Legislature(2023 - 2024)BELTZ 105 (TSBldg)
03/06/2023 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB84 | |
| SB83 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 84 | TELECONFERENCED | |
| *+ | SB 83 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 6, 2023
1:31 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Click Bishop, Vice Chair
Senator Elvi Gray-Jackson
Senator Kelly Merrick
Senator Forrest Dunbar
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 84
"An Act relating to the business of money transmission; relating
to money transmission licenses, licensure requirements, and
registration through the Nationwide Multistate Licensing System
and Registry; relating to the use of virtual currency for money
transmission; relating to authorized delegates of a licensee;
relating to acquisition of control of a license; relating to
record retention and reporting requirements; authorizing the
Department of Commerce, Community, and Economic Development to
cooperate with other states in the regulation of money
transmission; relating to permissible investments; relating to
violations and enforcement of money transmission laws; relating
to money transmission license exemptions; relating to payroll
processing services; repealing currency exchange licenses; and
providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 83
"An Act relating to professional licensing; relating to
temporary licenses for some professions; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 84
SHORT TITLE: MONEY TRANSMISSION; VIRTUAL CURRENCY
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/24/23 (S) READ THE FIRST TIME - REFERRALS
02/24/23 (S) L&C, JUD, FIN
03/06/23 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 83
SHORT TITLE: PROFESSIONAL LICENSING; TEMP PERMITS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/24/23 (S) READ THE FIRST TIME - REFERRALS
02/24/23 (S) L&C, FIN
03/06/23 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
ROBERT SCHMIDT, Director
Division of Banking and Securities
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Introduced SB 84 with a presentation on
money transmission and virtual currency.
TRACY RENO, Chief of Examinations
Division of Banking and Securities
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 84.
SYLVAN ROBB, Director
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Introduced SB 83 on behalf of the
administration.
ERICK CORDERO, Vice President of Operations
Alaska Policy Forum (APF)
Palmer, Alaska
POSITION STATEMENT: Testified in support of SB 83.
TINA REIN, Nursing Home Administrator
Foundation House Partners, Denali Center
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 83.
COLLEEN KOWALCHUK, Nursing Director
Wound and Ostomy Care Clinic
Fairbanks Memorial Hospital
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 83.
JESSICA STRUBINGER, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 83.
LEAH HOPPES, Manager/Nurse
Fairbanks Memorial Hospital Emergency Department
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 83.
ACTION NARRATIVE
1:31:20 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:31 p.m. Present at the
call to order were Senators Dunbar, Bishop, Merrick, and Chair
Bjorkman. Senator Gray-Jackson arrived during the meeting.
SB 84-MONEY TRANSMISSION; VIRTUAL CURRENCY
1:32:16 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO. 84
"An Act relating to the business of money transmission; relating
to money transmission licenses, licensure requirements, and
registration through the Nationwide Multistate Licensing System
and Registry; relating to the use of virtual currency for money
transmission; relating to authorized delegates of a licensee;
relating to acquisition of control of a license; relating to
record retention and reporting requirements; authorizing the
Department of Commerce, Community, and Economic Development to
cooperate with other states in the regulation of money
transmission; relating to permissible investments; relating to
violations and enforcement of money transmission laws; relating
to money transmission license exemptions; relating to payroll
processing services; repealing currency exchange licenses; and
providing for an effective date."
1:32:38 PM
ROBERT SCHMIDT, Director, Division of Banking and Securities
(DBS), Department of Commerce, Community and Economic
Development (DCCED), Anchorage, Alaska, introduced SB 84 with a
presentation on money transmission and virtual currency. He
advanced to slide 2 and began the presentation:
Introduction
This legislation amends and modernizes the Alaska
Uniform Money Services Act (AS 06.55) and adopts
pertinent sections of the Uniform Money Transmission
Modernization Act (Model Law).
• In 2008, money transmission was sending a wire
transfer at your local grocery store or purchasing a
money order or traveler's checks at the bank.
• This bill will modernize Alaska's money transmission
laws to include cryptocurrency (aka "virtual
currency," Bitcoin, Ethereum, DogeCoin). Six states
have adopted the Model Law in some form so far with
12 more introducing bills this year. Effective
1/1/23 DBS adopted regulations to include crypto in
current law as an interim solution.
• Cryptocurrency remains one of the key tools of rogue
actors. "North Korea stole more cryptocurrency
assets in 2022 than in any other year[.]" (Reuters,
2/6/23)
1:32:48 PM
MR. SCHMIDT stated the following:
Thank you for holding this hearing to discuss the
Money Transmission Modernization Act. I understand
that 50+ page legislation on the financial industry
may not sound exciting. But this bill impacts an
industry that most Alaskans carry in their pocket and
is used thousands of times an hour by our residents
involving billions of dollars each year. And last
year, the unregulated underbelly of this industry
resulted in thousands of Alaskans losing tens of
millions of dollars.
This presentation will have two parts. First, I will
discuss what money transmission is (think PayPal), I
will discuss the utilization of cryptocurrency by
Alaskans, the Alaska impact of the crypto
bankruptcies, and the explosive growth of money
transmission in Alaska. Then I will discuss the
modernization act and how it will benefit Alaskans.
Money transmission dates back to the middle ages when
the Knights Templar established a system for persons
to deposit gold and silver in Europe and withdraw it
in Jerusalem. In America, money transmission took hold
with the western expansion of the country, with
entities such as Western Union accepting money on the
east coast, then sending a telegram to an office near
the intended recipient, instructing the local office
to give the money to the intended recipient. For over
100 years, this was the pattern of money transmission
in America the sender physically going to a money
transmitter's office, instructing an amount of money
to be sent to the recipient, and the recipient
physically going into the local branch of the money
transmitter to receive the money. Alaskans can and do
still send money by physically going to a money
transmitter. But the industry has grown into so much
more.
As we will discuss, smartphones have revolutionized
the sending and receiving of money. Alaskans now use
their smartphones tens of millions of times a year to
send billions of dollars.
1:34:45 PM
SENATOR GRAY-JACKSON joined the meeting.
MR. SCHMIDT continued speaking:
The Division of Banking and Securities enforces the
Alaska Uniform Money Services Act (AS 06.55) which was
passed by the Legislature in 2007 and implemented in
2008.
When passed in 2007, cryptocurrency did not exist and
mobile money transmission was in its infancy. This
legislation updates the licensing, recordkeeping, and
enforcement provisions to support these business
activities and protect Alaska consumers.
This bill is based on the Uniform Money Transmission
Modernization Act (Model Law), which was developed by
state regulators, the Conference of State Bank
Supervisors (CSBS), with input and participation from
industry stakeholders.
1:35:29 PM
MR. SCHMIDT reviewed the purpose of the Alaska Uniform Money
Services Act of 2008 on slide 3. He said the Act provides the
legal framework for money transmission functions, including
currency exchange, transfer or wiring of money, and loading and
reloading payment instruments, including stored-value cards.
Slide 3 reads:
What is covered by the 2008 Act?
• Money transmitters (wiring of funds)
• Issuers of traveler's checks, money orders, or
stored valued cards
• Sellers or redeemers of traveler's checks, money
orders, or stored value cards
• Currency dealers or exchangers
1:36:04 PM
MR. SCHMIDT reviewed slide 4, stating SB 84 defines virtual
currency in statute and adds it to the definition of money
transmission requiring licensure and supervision:
Virtual Currency and Money Transmission
Definition of virtual currency: Cryptocurrency or
virtual currency means a digital representation of
value that is used as a medium of exchange, unit of
account, or store of value; and is not money, whether
or not denominated in money. AS 06.55.990(45)
MR. SCHMIDT said:
Cryptocurrency was invented by the online community in
response to the 2008 financial crisis. It is a digital
representation of value, i.e., money, that does not
pass through the banking system, is not backed by a
government, that by design has a limited quantity
only so many bitcoin can ever be available (federal
banks cannot just print more), and relies on
decentralized public ledgers to verify transactions.
Many people are surprised when they learn about
cryptocurrency, that it sounds like "Monopoly money.
How can there be a currency that is not issued by a
government and is outside the banking system? I am not
here as an advocate for or against cryptocurrency, but
I want to show you that Alaskans are using
cryptocurrency, and they are using a lot of it.
1:36:53 PM
MR. SCHMIDT spoke to the chart on slide 5, "Money Transmission
Licensees." He said:
Money transmission keeps on growing. In 2018, we had
111 licensed money transmitters. As of December 31,
2022, Alaska had 168 money transmitter licenses. Over
the past five (5) years, money transmission licenses
have increased 51 percent.
Today online transactions conducted by smartphone and
virtual currency such as Bitcoin are now common means
of exchanging or transferring payment or value. The
proposed legislation is necessary to appropriately
supervise and regulate money transmitters to protect
Alaskans. The eight largest money transmitters in the
state of Alaska all conduct over $100,000,000 a year
of business to, from, and within Alaska. The largest
two each conduct over $1 billion of business to, from,
and within the state.
1:37:50 PM
MR. SCHMIDT spoke to slides 6 and 7, "Alaska Money Transmission
Transactions." He reviewed the bar graph on slide 6 that
illustrates the total number of money transactions in Alaska,
including all money transmissions, payment instruments, stored
value, and virtual currency from 2019 through 2022. He said:
This graph shows the explosive growth in Alaskans
using money transmission. This graph shows how many
times transactions were used; this graph does not show
dollars. In three years, the number of money-serviced
transactions has tripled from over 10 million in 2019
to over 31 million transactions last year. In 2022,
Alaskans used money transmission on average, 3,540
times per hour, 24 hours a day, 365 days a year.
1:38:35 PM
SENATOR BISHOP asked whether the cited numbers exceed daily
credit card transactions.
MR. SCHMIDT answered yes, they do. He clarified that credit card
transactions are not a money service end-to-end payment
transmission; for example, a PayPal transmission of money or a
cash app transmission of money. These transmissions of money do
not include debit or credit cards.
SENATOR BISHOP said the prepared statement he is reading from is
fascinating. He requested a copy for distribution to committee
members with the chair's permission.
MR. SCHMIDT replied that it is not his decision to make, but he
hopes to share it.
1:39:43 PM
SENATOR GRAY-JACKSON asked if Zelle and Venmo are
cryptocurrencies.
MR. SCHMIDT replied that cryptocurrency is a digital
representation of value and has its own name. For example, the
most widely recognized name in cryptocurrency is Bitcoin.
Cryptocurrency is also known as virtual currency. An example of
real money is U.S. dollars. An individual might find an item on
the Facebook marketplace that costs $20. That individual sends
$20 by PayPal or Meta Pay. Those are real U.S. cash dollars
deposited into a bank account and withdrawn by a debit card. An
individual could also elect to use cryptocurrency to buy the
item. He said that cryptocurrency is so simple that it is
confounding because of our ideas about money, but it is a
digital representation of value.
SENATOR GRAY-JACKSON interrupted, stating it sounds like the
answer to her question is no.
MR. SCHMIDT replied that cryptocurrency and cash are different
things.
1:41:28 PM
MR. SCHMIDT continued his commentary on slide 6, stating the
growth in the money transmission industry is driven by two
factors. The first is mobile payment apps on smartphones. These
are apps such as PayPal, Meta Pay, etc.
1:41:30 PM
MR. SCHMIDT reviewed the bar graph on slide 7:
The second factor driving money transmission growth is
the emergence of cryptocurrency. Cryptocurrency
exploded in the last two years largely for investment
reasons people bought crypto hoping it would
increase in value. But crypto is now being used
increasingly for its original purpose of exchanging
value. People are using crypto in place of cash to pay
for things.
1:42:00 PM
SENATOR BISHOP asked if that was because it is off-book.
MR. SCHMIDT replied that it is and is not off-book.
Cryptocurrency does not pass through the banking system, but the
transactions are available on publicly viewable ledgers. The
ledgers look encrypted unless an individual's wallet address is
known; then, it is publicly traceable. The wallet address
comprises about 30 letters, commas, and other characters.
Cryptocurrency does not pass through the banking system, is not
subject to suspicious activity reporting, and knowing customer
requirements is not always necessary. It lacks that regulation
but, in some ways, is more public than most people realize.
MR. SCHMIDT continued his commentary of slide 7, stating:
In 2019, there were 84,719 cryptocurrency transactions
in Alaska. In 2021, the heyday of cryptocurrency,
there were 3,283,291 individual transactions. Last
year, even with all the bankruptcies, Alaskans
transacted 1,956,704 times. The key takeaway is
whether we understand it fully or not, or like it or
not, it is a reality that it is here and being used
at-scale by Alaskans.
1:43:37 PM
MR. SCHMIDT reviewed the bar graph on slide 8, "Money
Transmission Volume." He said:
In 2019, the volume of money transmission in Alaska
was $1.6 million. In 2021, it was over $7 billion. In
2022, it went down slightly to $5.8 billion due to
cryptocurrency bankruptcies. This is not entirely an
apples-to-apples comparison, but if you were to
compare the volume of money transmission to the assets
of the Alaska state-chartered financial institutions,
they are about the same. That is to say, this is an
awful lot of money and it is a very common way for
Alaskans to conduct their business.
1:44:27 PM
MR. SCHMIDT reviewed the bar graph on slide 9, "Money
Transmission Volume - Virtual Currency." He said:
This graph shows the jaw-dropper of them all. In 2019,
Alaska went from $33.6 million in cryptocurrency
transactions to, from, and within the state to $1.9
billion in 2021. That is a growth of 5,789 percent
from 2019 to 2021, 24 months.
Virtual currency transmission in Alaska grew 2,120
percent in 2021 alone. Virtual currency transactions
have fundamentally changed the financial services
world. This bill will add virtual currency activities
to the definition of money transmission in statute to
allow DBS to regulate this activity that accounted for
nearly one-third of the total money transmission
volume in Alaska in 2021. The dollar amount of volume
dipped in 2022 due to the crypto company bankruptcies
and market crash. But Alaskan's utilization of crypto
remains far above its 2020 level.
Alaska did not regulate virtual currency activity
until this year. A very limited regulations package
became effective on January 1st, adding virtual
currency to the definition of money transmission under
the current statute and requiring additional companies
to become licensed.
1:45:53 PM
MR. SCHMIDT advanced to slide 10, "2022 Crypto Bankruptcies -
Alaska Consumer Harm:"
VOYAGER DIGITAL:
• 1,879 Alaskan Accounts
• $4.96 million in Alaska accounts frozen
CELSIUS NETWORK:
• 526 Alaskan Accounts
• $13.9 million in Alaska accounts frozen
CONSUMER COMPLAINTS RECEIVED: 0
MR. SCHMIDT reviewed slide 10:
Of course, we cannot talk about cryptocurrency without
discussing its tumultuous year in 2022. This slide
captures one of the biggest stories that you did not
hear about in 2022, and that is the Alaska impact on
crypto-bankruptcies. There were three main crypto-
bankruptcies in 2022. The first two were Voyager
Digital and Celsius Network. Twenty-four hundred
Alaska accounts valued at almost $20 million were
frozen in those two bankruptcies. That is to say, on
day one of the first bankruptcy, and on day one of the
second bankruptcy, Alaska assets at $20 million were
frozen. It is unclear if, when, or how much impacted
Alaskans might get back as these bankruptcies
progress.
The impact of the crypto-bankruptcies on Alaskans
makes these bankruptcies an exceptionally large
consumer loss. Yet DBS received zero complaints. We
often find that victims of financial harm often suffer
in silence, but that silence does not mean Alaskans
are not impacted. This is not the sort of situation
where you want to wait for a squeaky wheel because we
had this massive event, thousands of Alaskans, tens of
millions of dollars, and no one has really said
anything. This does not mean that it is not having an
impact.
1:47:16 PM
MR. SCHMIDT advanced to slide 11, which outlined the biggest
bankruptcy of 2022:
FTX Trading - Alaskan Consumer Harm
FTX - Bankruptcy in November 2022; largest crypto
bankruptcy yet; former CEO facing federal criminal
charges.
$$$ ? ? ? ALASKA IMPACT UNKNOWN
"Never in my career have I seen such a complete
failure of corporate controls and such a complete
absence of trustworthy financial information as
occurred here."
-FTX CEO-in-bankruptcy John Jay Ray III
(Mr. Ray was the CEO-in-bankruptcy of Enron)
MR. SCHMIDT spoke about the 2022 FTX bankruptcy:
The biggest crypto bankruptcy of 2022 was the
spectacular collapse of FTX. DBS is closely monitoring
this bankruptcy, but we have yet to get reliable data
on the Alaska impact of this bankruptcy. What we do
know is that FTX was bigger than Voyager and Celsius.
Because of that, we expect the impact on Alaskans to
be greater. FTX's former CEO, Sam Bankman-Fried, has
been charged with financial crimes. Some of FTX's
senior management has pled guilty to financial crimes.
DBS believes that Alaskans lost many millions of
dollars to FTX, and the chance of any recovery
currently looks remote.
1:47:59 PM
MR. SCHMIDT advanced to slide 12 to discuss the fiscal impact of
SB 84:
Fiscal Impact
• Receipts in FY2012 were $12.4 million. The FY2012
budget was $3.5 million.
• Receipts in FY2022 were $22 million. The FY2022
budget was $4.3 million.
1:47:57 PM
MR. SCHMIDT said:
This bill contains a fiscal note. Division receipts
have grown 77% from FY2012 to FY2022. Receipts in
FY2022 were $22 million against a division budget of
$4.3 million.
The division will require additional staff and support
costs to respond to the growth in money service
activities, the complexity of new business models, and
use of third-party partnerships. The positions will
allow the division to implement the new law,
incorporate changes in the operation of NMLS
[Nationwide Multistate Licensing System], develop
proficiency in the examination of electronic systems,
and assessment of cybersecurity measures in a high-
risk environment.
New program receipt revenue is estimated to be at the
low end, with a minimum of $110,000 for 35 new license
applications by FY2025. It is difficult to anticipate
the number of new applications, annual renewal
fees/assessments, and resulting revenue for future
years. However, the division expects to adopt an
assessment fee model through new regulations that
would ensure actual costs of supervision of the
industry would be covered through annual program
receipts and is expected to range between $750K to
$1.2 million.
MR. SCHMIDT described this as an industry of minnows and whales.
Alaska has:
- Two top money-service businesses over $1 billion each,
- Eight money-service businesses over $100 million each, and
- At least one locally owned, smaller money-service business
that all pay the same fees.
MR. SCHMIDT said that the fees are inappropriately scaled for
each business. SB 84 allows for a volume-based assessment, so
the larger, higher-risk operations pay more than the locally
owned, smaller business.
1:49:58 PM
SENATOR MERRICK asked if he could disclose who the top two
operators are.
MR. SCHMIDT answered probably not, but those names would not
surprise anyone. They are widely known.
SENATOR DUNBAR brought up Venmo that is owned by PayPal. He
asked if they would pay a fee of some kind under SB 84's new
regulatory package and, if so, how would the state get them to
pay and collect the fee.
MR. SCHMIDT replied that all the data is self-reported through
the Nationwide Multistate Licensing System (NMLS), an automated
system used to regulate the financial services industry. Venmo
and PayPal would report their data, and the state would adopt a
formula based on fractions of a percent. They would pay through
MNLS and pay the state annually instead of a $3,000 license fee
which is an annual renewal.
SENATOR DUNBAR sought confirmation that the fraction of a
percent is so small that the consumer would not notice an
increase in transaction fees.
MR. SCHMIDT replied that the consumer would not notice an
increase in fees. He said he intends to discuss later how the
fee model would benefit consumers. The change in the proposed
fee model would have no impact on the consumer.
1:52:11 PM
MR. SCHMIDT reviewed slide 13:
Why do we need to change the Act?
• The current law has not kept up with the industry's
explosive growth and innovation.
Consumer protection is insufficient; cryptocurrency
is currently one of the top risks for consumer
fraud.
• Reduce wasting staff time, increase automation,
harmonize Alaska laws to encourage business, reduce
regulatory burden.
1:52:39 PM
MR. SCHMIDT advanced to slide 14. He said SB 84 would let the
Division of Banking and Securities (DBS) leverage the Nationwide
Multistate Licensing System (NMLS) registry for submitting
license applications, filing documents, reporting, and paying
fees. The bill removes the currency exchange license type and
adds currency exchange to the definition of money transmission,
so only one license is needed. He summarized slide 14:
What does this bill do?
• Reduces regulatory burden by streamlining initial
licensing and license renewal
• Protects Alaska consumers by conducting criminal
background checks through the Nationwide Multistate
Licensing System (NMLS)
1:53:05 PM
MR. SCHMIDT said he has a staff member who spends about 400
hours per year doing manual background checks because NMLS does
not allow the division to do automated background checks under
current statute.
• Ensures regulatory costs of supervision keep pace
with growth
• Broadens the definition of money transmission and
defines virtual currency activities
• Requires licensees to comply with federal laws,
including suspicious activity reporting
• Updates enforcement provisions by allowing a broader
spectrum of orders to be issued
• Ensures DBS can coordinate with other states in all
areas of regulation, licensing, and supervision to
reduce regulatory burden on the industry and more
effectively utilize regulator resources
MR. SCHMIDT continued paraphrasing his statement below:
The bill allows the implementation of a volume-based
annual assessment. Licensees will be required to
report money transmission volume, which will ensure
licensees are treated fairly and equitably based on
the level of volume and business conducted in the
state. He said it does not make sense for a guy who is
doing a couple of million dollars to pay the same
couple of grand as someone who is doing billions.
The bill includes virtual currency transactions and
other methods of moving or transferring monetary value
to better protect Alaskans. Six states have adopted
some version of the Model Law so far, and twelve have
introduced bills this legislative session.
1:54:03 PM
MR. SCHMIDT said thank you for the opportunity to testify on SB
84. He expressed his hope that he communicated how expansive
this field of the Alaska economy is, the importance of it, and
the silent revolution and payment systems happening out there.
He hoped the committee would view the bill favorably.
SENATOR DUNBAR asked which states adopted some version of the
Model Law.
MR. SCHMIDT replied that Arizona adopted it, essentially fully.
Connecticut, Georgia, South Dakota, Utah, and West Virginia
partially adopted it. He pointed out that one of the things he
likes about SB 84 is it has support from the industry and
support from consumer rights advocates. Politically and
geographically diverse states and urban and rural areas are
adopting it. The Model Law has been well received nationwide.
1:55:24 PM
SENATOR BJORKMAN recalled that the director had said there is an
unregulated financial transaction underbelly. He asked if there
are people who endanger the financial security of Alaskans and
whether SB 84 has the penalties and measures that punish bad
actors.
MR. SCHMIDT replied yes. Before January 1 of this year, the
division's approach was cryptocurrency was not money; therefore,
DBS did not regulate it. Cryptocurrency in Alaska was entirely
unregulated by the state. The exception was that DBS could
regulate anything to the extent that it was an investment, but
it could not regulate money transmissions. SB 84 was introduced
last year and made good progress, but it did not pass. The
division prioritized passing a regulations package that
clarified that DBS could regulate cryptocurrency under existing
statutes. The division applied a temporary fix under existing
statute, including:
- enforcement provisions that allow DBS to enter enforcements
orders, and
- revoke licenses to assess civil penalties.
MR. SCHMIDT said underbellies should be well regulated.
1:57:16 PM
CHAIR BJORKMAN invited Tracy Reno of DBS to present the
sectional analysis.
1:57:29 PM
TRACY RENO, Chief of Examinations, Division of Banking and
Securities, Department of Commerce, Community and Economic
Development (DCCED), Anchorage, Alaska stated the sectional
analysis is available on BASIS under the SB 84 "Documents" tab.
She presented a shortened version, and the following excerpts
show the points she highlighted:
Sectional Analysis
SB 84 version A
An Act Relating to Money Transmission; Virtual
Currency
The proposed bill is not a simple repeal and
reenactment of AS 06.55. Instead, it is a line-by-line
overhaul of the Act carefully considering the Model
Law and selectively adopting and revising the
statutes. The bill repeals the currency exchange
license and includes that activity in the definition
of money transmission so only one license type will be
required in AS 06.55 going forward.
Section 1. Adds a section of uncodified law explaining
the purpose of the bill.
Section 2. Amends AS 06.05.101(a) requires a license
to engage in the business of money transmission (MT).
The amendment inserts a citation to the exemption
statute, AS 06.55.802, and clarifies that an
authorized delegate may not engage in MT if the
actions taken are outside the scope of the exemption.
Section 3. Repeals and reenacts AS 06.55.102 to
conform with the Model Law providing application
requirements for a MT license and allows the
Department of Commerce, Community, and Economic
Development (DCCED or the department) to change or
update the forms to be consistent with licensing
requirements in NMLS [also referred to as the
registry].
1:58:35 PM
Section 7. Amends AS 06.55 to add new sections to
Article 1A concerning virtual currency derived from
the Model Law. Virtual Currency (VC) Business Activity
replaces Currency Exchange Licenses as the heading for
Article 1A. AS 06.55.150 06.55.170 provide the
details of what is considered and what is not
considered licensed activity for companies engaging in
VC business activity. The bill will allow regulation
and supervision of persons that issue VC or that
provide services that allow others to transfer VC,
provide exchange services to the public, or offer to
take custody of VC for other persons.
AS 06.55.150 provides that VC business activity is
MT and unless exempt, the activity requires a MT
license.
AS 06.55.155 concerns required disclosures granting
the department discretion to require additional
disclosures and to regulate the time and form
required for disclosure.
AS 06.55.160 requires VC business with control over
VC to maintain an amount of each type of VC
sufficient to satisfy the aggregate entitlements of
the persons to each type of VC ensuring consumer
protection and reducing regulatory burden on the
licensee without increasing net worth requirements.
AS 06.55.165 allows a licensee engaged in VC
business activity to include VC in its tangible net
worth calculation and details record keeping
requirements specific to VC businesses.
AS 06.55.170 contains a list of exempted activities
and provides an exemption for business activity of
$5,000 or less.
1:59:10 PM
Section 10. Amends AS 06.55.401 relating to
supervision and the department's powers with respect
to examination. It allows the department to accept
examination reports from other states [for network
supervision], the federal government, or an
independent accounting firm. This section requires
licensees to pay all costs associated with
examinations, references confidentiality requirements,
and eliminates the existing requirement to notify a
licensee 45 days prior to an examination.
1:59:41 PM
Sections 11 - 14. Repeals and reenacts or amends
subsections of AS 06.55.403 for consistency with the
Model Law. It requires quarterly reports of condition
for a licensee's activities and their authorized
delegates. It maintains existing requirements for
immediate reporting knowledge of filing a bankruptcy
petition, a proceeding to revoke or suspend a license
in another state or country, bond cancellation and
criminal charges. Allows the department to utilize the
NMLS for reporting required by AS 06.55.403.
MS. RENO said this section change would help the division
regulate virtual currency companies it did not previously
regulate.
Section 15. Repeals and reenacts AS 06.55.404
regarding acquisition of control of a MT licensee
containing procedural and reporting requirements for
the acquisition or transfer of control of licensees.
It allows exceptions for acquisition of control and
contains discretionary provisions for the department
for ease and flexibility of administration and the
utilization of the NMLS. It adds details for
aggregation of interest of ownership for family
members for consistency with the Model Law.
Sections 16 and 17. Amends AS 06.55.405(a) and (d) for
consistency with the Model Law. It details record
keeping obligations of licensees, increasing the time
period from 3 years to 5 years [to follow the Bank
Secrecy Act], and makes conforming language changes.
Section 23. Adds a new subsection (f) to AS 06.55.407
stating when department records may be made public and
what information is confidential.
2:00:58 PM
Section 24. Amends AS 06.55 to add new sections to
Article 4 from the Model Law
AS 06.55.408 requires licensees to submit an annual
audited financial statement to the department within
90 days after the end of the licensee's fiscal year.
AS 06.55.409(a) grants the department discretion to
enter into agreements with other state and federal
agencies to improve efficiencies and reduce
regulatory burden.
AS 06.55.409(b) grants the department broad
discretion to administer, interpret, and enforce the
chapter, to adopt rules and regulations, and to
recover its costs through imposition and collection
of fees.
AS 06.55.410 expands the department's ability to
participate in multistate supervisory processes such
as joint investigations.
AS 06.55.411 provides that in the event of an
inconsistency between state and federal law, the
federal law governs to the extent of the
inconsistency.
AS 06.55.412 contains the requirements and
procedures applicable when a licensee adds or
replaces a key individual allowing the department to
disapprove a change of key individual due to certain
criteria.
2:01:06 PM
Sections 27 and 28. Amends subsections (a) and (b) of
AS 06.55.502 concerning permissible investments for
consistency with the Model Law.
Subsection (a) does the following:
1. Incorporates ACH items in transit to licensees and
payees, cash in transit via armored car, cash in smart
safes, etc. ACH funds are in the banking system and
the Model Law defines cash in transit via ACH as a
permissible investment;
2. allows letters of credit as a permissible investment;
and
3. allows excess bonding as a permissible investment
type.
2:01:32 PM
Section 29. Amends AS 06.55 to add a new section to
Article 5.
AS 06.55.503 contains the requirements for letters of
credit to align with the Model Law
Amends AS 06.55 to add new sections to Article 5.
AS 06.55.505 proposes applicable forms of security (AS
06.55.104) and is a hybrid of the Model Law and the
existing Act. It requires a licensee to hold a security
bond or with the department's approval, a deposit, with a
maximum amount of $1,000,000 and be maintained for no
less than 5 years with the details to be determined by
the department in regulation or order.
AS 06.55.506 provides a significant expansion of net
worth requirements from $25,000 to a new net worth based
on a tiered level of total assets held, requiring a
licensee to demonstrate net worth at application. It also
allows the department to exempt applicants or licensees
from net worth requirements.
Section 30. Amends AS 06.55.601 for consistency with
the Model Law regarding the suspension and revocation
of a license by deleting unnecessary language and
inserting new terms such as key individual and the
replacement of transmission for services.
2:02:11 PM
Section 37. Amends AS 06.55.605 regarding civil
penalties allowing the department to assess its costs
and expenses for investigation.
2:02:21 PM
Sections 40 and 41. Amends subsections of AS 06.55.607
to remove citations to AS 06.55.201, which is
repealed. The existing AS 06.55.201 contains the
currency exchange license requirements and this
license is being eliminated in the bill in favor of
one license type including currency exchange as a
money transmission activity.
Section 43. Amends AS 06.55.802 for consistency with
the Model Law revising licensing exclusions and
renames the section to exemptions. It adds new
exemption types and would allow the department to add
additional exemptions if it is in the public interest
creating consistency from state-to-state. It also adds
the term federally insurance depository financial
institution for consistency with other statutes the
division regulates under AS 06.60.990(9).
MS. RENO said that SB 84 gives payroll processors an exemption
at the request of industry.
2:03:06 PM
Section 46. Amends AS 06.55.810 by adding a new
subsection (d) that requires licensees and authorized
delegates include on a receipt or through disclosure
on the licensee's website or mobile application, the
name and phone number of the department and a
statement on how customers can contact the department
with questions or complaints.
2:03:27 PM
SENATOR BISHOP sought confirmation that payroll processors are
third parties that run payroll for a small mom-and-pop business.
MR. SCHMIDT clarified that payroll processors run payroll for
small and large businesses. The division found that except for
one multi-state licensed payroll processor, DBS never required
payroll processors to license their operations. There was
concern about imposing a $2,000 regulatory requirement on them.
The division decided that, given the past practice, DBS would
exempt them from this version of the legislation.
SENATOR BISHOP asked if there are many payroll processors in the
state.
MR. SCHMIDT replied he expects there are over 100.
2:05:01 PM
MS. RENO continued highlighting excerpts from the sectional
analysis:
Section 46. Amends AS 06.55.810 by adding a new
subsection (d) that requires licensees and authorized
delegates include on a receipt or through disclosure
on the licensee's website or mobile application, the
name and phone number of the department and a
statement on how customers can contact the department
with questions or complaints.
Section 48. Repeals and reenacts AS 06.55.830
regarding receipts for consistency with the Model Law.
Subsections (a) (b) include content and format
requirements for transaction receipts and define
receipt. Receipts are required to be in English and
any other language principally used by the licensee or
authorized delegate to negotiate a transaction.
Subsection (c) describes exceptions to the receipt
requirement including stored value. Subsection (d)
provides a definition of receipt.
Section 53. Amends AS 06.55.850 by adding a new
subsection (f) that states an annual renewal fee must
be based on a licensee's total volume of money
transmission in the state with the annual renewal fee
to be determined by the department by regulation or
order.
MS. RENO said the division is sensitive to small businesses but
acknowledges the risk of large, multi-state international
companies. So, the administration proposes tiers based on volume
to address annual renewal fees in this section.
2:05:56 PM
Sections 54 - 61. Amends definitions found in AS
06.55.990 for consistency with the Model Law. Changes
include the incorporation of the words in this state
to ensure AS 06.55 protects Alaska consumers and
ensuring revisions are made to align the language of
the Act with the model law. It also includes an
exception for a loyalty reward card, amends the
definition of control to at least 25 percent of
ownership and amends the definition of stored value.
2:06:27 PM
Section 62. Amends AS 06.55.990 to renumber and add
definitions for terms introduced by the Model Law
including the following terms:
1. Accredited state
2. Acting in concert
3. Average daily money transmission liability
4. Bank Secrecy Act
5. Closed loop stored value
6. Control of virtual currency
7. Dollar equivalent
8. Eligible rating
9. Eligible rating service
10. Federally insured depository financial
institution
11. In this state
12. Individual
13. Key individual
14. Passive investor
15. Payroll processing services
16. Registry
17. Tangible net worth
18. Virtual currency
2:06:41 PM
Section 63. Amends AS 06.55.995 to refer to the Act or
Chapter as the Alaska Uniform Money Transmission
Modernization Act instead of the Alaska Uniform Money
Services Act.
2:06:53 PM
Section 64. Amends AS 12.62.400(b) to read that an
applicant under AS 06.55 may submit fingerprints to
the registry.
2:07:04 PM
Section 65. Repeals several sections in AS 06.55. AS
06.55.104 and AS 06.55.107 are repealed and reenacted
in Article 5 concerning prudential standards. All
statutes in Article 2 regarding currency exchange
licenses are repealed as the activity was added to the
definition of money transmission. AS 06.55.890 and AS
06.55.990 contains definitions that are no longer
necessary.
2:07:30 PM
Section 66 68. are transitional provisions amending
uncodified law to avoid interference with existing
contracts, to allow a transitional period for holders
of existing money services licenses and for payroll
processors, to allow adoption of transitional
regulations by DCCED, and to instruct the revisor of
statutes to amend certain headings.
2:07:36 PM
Section 69. provides for an immediate effective date
for sec. 68, which would allow DCCED to begin the
regulation promulgation process.
Section 70 provides for an effective date of January
1, 2024.
2:07:55 PM
SENATOR BISHOP remarked that the administration is proposing
many statutory changes and repeals. He sought confirmation that
the goal of SB 84 is to weed out bad actors and protect
Alaskans.
MR. SCHMIDT replied that this is one of the goals.
SENATOR BISHOP drew attention to Section 64, which states, "...
an applicant under AS 06.55 may submit fingerprints to the
registry." He asked why the proposed change does not read
"shall" rather than "may" since one of the bill's objectives is
to weed out bad actors.
2:08:27 PM
MS. RENO replied that the bill uses "may" rather than "shall" to
give DBS the flexibility of choosing a different licensing and
regulation system.
MR. SCHMIDT added that an applicant must submit their
fingerprints; one way an applicant may do it is through NMLS.
2:09:12 PM
SENATOR GRAY-JACKSON said she would like to meet offline to
understand SB 84 better.
MR. SCHMIDT replied that he is in Juneau all week.
2:09:45 PM
CHAIR BJORKMAN opened public testimony on SB 84; finding none,
he stated he would hold public testimony open.
CHAIR BJORKMAN held SB 84 in committee.
2:10:29 PM
At ease
SB 83-PROFESSIONAL LICENSING; TEMP PERMITS
2:14:39 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 83 "An Act relating to
professional licensing; relating to temporary licenses for some
professions; and providing for an effective date."
2:15:13 PM
SYLVAN ROBB, Director, Division of Corporations, Business and
Professional Licensing (CBPL), Department of Commerce, Community
and Economic Development (DCCED), Juneau, Alaska, introduced SB
83 on behalf of the administration.
2:15:40 PM
MS. ROBB advanced to slide 2 to explain universal temporary
licensure (UTL) and the three ways to qualify. A universal
temporary license aims to get people to work faster in Alaska.
She reviewed slide 2:
What is Universal Temporary Licensure?
Universal Temporary Licensure (UTL) is a measure that
establishes a pathway for limited reciprocity for
qualified professionals who:
• Hold substantially equivalent licenses in other U.S.
and Canadian jurisdictions or
• Have demonstrated substantial compliance with
licensing requirements in Alaska but live in a U.S.
jurisdiction or Canadian territory/province where
the profession is not licensed or
• Meets the qualifications for Alaska licensure
through military education, training, and service
and does not already hold a license in another
jurisdiction
2:16:58 PM
MS. ROBB turned to slide 3, "How Does One Qualify for UTL?" She
relayed the following information:
Applicant cannot:
• Be the subject of disciplinary action related to their
profession or be the subject of ongoing review or
disciplinary proceeding by the professional licensing
entity in another jurisdiction or
• Have committed an act in another jurisdiction within the
past 10 years that would have constituted grounds for
denial or revocation of a license in Alaska at the time
the act was committed
Applicant must:
• Submit application and provide documents required to
verify:
• Licensure in good standing in another jurisdiction
• Lack of licensure in their jurisdiction of residence
and proof of meeting Alaska's qualifications or
• Proof of meeting Alaska's qualifications with military
education, training, and service per AS 08.01.064(a)
• Undergo a criminal history background check if required
for that profession in Alaska
• Pay all required fees
MS. ROBB said professionals cannot obtain a UTL if they are from
a jurisdiction with substantially different licensing
requirements, which further ensures these professionals are safe
to practice in Alaska.
2:18:32 PM
MS. ROBB advanced to slide 4, "How Does UTL Work?" and reviewed
the following:
• Temporary licenses are valid for up to 180 days
• Applicants can apply for one 180-day extension
(approved at the department's discretion)
MS. ROBB explained the 180-day extension applies to temporary
licensees who show they are working towards permanent licensure
but still need to meet the requirements because a required class
was not available or extenuating life circumstances prevented
them from submitting final, permanent licensure items.
• Temporary license holders are authorized to
temporarily practice the profession for which the
license was granted in compliance with Alaska's laws
MS. ROBB emphasized UTL holders are required to comply with
statutes and regulations that cover their practice in Alaska,
not the state laws of the jurisdiction from which they came.
2:19:40 PM
CHAIR BJORKMAN drew attention to the bullet point at the bottom
of slide 3 regarding a criminal history background check. He
remarked that people report long wait times for background
checks. He inquired about the efficiency of this when the bill
aims to expedite licensure.
MS. ROBB replied that a handful of professions require a
criminal background check. The division's standard operating
procedure is to issue a temporary license as soon as fingerprint
cards are submitted to the Department of Public Safety (DPS).
CBPL does this to ensure background checks do not hold up the
licensing process. Permanent licenses are not issued until DPS
returns background check results.
2:21:16 PM
SENATOR BISHOP sought clarification about the process, asking
who takes the fingerprints.
MS. ROBB replied that local law enforcement offices have
standard fingerprint cards and can take prints. Individuals
submit their cards to CBPL. The cards are available elsewhere,
and she expressed her belief an individual could download the
cards from the division's website.
SENATOR BISHOP expressed alarm. He sought confirmation that
after a UTL applicant's fingerprint cards are submitted to DPS
and while that agency runs a criminal background check, the
applicant is issued a temporary license.
MS. ROBB replied this is correct, but she said to bear in mind
the applicant must have a license in good standing from another
jurisdiction with substantially similar licensing requirements
to qualify for a UTL. She emphasized that if Alaska requires a
criminal background check, the other licensing jurisdiction must
also require it.
2:22:51 PM
MS. ROBB returned to slide 4:
How Does UTL Work? [continued]:
• The department has the authority to revoke a
temporary license if the license was secured under
deceit, fraud, or intentional misrepresentation
MS. ROBB said three professions in Alaska require Alaska-
specific knowledge and are not covered by this statute:
• Temporary license provisions do not apply to:
• AS 08.48: Architects, Engineers, Land Surveyors,
and Landscape Architects;
• AS 08.54: Big Game Guides and Related
Occupations; or
• AS 08.62: Marine Pilots
2:24:14 PM
MS. ROBB advanced to slide 5, stating SB 83 allows CBPL to
streamline and expedite the licensure process to get qualified
professionals working in Alaska faster. She reviewed the need
for universal temporary licensure on slide 5:
Why is UTL Needed?
• Boards were given the authority to create temporary
licenses under AS 08.01.062, but many still have not
• Processing times are long for many programs due to
increased workloads
• Increase of 64% in the number of professional
licenses (FY12-FY22)
• Allows the department to issue qualified
professionals a temporary license as part of the
permanent licensure process once the required items
for the temporary license have been received
• Allows qualified professionals to begin working
more quickly
• Limits the additional work created by making the
temporary license part of the permanent licensure
process (if the applicant wants a permanent
license)
MS. ROBB said the universal temporary licensure concept gives
CBPL one more tool to address the division's licensing
challenges. Eighteen other states have a temporary licensing
option. CBPL wants this option to get vetted professionals to
work faster.
2:25:39 PM
MS. ROBB spoke to professionals seeking permanent licensure. She
said the department would issue a temporary license
automatically if and when an applicant meets the qualifications
for temporary licensure as part of the permanent licensure
process. This reduces the need for multiple applications and
reduces the number of documents the division processes. The bill
gets people into the workplace quicker without increasing the
number of license applications.
MS. ROBB said all boards have the option to offer temporary
licenses, but only some actually do. Some boards offer multiple
temporary licenses. The division wants to streamline the UTL
process by offering just one standardized temporary license to
communicate that Alaska is open for business.
2:28:41 PM
MS. ROBB advanced to slide 6:
How Do We Know UTL Will Help?
• The Alaska State Medical Board and Alaska Board of
Nursing led the way in making temporary permits part
of the permanent licensure process
MS. ROBB said temporary licensure requires additional tracking
and communication beyond what is necessary for permanent
licensure, but it eliminates the need for applicants to submit
and licensing staff to review multiple applications. This
streamlines the process for licensing staff and makes it easier
for the license applicant.
• These temporary permits allow physicians, physician
assistants, registered nurses, and licensed
practical nurses to get to work quicker while we
wait on items from third-parties (such as
verifications of work experience, verifications of
hospital privileges, etc.)
MS. ROBB explained that many licenses require primary source
verifications. CBPL must receive source documents directly from
schools, employers, and other entities, not the applicant. These
documents include employment verifications and transcripts. She
said the primary source verification requirement aims to protect
the division from people manipulating documents and falsifying
records. Former employers do not always prioritize employment
verifications, which can delay documentation. SB 83 alleviates
these types of temporary document delays.
• Previously, applicants would have to specify if they
wanted a temporary license when submitting their
application for a permanent license or apply for it
separately from the permanent license
2:30:48 PM
MS. ROBB said standardizing the process across all programs
would reduce processing times. For example, out of 1,000
temporary nursing licenses in the last eight months, 200
applicants did not submit any paperwork to get a permanent
license. It was helpful for licensing staff to know they did not
need to communicate with those applicants about permanent
license paperwork requirements.
• Medical and nursing professionals, hospitals, and
health care facilities are happier under this
current process
• We currently have similar provisions available to
active-duty military members and their spouses under
AS 08.01.063 (due to SB 21 passed last year)
MS. ROBB said military spouses have the option of getting a UTL
or a military courtesy license. CBPL is required to issue
military courtesy licenses within 30 days.
2:31:59 PM
SENATOR DUNBAR sought confirmation that the temporary licensing
process already exists for nurses through the Alaska Board of
Nursing.
MS. ROBB said that is correct.
SENATOR DUNBAR commented that the committee heard testimony
previously that one justification for the Nurse Licensure
Compact (NLC) is the length of time it takes to get a nurse up
and running with a temporary license. He said CBPL has already
implemented and operates under an improved, faster temporary
license process, yet the division recently requested an NLC
because the process is not fast enough. He asked why the
committee should consider the proposed standardized UTL for
other professions when it does not seem to have helped the
nurse's temporary licensure situation.
MS. ROBB replied that the standardized UTL process for nursing
clearly identifies which applicants do not want a permanent
license, thus saving time with the following tasks:
- reviewing applications to see what is missing to obtain a
permanent license,
- communicating that to the applicant, and
- following up on notification deadlines.
SENATOR DUNBAR sought confirmation that a temporary license is
available through the Board of Nursing now, but SB 83 takes it a
little further and is a little different.
MS. ROBB replied that is correct. She said SB 83 repeals
temporary licensure language for boards with that provision and
replaces it with standard temporary license language. A standard
temporary license is easier for applicants and staff.
2:34:03 PM
MS. ROBB advanced to slide 7, stating the division seeks
legislative help with UTL and NLC as tools to accelerate
processing times. She said the division views NLC as the best
option; it would reduce the number of applications submitted to
CBPL. UTL complements the nursing compact. There are 39 compact
states. UTL creates a pathway for a temporary license for
professionals who are not in a compact state. She said NLC is a
great option for improvement. She added that many of the
division's professions do not offer a temporary license option,
so people cannot work until licensing staff process their
documents. Universal temporary licensure and compact criteria
are listed on slide 7:
UTL vs. Compacts
Universal
Licensure Interstate
Recognition Licensure
Laws Compacts
Criteria
Requires practitioners to abide by the scope of Yes Yes
practice of the state in which they are practicing
Allows for expeditious interstate movement of Yes Yes
practitioners during emergencies
Reduces barriers for out-of-state practitioners Yes 1 Yes
aiming to practice within a state
Reduces barriers for in-state practitioners No Yes
intending to practice in other state(s)
Allows military spouses to maintain a single home No Yes 2
state license for the duration of the service
member's active duty, regardless of relocations,
without submitting a separate application to each
state's licensure board
Allows practitioners to work in multiple state, No Yes
both in person and via telehealth/telework, without
submitting a separate application to each state's
licensure board, requiring verification of the
current license or obtaining a new background check
Brings together a coalition of states to establish No Yes
consistent and enforceable interstate licensure
standards tailored to the public protection
requirements of a given profession
Enhances public protection by creating a multistate No Yes
database of licensure information to facilitate
collaboration on license verification and
investigations of potential misconduct
Allows multistate practice without requiring Sometimes 1 Yes 3
practitioners to change state of residence
Allows practitioners to work in multiple states No Yes
while adhering to only one state's continuing
education requirements and license renewal schedule
1 Some statessuch as Arizona and Iowahave universal licensure recognition laws
that require practitioners to reside in the state, while otherssuch as Colorado
and Idahodo not
2 This is true only if practitioners relocate to a compact member state. License
verification is based on practitioners complying with compact criteria for
privilege to practice in another member state.
3 This is applicable when practitioners travel from one compact member state to
another.
2:35:53 PM
MS. ROBB advanced to a map on slide 8 that shows which states
enacted some type of universal recognition policy for out-of-
state licensed professionals as of May 2022. The Council of
State Governments (CSG) identified the following 18 states as
having UTLs: Montana, Idaho, Nevada, South Dakota, Wyoming,
Utah, Arizona, Colorado, New Mexico, Iowa, Kansas, Oklahoma,
Missouri, Mississippi, Pennsylvania, New Jersey, Vermont, and
New Hampshire.
2:36:21 PM
MS. ROBB completed the presentation and offered to answer
questions.
2:36:30 PM
SENATOR GRAY-JACKSON asked if she is aware of any opposition to
SB 83.
MS. ROBB said none that the division is aware of now. Boards are
aware of the bill and are looking at it.
CHAIR BJORKMAN invited her to present the sectional analysis.
2:37:17 PM
MS. ROBB introduced the sectional analysis. It is available on
The Alaska State Legislature website under the bill "Documents"
tab. She addressed the following points from the sectional
analysis:
Section 1:
Repeals and reenacts AS 08.01.062 temporary license
to allow the Department of Commerce, Community, and
Economic Development ("department") to issue a
temporary license if the applicant:
• Is licensed in another U.S. jurisdiction or
province/territory of Canada that has license
requirements substantially equivalent or greater
than Alaska's, or authorizes a scope of practice
substantially equivalent to the scope of practice
for the license in Alaska;
• Meets the qualifications and requirements of a
license in Alaska and resides in a U.S. jurisdiction
or province/territory of Canada that does not
license the respective profession; or
• Meets the qualifications and requirements for the
Alaska license through military education, training,
and service under AS 08.01.064(a) and doesn't
already hold a license in another jurisdiction.
2:38:19 PM
SENATOR BISHOP asked who decides what qualifies as substantially
equivalent. He wondered if the boards decide that for
themselves.
MS. ROBB replied the department makes that determination with
the help of a paralegal. She said that substantially equivalent
is many states' standard language to compare professional
licensing. She elaborated, stating:
- a person might have graduated from a college accredited by an
entity different from that listed in a profession's threshold
qualifications, or
- a profession might require 250 hours of experience in Alaska,
but another jurisdiction only needs 240 to meet their
qualifications.
She said listing substantially equivalent qualifications for
every profession in every jurisdiction would be impossible. For
professions with a board, CBPL seeks board guidance to ensure
safe practitioners are licensed in Alaska if the applicant's
credentials are uncomfortably shy of qualification thresholds.
SENATOR BISHOP said his goal is to protect Alaskans and he asked
the question to ensure due diligence.
MS. ROBB said that the division's first and foremost goal is to
ensure licensed service providers have the education, training,
and skills necessary to provide safe services to Alaskans.
2:40:21 PM
MS. ROBB continued the sectional analysis, addressing the
following points:
Section 1 [continued]:
To qualify for a temporary license, the applicant
cannot:
• Be the subject of disciplinary action related to the
profession in another jurisdiction or be the subject
of an ongoing review or disciplinary proceeding by
the profession's licensing entity in another
jurisdiction.
• Have committed an act in another jurisdiction within
the 10 years before the application that would have
constituted grounds for denial or revocation of a
license in Alaska at the time the act was committed.
To qualify for a temporary license, the applicant
must:
• Pays all required fees
• Undergo a criminal history background check if the
department or applicable board requires such for the
professional license.
• Disclaimer: The department may consider an
application and grant a temporary license before
obtaining any resulting report. If the department
subsequently receives criminal record information
that would authorize the department or board to
take disciplinary action, that authority shall be
exercised.
Temporary licenses are valid for up to 180 days.
Applicants can apply for one 180-day extension, which
the department approves at its discretion. Temporary
license holders are authorized to practice the
profession for which the license was granted
temporarily. The department has the authority to
revoke a license issued under this section if secured
under deceit, fraud, or intentional misrepresentation.
Temporary license provisions under this section do not
apply to AS 08.48 (Architects, Engineers, Land
Surveyors, and Landscape Architects), AS 08.54 (Big
Game Guides and Related Occupations), or AS 08.62
(Marine Pilots).
Section 2:
Amends AS 08.01.063(a) under military courtesy
licenses to change the term "temporary courtesy
license" to "temporary military courtesy license", and
to refer to a "license or certificate" versus just a
license.
2:42:19 PM
MS. ROBB said sections 3-27 are conforming changes.
Section 28:
Adds a TRANSITION: REGULATIONS section under the
uncodified law to allow DCCED to adopt regulations
necessary to implement the changes made by this Act.
Section 29:
Adds a TRANSITION: SAVINGS CLAUSE section under the
uncodified law to:
• Provide for litigation, hearings, investigations,
appeals, and other proceedings pending under a law
amended or repealed by this Act to continue and
completed notwithstanding a transfer or amendment or
repeal provided in the Act.
• Allow certificates, orders, permits, licenses, and
regulations issued or adopted under the authority of
a law amended or repealed by this Act to remain in
effect for the term issued or until revoked,
vacated, or otherwise modified under the Act's
provisions.
• Allow contracts, rights, liabilities, and
obligations created by or under a law amended or
repealed by this Act and in effect as of the date
of the Act to remain in effect.
2:43:36 PM
Section 30:
Provides an immediate effective date for Sections 28-
29.
Section 31:
Provides for a July 1, 2024, effective date for
Sections 1-27.
2:43:50 PM
CHAIR BJORKMAN asked if there were questions.
2:44:04 PM
CHAIR BJORKMAN opened public testimony on SB 83.
2:44:48 PM
ERICK CORDERO, Vice President of Operations, Alaska Policy Forum
(APF), Palmer, Alaska, testified in support of SB 83. He said
that according to the Goldwater Institute, a quarter of all jobs
in the United States require an occupational license,
essentially a government-issued permit to work. Licensed
individuals may find it difficult to move to another state to
work because of additional testing or training requirements and
extra fees to obtain a new license. He said that licensure can
sometimes be excessive, limit competition, raise consumer prices
and impact minorities and low-income residents unequally.
Temporary licensure of individuals who previously completed
training or testing requirements in another state would
eliminate costly, time-consuming, and often unnecessary barriers
to employment. There is a shortage of skilled workers in Alaska,
such as school bus drivers, speech pathologists, construction
and transportation services workers, and healthcare
professionals. Universal licensing may benefit businesses and
organizations dependent on these professionals. States like
Arizona adopted universal licensing reforms, and there was a
growth in the number of professionals working in diverse fields,
such as medicine and engineering. Reducing licensing barriers
and increasing occupational mobility can increase competition,
lower prices, and boost economic growth.
2:46:45 PM
TINA REIN, Nursing Home Administrator, Foundation House
Partners, Denali Center, Fairbanks, Alaska, testified in support
of SB 83. She spoke of the difficulties associated with getting
licensed staff. She said Alaska does not have a supply of nurses
to fill vacant positions. This is evident in the number of
applicants and the length of time positions stay open. She said
the facility employs traveling nurses and nurses relocating with
the military to fill the vacancy gap. She said 40 percent of the
job offers extended to applicants were not accepted because the
applicants found jobs in other states while waiting for Alaska
licensure. She said the average license processing time exceeds
eight weeks and sometimes takes over 15 weeks. The Denali Center
and other long-term care facilities lose candidates to licensure
delays; applicants find jobs elsewhere. As a result, facilities
cannot accept new residents due to staffing shortages. She said
the issue causes a healthcare system domino effect, creating a
backup of patients in the hospital medical-surgical units,
intensive care, and emergency rooms. It affects Alaskans who end
up traveling out-of-state for critical care needs. She asked the
committee to pass SB 83 to support her staff and the elders at
the Denali Center, who need the safe care that adequate staffing
provides.
2:49:40 PM
COLLEEN KOWALCHUK, Nursing Director, Wound and Ostomy Care
Clinic, Foundation Health Partners, Fairbanks, Alaska, testified
in support of SB 83. She said Fairbanks is experiencing
unprecedented nursing vacancies for various reasons; licensing
delays are one of the biggest hurdles. The hospital uses travel
nurses more than normal, and there is sometimes fierce
competition for them. Many travel nurses indicate the Alaska
licensure process is slow and choose to work in other states.
This affects the ability to provide safe care without asking
permanent staff to work additional shifts. Extra shifts increase
the risk of burnout. It creates a chain reaction. Fairbanks has
a small dialysis program and has experienced delays with travel
nurse licensure, so much so that the inpatient program was put
on hold while nurses awaited their Alaska licenses. This is a
critical problem. It is common for licensing to take longer than
ten to twelve weeks. She said having flexible nurses who can
obtain immediate licensing would benefit patient care in Alaska.
2:51:29 PM
JESSICA STRUBINGER, representing self, Fairbanks, Alaska,
testified in support of SB 83. She said she had been a licensed
nurse for 22 years. She had worked at Fairbanks Memorial
Hospital for the last 8.5 years. She said that she returned to
bedside nursing Monday through Friday at the tail end of the
COVID surge and worked extra shifts on the weekend to help her
nursing brothers and sisters in the medical-surgical unit. She
said the workload is unsustainable, nurses work all the time,
and there is no work-life balance. She fears a shortage of
nurses will interrupt Fairbank's way of life. Nurses wait 6 - 12
weeks while CBPL processes their licenses; it is soul-crushing
for those waiting to go to work and unsafe for patients.
Patients are not turned out in the street because nurses are
picking up the slack and caring for the dying, tending to the
elderly who await placement and have nowhere else to go, for
babies and mothers that just gave birth, and for patients just
out of surgery. Hospitals need to fill position vacancies, so
the nurses carrying the extra load can be with their families
and take time off. Nurses are tired. Alaska needs to figure out
how to bring nurses to Alaska, license them, and get them
working. She said SB 83 needs to pass for Foundation Health
Partners staff and patients.
2:54:56 PM
LEAH HOPPES, Senior Manager/Nurse, Emergency Department (ED),
Fairbanks Memorial Hospital, Fairbanks, Alaska, testified in
support of SB 83. She said the long wait for a temporary Alaska
license had affected staff morale and the safety of patients and
staff. The Emergency Department has lost traveling nurses who
could have filled vacancies and closed the gap on many open
shifts. The hospital has seen:
- staff burnout and turnover from working short and picking up
extra shifts to alleviate staff shortages, and
- increased wait times for a patient to see a provider due to
throughput issues.
MS. HOPPES said throughput issues occur either because inpatient
units are short-staffed and cannot take a patient to the
Emergency Department or because ED is short-staffed and the time
to complete a task takes longer than usual.
MS. HOPPES said the University of Alaska Fairbanks (UAF)
produces 15 to 20 nurses each year and that ED might get two or
three of those nurses. A new ED nurse takes a full year to gain
the skills and confidence to care for the sickest patients
independently. A quarter of the nurses left the ED in 2022, and
with them, the department lost knowledge and skills, which take
time to replace. The Emergency Department needs to be able to
recruit and onboard from outside Alaska promptly. SB 83 would
help, and she asked for favorable consideration of the bill.
2:57:00 PM
CHAIR BJORKMAN held SB 83 in committee with public testimony
open.
2:57:23 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:57 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 83 ver A.PDF |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| SB 83 Sectional Analysis 02.27.2023.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| SB 83 Transmittal Letter 02.23.23.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| SB 83 Hearing Request Memo 02.27.2023.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| SB 83 Fiscal Note-DCCED-CBPL-02-17-23.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| Statutes Repealed by SB 83.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| SB 84 ver A.PDF |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| SB 84 Sectional Analysis Ver A 02.24.2023.pdf |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| SB 84 Transmittal Letter 02.27.23.pdf |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| SB 84 Hearing Request Memo 02.27.2023.pdf |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| SB 84 Fiscal Note-DCCED-DBS-02-16-23.pdf |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| Statutes Repealed by SB 84.pdf |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| SB 84 Presentation_DCCED-DBS 03.06.23.pdf |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| SB 84 Supporting Documents-DCCED-DBS White Paper 03.03.23.pdf |
SL&C 3/6/2023 1:30:00 PM SL&C 3/27/2023 1:30:00 PM |
SB 84 |
| SB 83 Presentation_DCCED-CBPL 03.06.23.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| SB 83 Supporting Documents-DCCED-CBPL White Paper 03.06.23.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |
| SB 83 Supporting Documents-Letter of Support_Fresenius Medical Care.pdf |
SL&C 3/6/2023 1:30:00 PM |
SB 83 |