ALASKA STATE LEGISLATURE  HOUSE JUDICIARY STANDING COMMITTEE  February 24, 2020 1:02 p.m. MEMBERS PRESENT Representative Matt Claman, Chair Representative Harriet Drummond Representative Louise Stutes Representative Gabrielle LeDoux Representative Laddie Shaw Representative David Eastman MEMBERS ABSENT  Representative Chuck Kopp COMMITTEE CALENDAR  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." - HEARD & HELD HOUSE BILL NO. 201 "An Act relating to legal representation of public officers in ethics complaints." - MOVED CSHB 201(JUD) OUT OF COMMITTEE PREVIOUS COMMITTEE ACTION  BILL: HB 124 SHORT TITLE: ELECTRONIC DOCUMENTS AND NOTARIZATION SPONSOR(s): REPRESENTATIVE(s) CLAMAN 04/05/19 (H) READ THE FIRST TIME - REFERRALS 04/05/19 (H) JUD, FIN 04/08/19 (H) JUD WAIVED PUBLIC HEARING NOTICE, RULE 23(A) UC 04/12/19 (H) JUD AT 1:00 PM GRUENBERG 120 04/12/19 (H) Scheduled but Not Heard 04/15/19 (H) JUD AT 1:00 PM GRUENBERG 120 04/15/19 (H) Heard & Held 04/15/19 (H) MINUTE(JUD) 02/17/20 (H) SPONSOR SUBSTITUTE INTRODUCED 02/17/20 (H) READ THE FIRST TIME - REFERRALS 02/17/20 (H) JUD 02/21/20 (H) JUD AT 1:00 PM GRUENBERG 120 02/21/20 (H) -- MEETING CANCELED -- 02/24/20 (H) JUD AT 1:00 PM GRUENBERG 120 BILL: HB 201 SHORT TITLE: DEFENSE OF PUB. OFFICER: ETHICS COMPLAINT SPONSOR(s): REPRESENTATIVE(s) LEDOUX 01/21/20 (H) PREFILE RELEASED 1/17/20 01/21/20 (H) READ THE FIRST TIME - REFERRALS 01/21/20 (H) JUD, FIN 02/10/20 (H) JUD AT 1:00 PM GRUENBERG 120 02/10/20 (H) Heard & Held 02/10/20 (H) MINUTE(JUD) 02/17/20 (H) JUD AT 1:00 PM GRUENBERG 120 02/17/20 (H) Heard & Held 02/17/20 (H) MINUTE(JUD) 02/24/20 (H) JUD AT 1:00 PM GRUENBERG 120 WITNESS REGISTER DAVID CLARK, Staff Representative Matt Claman Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Presented SSHB 124 on behalf of Representative Matt Claman, prime sponsor. TERRY BRYAN, President Yukon Title Company Anchorage, Alaska POSITION STATEMENT: Answered questions pertaining to SSHB 124. ERROL CHAMPION, Chair Legislative Issues Committee Alaska Association of Realtors Juneau, Alaska POSITION STATEMENT: Offered testimony in support of SSHB 124. HOWARD HANCOCK, Chief Title Officer Fidelity Title Agency of Alaska, LLC Anchorage, Alaska POSITION STATEMENT: Offered testimony in support of SSHB 124. JORDAN BARTELS, Title Officer Yukon Title Company Anchorage, Alaska POSITION STATEMENT: Offered testimony in support of SSHB 124. DAN WAYNE, Attorney Legislative Legal Counsel Legislative Legal Services Legislative Affairs Agency Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Answered questions pertaining to HB 201. ACTION NARRATIVE 1:02:46 PM CHAIR MATT CLAMAN called the House Judiciary Standing Committee meeting to order at 1:02 p.m. Representatives Claman, Drummond, Stutes, LeDoux, and Shaw were present at the call to order. Representative Eastman arrived as the meeting was in progress. 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. HB 201-DEFENSE OF PUB. OFFICER: ETHICS COMPLAINT  1:31:53 PM CHAIR CLAMAN announced that the final order of business would be HOUSE BILL NO. 201, "An Act relating to legal representation of public officers in ethics complaints." 1:32:27 PM REPRESENTATIVE LEDOUX as prime sponsor of HB 201, stated that a committee substitute (CS) was available that would help to cut down on some "excess verbiage" that was present in HB 201. She explained that the proposed CS would make it clear that the attorney general may not represent the governor, lieutenant governor, or any other public official in an ethics violation complaint. She expressed that this would leave the regulations formed 10 years ago in place, and the status quo would continue as it has for the past 10 years. CHAIR CLAMAN asked whether the proposed legislation would apply to the attorney general. 1:33:57 PM REPRESENTATIVE LEDOUX replied that she thinks the language "another public officer or former public officer" would include the attorney general. She remarked that Dan Wayne from the Legislative Legal Services could speak more to that topic. 1:34:24 PM DAN WAYNE, Attorney, Legislative Legal Counsel, Legislative Legal Services, Legislative Affairs Agency, Alaska State Legislature, remarked that Representative LeDoux was correct; the attorney general was encompassed by the term "public officer." 1:34:45 PM CHAIR CLAMAN, after ascertaining that there were no further questions, asked for a motion to adopt the CS as the working document before the committee. 1:34:58 PM REPRESENTATIVE STUTES moved to adopt proposed committee substitute (CS) for HB 201, Version 31-LS1264\S, Wayne, 2/18/20, as a work draft. 1:35:13 PM REPRESENTATIVE EASTMAN objected to the motion. REPRESENTATIVE EASTMAN stated that he would like to know whether the changes to the proposed legislation meant that the committee would be moving away from conversations pertaining to reimbursements, and whether these changes should affect the legislative branch in addition to the executive branch. He expressed that he found those conversations to be rather interesting and fruitful in the past two hearings. 1:35:47 PM REPRESENTATIVE LEDOUX replied that that is the direction the proposed legislation was going to take. She said she wanted to make the proposed legislation "nice and simple, and this CS accomplishes that." 1:36:05 PM REPRESENTATIVE EASTMAN maintained the objection. REPRESENTATIVE EASTMAN reiterated the point that he thinks those conversations were both interesting and fruitful, and he hopes that a way to continue them can be found. He stated that he could not see a better vehicle for discussing those points than HB 201. 1:36:32 PM A roll call vote was taken. Representatives Shaw, Drummond, Stutes, LeDoux, and Claman voted in favor of the motion to adopt the proposed committee substitute (CS) for HB 201, Version 31- LS1264\S, Wayne, 2/18/20, as a work draft. Representative Eastman voted against it. Therefore, Version S was adopted as a work draft by a vote of 5-1. 1:37:17 PM REPRESENTATIVE EASTMAN remarked that there might be a potential conflict between existing legislation under Title 23, which he said spells out that the attorney general is the legal advisor of the governor, and the legislation proposed under CSHB 201, which would make it so the attorney general cannot advise the governor on certain things. 1:37:59 PM MR. WAYNE responded that the constitutional requirement is to represent the office of the governor in an official capacity, not in a personal capacity as in the defense of an ethics complaint. REPRESENTATIVE EASTMAN remarked that he was trying to find a way that the proposed legislation could be misused, and he asked whether it would be possible for someone to file a complaint against the governor whenever he/she wanted to deprive the governor of advisement from the attorney general or whether there would be firewalls in place to prevent this. MR. WAYNE replied that the proposed legislation only deals with complaints filed under the Alaska Executive Branch Ethics Act, and any other situation involving litigation, disagreements about the law, or the limits of the governor's authority would not be covered under CSHB 201. REPRESENTATIVE EASTMAN recalled a situation from the previous year, in which the governor was sending out social media regarding the Permanent Fund Dividend (PFD), and he asked whether a complaint filed against the governor for something related to that would "trigger" the Executive Branch Ethics Act and prohibit the attorney general from offering legal advice to the governor. MR. WAYNE replied that he could think of two ways that the term "trigger" might be relevant to the [Executive] Branch Ethics Act: First, when an officer is elected to public office the Act is triggered and the elected official is responsible for following it. Second, misuse of government resources by a public official, for political or personal purposes, might constitute a violation of the Act and someone could file a complaint. He remarked that if no complaint was filed, as in the hypothetical situation Representative Eastman had referenced, then the legislation proposed under CSHB 201 would probably not be applicable because it only applies to complaints filed under the Executive Branch Ethics Act. He pointed out that page 1, lines 7-8, of Version S state that specifically. REPRESENTATIVE EASTMAN asked how difficult, time consuming, and costly it is for someone to file a complaint against the governor. He remarked that he could see how a situation may arise in which the governor has not acted improperly but someone might not want the governor to be able to work with the attorney general on a certain policy issue and might file a complaint to prevent them from working together. MR. WAYNE answered that his recollection of the complaint provisions of the Executive Branch Ethics Act is that there is no cost to file a complaint, and it may be relatively easy for a complaint to be filed; however, it is difficult for a complaint to pass through the various stages required to make it to a high level decision. He remarked that he has never filed a complaint and does not have first-hand experience with the process. 1:42:57 PM REPRESENTATIVE EASTMAN asked whether it would be difficult for someone to file a complaint on a whim, and later - if it is admitted that the complaint was politically motivated and made to separate the governor and attorney general - whether there would be any penalty for that. 1:43:53 PM REPRESENTATIVE LEDOUX answered that her thought on the topic is that the attorney general could not advise the governor as far as the ethics complaint goes, but he/she could advise the governor for anything else that does not pertain to that particular ethics complaint. 1:44:18 PM CHAIR CLAMAN commented that he agreed with Representative LeDoux's analysis. He said, as an example, that someone who is opposed to proposed legislation regarding electronic notarization could lobby against the proposed legislation by sending letters to the governor asking for him/her to not sign the bill, but could also file an ethics complaint against the governor saying that he/she took money from title companies in the last election and is conflicted on this topic. He said that he thinks the attorney general could still give advice to the governor on signing the bill but could not provide advice regarding the ethics complaint. 1:45:34 PM REPRESENTATIVE EASTMAN asked whether there was any penalty for filing fraudulent ethics complaints against a public official. He wondered whether there was something that could be done to rework the language in line 6 and line 7 of the proposed legislation under Version S to prevent it from being misinterpreted. 1:46:30 PM REPRESENTATIVE LEDOUX replied that she did not see how changing the language would be misinterpreted or needed to be made clearer. 1:46:47 PM MR. WAYNE commented that any statute or legal provision is subject to the interpretation of the individual reading it and, in this instance, it seems to him that the most likely interpretation of the proposed legislation is that it is limited to complaints which are filed. 1:47:28 PM CHAIR CLAMAN, after ascertaining that there were no further questions, discussed the committee's options for Version S. 1:49:13 PM The committee took an at-ease from 1:49 p.m. to 1:51 p.m. 1:51:25 PM CHAIR CLAMAN announced that during the at-ease it was suggested that, since this was the third hearing on HB 201 in the House Judiciary Standing Committee, the bill could be moved from committee. He asked whether there was any objection to moving Version S out of committee. 1:51:50 PM REPRESENTATIVE EASTMAN said that he would object to the motion. He expressed that he thinks more discussion on the proposed legislation would be fruitful. 1:52:10 PM REPRESENTATIVE STUTES moved to report CSHB 201, Version 31- LS1264\S, Wayne, 2/18/20, out of committee with individual recommendations and the accompanying fiscal notes. 1:52:31 PM REPRESENTATIVE EASTMAN objected to the motion. 1:52:42 PM A roll call vote was taken. Representatives LeDoux, Shaw, Drummond, Stutes, and Claman voted in favor of moving CSHB 201, Version 31-LS1264\S, Wayne, 2/18/20, out of committee with individual recommendations and the accompanying fiscal notes. Representative Eastman voted against it. Therefore, CSHB 201(JUD) was reported out of the House Judiciary Standing Committee by a vote of 5-1. 1:53:21 PM ADJOURNMENT  There being no further business before the committee, the House Judiciary Standing Committee meeting was adjourned at 1:53 p.m.