HB 124-ELECTRONIC DOCUMENTS AND NOTARIZATION  1:03:16 PM CHAIR CLAMAN announced that the first order of business would be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 124, "An Act relating to the recording of documents; relating to notaries and notarization, including notarial acts performed for remotely located individuals; and providing for an effective date." CHAIR CLAMAN passed the gavel to Representative Stutes for the duration of the presentation of SSHB 124. 1:04:17 PM CHAIR CLAMAN introduced SSHB 124, as prime sponsor. He stated that SSHB 124 would establish a secure process for remote online notarization to facilitate commercial transactions throughout the state. He announced that since the introduction of the proposed legislation on April 15,2019, his office had met with the lieutenant governor and representatives from the notary commission to ensure that the proposed legislation would align with and strengthen the daily operations of the notary commission. CHAIR CLAMAN explained that notaries are responsible for supervising the signing of documents and attesting to the authenticity of the documents and the identities of the parties involved. He said that a system for remote online notarization would be particularly useful in Alaska, given the state's immense size and the fact that many of its communities are not connected by road. Currently, commercial transactions within Alaska often necessitate delays as parties ship documents back and forth for the purpose of notarization. He stated that SSHB 124 would allow individuals to have documents notarized without delays from their homes and offices. He remarked that the sensitive nature of notarized documents requires that any updates to notarial law must maintain the integrity and security of the process. He added that SSHB 124 would update Alaska notarial law with adequate provisions to keep the process secure and consistent with notarial law in a growing number of states which have adopted standards for remote online notarization. CHAIR CLAMAN stated that the use of electronic records in commercial, governmental, and personal transactions has become increasingly prevalent in Alaska and throughout the world in recent years. He remarked that SSHB 124 would allow Alaskans to keep up with trends and perform notarizations with greater ease. He summarized that SSHB 124 would strengthen Alaska's economy by creating a process for remote online notarization and improving the efficiency and convenience of transactions in the state. 1:06:35 PM DAVID CLARK, Staff, Representative Matt Claman, Alaska State Legislature, explained changes made from the original bill version on behalf of Representative Matt Claman, prime sponsor of SSHB 124. He stated that SSHB 124 would update Alaska's current notarial laws by allowing notaries the option to perform online notarizations for remotely located individuals and ensuring that online notarizations remain secure. He pointed out that through a series of meetings with the notary commission, which is housed in the Office of the Lieutenant Governor, the following modifications have been made to SSHB 124. He explained that Section 3 is a new section that would provide for AS 09.80 (Uniform Electronic Transactions Act) to apply to AS 40.17. He said that this would require the Department of Natural Resources (DNR) to accept electronic notarial acts that are performed for remotely located individuals. MR. CLARK stated that Section 5 would raise the current bond requirement for a notary public applicant from $1,000 to $2,500. He pointed out that Section 10 would strengthen identity confirmation for remote notarial acts through a three-step process. First, a client must furnish a government issued identification card. Second, the notary public must ensure that a third party has confirmed the accuracy of the furnished government issued identification card. Third, the notary public would be required to use at least one type of remote identity proofing. MR. CLARK explained that Section 11 would be amended to require a notary public to maintain at least one journal in a tangible medium to chronical all remote notarial acts. He added that Section 11 would also allow a notary public to maintain one or more electronic journals in a secure electronic medium. He remarked that the lieutenant governor has never retained nor stored notary journals prior to this. He remarked that, accordingly, subsection (f) and subsection (g) were removed from the Sponsor Substitute; subsection (f) would have allowed a notary public to store his/her journals with the notary commission, and subsection (g) would have required the state to transmit the notary public's journals to the notary commission upon death or adjudication of incompetence. 1:08:45 PM REPRESENTATIVE STUTES asked the bill sponsor to walk her through what the notarization process would be under the proposed legislation. She asked whether she would go to an existing notary if she was in a remote location, such as Kodiak, and she needed to send a notarized document to Anchorage. 1:09:07 PM CHAIR CLAMAN replied that in this situation the process would probably require an individual to go to a location that has online communication and could communicate via secure electronic means between Kodiak and an office in Anchorage. He explained that the individual would have the document physically with him/her to sign in Kodiak. In response to a follow-up question, he remarked that it would be like a video networking app, such as FaceTime, but he thinks it would be more secure. He said that he suspects that if someone were physically in front of a notary in Kodiak, he/she would still have to sign the document in that location, in which case the electronic notarizing wouldn't come into play as the physical document would be signed. CHAIR CLAMAN expressed that SSHB 124 would allow for people to sign a document over a secure connection with a notary that is in a different location. He clarified that when an individual is signing a document, the notary's job is to attest to the validity of the signature on the document. He explained that under a remote notarization, the document would have to be in front of the individual signing it, but the signing would be done over the video link and the notary would observe from a different location. The notary would confirm the identity of the individual and issue a certification saying the document was signed and witnessed by the notary. 1:11:08 PM REPRESENTATIVE LEDOUX asked whether Chair Claman envisioned that this would take place in locations that do not have notaries. She remarked that many of the remote areas that do not have notaries, and would benefit most from the proposed legislation, also have a problem with Internet service, and she thinks that the system might not necessarily work in areas where it would be most critical. CHAIR CLAMAN replied that Representative LeDoux's question identified a broader issue with electronic technology; without Internet service it won't be possible to utilize remote notarizations. He remarked that these individuals would be facing the same challenges they are today, even if they do not have a notary in their location. He summarized that the proposed legislation would not solve all those problems, but there would be many times when the Internet service is available and remote notarization from another location would be possible, thus providing more access to notarization for remote locations. REPRESENTATIVE LEDOUX asked whether every current notary would be required to have a special encrypted access to the Internet for the remote notarization process. CHAIR CLAMAN replied that this would not be a requirement for notaries. As an example, he recalled that when he was practicing law with a private law firm, a lot of the assistants were notaries public, but they did not want to notarize anyone except for those that came into the office. He suggested that he expects there to be many notaries who would choose not to get involved in the electronic certification process. He stated that other notaries, such as those that work for title companies and have to routinely notarize title documents for properties, would be very likely to be set up for online remote notarization, as they would be much more likely to come across scenarios in which someone in a remote location can't get to the location to sign the documents. REPRESENTATIVE LEDOUX asked whether special equipment would be required for the individuals in remote locations wishing to have a document notarized electronically. CHAIR CLAMAN answered that he would let someone with more expertise on that topic answer the question. 1:15:28 PM REPRESENTATIVE LEDOUX repeated her question for Terry Bryan to answer. 1:16:02 PM TERRY BRYAN, President, Yukon Title Company, answered that the fine tuning of the equipment that would be necessary for electronic notarizations would be the result of the regulations that would be written by the Office of the Lieutenant Governor; however, he said that in the 25 states where electronic notarizations have been implemented, a traditional Internet connection on a device with video capability would be sufficient for the communication. He remarked that a cell phone camera or laptop camera would suffice in most situations. He added that notarization could be accomplished through audio-video communication, whether it be on a fishing boat, in a hunting camp, or even in Afghanistan. 1:17:06 PM REPRESENTATIVE EASTMAN asked whether there had been any discussion on how the electronic notarization process could potentially be abused, and whether there would be a way to undo a notarization after the fact if it was found to be fraudulent. 1:17:49 PM CHAIR CLAMAN replied that Section [10] of SSHB 124 proposes a three-step requirement be met during the identification process to satisfy that the individual is who he/she says he/she is. He remarked that he thinks it would be in the regulations that a fraudulent notarization could be undone. 1:18:23 PM REPRESENTATIVE EASTMAN remarked that he would like to know more about how the reversal process might work. He recalled a story in which "someone had been deemed dead according to the courts, and then the courts weren't recognizing them because they were dead," and he said that he would like to make sure something like that wouldn't happen. 1:18:58 PM REPRESENTATIVE STUTES returned the gavel to Chair Claman. 1:19:20 PM CHAIR CLAMAN, after ascertaining that there was no further discussion from the committee, opened invited and public testimony. 1:20:12 PM ERROL CHAMPION, Broker, Chair, Legislative Issues Committee, Alaska Association of Realtors, offered testimony in support of SSHB 124 [letter of support included in committee packet]. He complimented Chair Claman on the work he had done to improve the integrity and security of the proposed legislation, specifically within Section 10. He pointed out that the identification process would now require the following three steps: First, the viewing of a government issued identification card; second, credential analysis of the government issued identification card; and third, one type of identity proofing. He remarked that while there was still possibility for an error, he thinks these were important improvements which had been made to SSHB 124. He remarked that he is positive the proposed legislation would be a good think for Alaskans, and he urged the adoption of SSHB 124. CHAIR CLAMAN noted that his reference earlier to Section 6 had been mistaken; Section 10 was the section to which he had meant to refer. 1:21:42 PM REPRESENTATIVE EASTMAN asked whether Mr. Champion could provide the committee with an idea of the impact SSHB 124 would have on his industry if it were to pass. 1:21:55 PM MR. CHAMPION replied that the proposed legislation would be utilized by people in his industry quite frequently. As an example, he recalled a situation in which someone trying to sell a home had the deal fall through, because he was in the Far East on active duty in the military and could not find a notary to sign the deed. He remarked that today's society is very mobile and often, when a transaction is ready to be closed, the two parties required to sign are located far apart, which requires hard copies and takes up to a few extra days. He summarized that SSHB 124 would expedite that process and bring Alaska in step with approximately 35 other states that currently allow electronic notarization. REPRESENTATIVE EASTMAN asked Mr. Champion whether he could speak to the possibility of allowing individuals, such as a service member in the military, to use a notary from another state that already allows electronic notarization. MR. CHAMPION answered that this has been an option all along, and often when an individual is in another state which offers electronic notarization this can be accommodated. He stated that in remote areas where there is no notary available, it results in a situation in which that person's only option is to present themselves physically in front of a notary, and it cannot be done. 1:23:50 PM CHAIR CLAMAN commented that the authority of a notary public to notarize a signature is a jurisdictional matter, and "in California somebody could notarize my signature in California, but I'm not sure that they could notarize my signature in Alaska." 1:24:10 PM REPRESENTATIVE EASTMAN repeated his previous question to Mr. Champion. 1:24:44 PM MR. CHAMPION answered that he did not feel qualified to answer that question, as it seems to be a judicial matter of whether the state would recognize a notarized signature recorded in another jurisdiction, which he doubts. 1:24:58 PM REPRESENTATIVE LEDOUX asked whether someone would be able to use the electronic notarization system in another country that has notaries, in order to get around lengthy processes and requirements. She explained that her understanding is that getting a document authorized in a foreign country and then having it recognized in the U.S. is very involved, and "by the time you've done that, you know, your deal's probably long blown." 1:26:06 PM MR. CHAMPION replied that he is not a title officer, but he thinks that electronic notarization would avail itself over any kind of legal requirement for a notarized signature and could be used anytime its needed, even in countries where a notarization system doesn't exist. 1:27:18 PM HOWARD HANCOCK, Chief Title Officer, Fidelity Title Agency of Alaska, LLC, offered testimony in support of SSHB 124, which he described is in sync and consistent with model bills on the topic that have been passed or in the legislative process in other states around the country. He stated that his company expects that several of its staff members would be commissioned as remote online notaries, which would eliminate the need to mail out documents and streamline the real estate title and closing process. He strongly urged the support and passage of SSHB 124. 1:28:46 PM TERRY BRYAN addressed a previous question from Representative LeDoux regarding electronic notarization for individuals in foreign countries. He stated that SSHB 124 would allow an Alaska notary, who is commissioned as an electronic notary, to notarize anyone electronically worldwide. He remarked that if someone were on a fishing charter or located internationally, then the requirement would be for the notary to be an Alaska notary, present in the state of Alaska at the time of notarization. He expressed that this would facilitate real estate and other transactions and would improve the flow of commerce in Alaska dramatically. He stated that approximately 20 percent of the real estate transactions conducted by Yukon Title Company require a "mail out" in which the buyer or seller's documents are sent out via mail in order to be notarized at that individual's location. He remarked that this adds several days to many transactions. 1:30:38 PM JORDAN BARTELS, Title Officer, Yukon Title Company, offered testimony in support of SSHB 124. He reiterated what Mr. Bryan had said about the mail out requirement for approximately 20 percent of the transactions processed by Yukon Title Company. He remarked that SSHB 124 would streamline the titling process for many Alaskan's who live in remote locations, and he strongly supports the proposed legislation. 1:31:16 PM CHAIR CLAMAN, after ascertaining that there was no one else who wished to testify, closed public testimony on SSHB 124. CHAIR CLAMAN announced that SSHB 124 would be held over for further review.