Uniform Commercial Code, and he asked why this has
happened so quickly.
MR. PETERSON explained the UCC had swept the country because
of the great push to make uniform all of the laws to keep
pace with the strides in the business world, and he reviewed
the bill from last session on this subject.
Number 347
SENATOR RIEGER asked about the rate of interest on page 37
of the bill, as to whether it referred to the various
financial institutions. MR. PETERSON explained, as a
depositor, a rate would be set in the contract with the
bank.
After a few more questions on the subject,
SENATOR RIEGER moved to pass SENATE BILL NO. 86 from
committee with individual recommendations. Without
objections, so ordered.
SENATOR KELLY introduced CS FOR SENATE BILL NO. 112(L&C)
(UNIFORM COMMERCIAL CODE REVISIONS), sponsored by SENATOR
JAY KERTTULA, and invited ARTHUR PETERSON, Uniform Law
Commissioner for Alaska, to explain the bill.
MR. PETERSON explained that although he was now an attorney
in private practice with Dillon & Findley, he was appearing
in his role as a Uniform Law Commissioner for Alaska, and he
strongly supported SB 112.
MR. PETERSON said the bill was a faithful adherence to the
national uniform versions and covers three areas: (1) a new
article 2A on personal property leasing (Section 125 of the
bill), (2) amendments to the UCC's articles 3 and 4,
regarding negotiable instruments, bank deposits, and
collections (Sections 14 through 117 and 127 of the bill),
and (3) repeal of UCC's article 6 on bulk sales (Section 127
of the bill). He explained Alaska's numbering system was
different, and he preferred to refer to the article numbers.
Number 382
MR. PETERSON said the Labor and Commerce Committee
Substitute for SB 112 before the committee was a faithful
reproduction, which makes a couple of technical corrections.
He noted an additional typo on line 27, which would insert
"lessor or" in front of "lessee," and he said he had
discussed it with the drafting department.
MR. PETERSON said there was presently no law on the subject
of Personal Property Leasing, which means that any questions
that arise go to litigation depending on the disagreement,
go to the courts, and provide activity for attorneys, when
statutory authority should provide the necessary guidance.
He reviewed the items that fall under personal property and
said the current absence of these rules inspires litigation.
He explained a national system was needed since commerce was
conducted across state lines.
MR. PETERSON noted that the Negotiable Instruments articles
of the UCC had not been revised in about 30 or 40 years, and
he reviewed the proliferation of negotiable instruments from
9 billion in the late 1950 to 48 billion checks now. He
explained SB 112 recognized the need to provide a number of
simple and fair answers on a national basis.
In the Bulk Sales area, MR. PETERSON noted it was a sale out
of the ordinary course of business or a "bulk transfer," and
he explained, under the old law, there was a great concern
for the creditors, leaving the buyers to fend for
themselves. He described new laws have partially overlapped
article 6, and more sophisticated and wide-spread inventory
financing under article 9 of the UCC have provided even more
significant protection for creditors. He reviewed a letter
from a group of 16 Alaska business law attorneys listing
their reasons for unanimously supporting SB 112.
Number 447
SENATOR LINCOLN asked MR. PETERSON to point out the
difference between the original bill and the changes made in
the Labor and Commerce Committee.
MR. PETERSON listed the changes which dealt with the
insertion of words to avoid changing the citations every
time another chapter is added, to correct typos, to promote
consistency with the national version, to resolve
inconsistencies, to correct significant punctuation, and to
add relevant language.
Number 511
SENATOR LINCOLN discussed some of the inconsistent language
with MR. PETERSON, and MR. PETERSON agreed she was correct.
SENATOR RIEGER had a question on page 93 with the use of the
word, unconscionability, and MR. PETERSON directed him to
line 15 (d) to read the modification to be sure the national
approach prevails, within the context of Alaska Rule of
Civil Procedure 82 dealing with a consumer lease.
SENATOR RIEGER was still concerned with an "unconscionable
clause" in a contract, and he gave an example of its use
being a blank check in a contract. MR. PETERSON used a
similar example to explain the need for a nationally uniform
system of rights and obligations.
SENATOR KELLY said the bill would be discussed at the next
meeting, and he invited GERALD KURTZ, a Uniform Law
Commissioner in Alaska, to testify from his off-net site in
Anchorage.
MR. KURTZ explained that in addition to a tremendous
increase in the number of checks, electronic transfers have
become the way of doing business without any modification of
the law. He suggested, in the personal property leasing, to
read a few car ads to get an idea of personal property
leasing on the car business. He said those two areas of the
legislation were catching up with the times and need to be
adopted.
Number 565
In response to SENATOR RIEGER's question on the attorney's
fees, said the key word in the legislation was "reasonable,"
and he claimed a typical Alaskan judge is quick to crawl all
over an attorney who tries to continue litigation where
there is no reason. They continued a discussion of attorney
fees.
SENATOR KELLY checked with MR. KIRKPATRICK, MR. CRANDALL,
TAPE 93-16, SIDE B
Number 001
and GARY AMANDOLA for their opinions on the bill.
There being no further business to come before the
committee, the meeting was adjourned at 3:30 p.m.
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