Legislature(1999 - 2000)
03/22/2000 01:50 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 239
"An Act relating to the Uniform Commercial Code;
relating to secured transactions; amending Rule 79,
Alaska Rules of Civil Procedure; and providing for an
effective date."
Co-Chair Therriault provided members with proposed committee
substitute, work draft 1-LS0455\K, 2/17/00 (copy on file).
Vice Chair Bunde MOVED to ADOPT work draft 1-LS0455\K,
2/17/00. There being NO OBJECTION, it was so ordered.
REPRESENTATIVE LISA MURKOWSKI testified in support of the
legislation. She explained that the committee substitute
incorporates minor technical changes submitted by the
National Conference of Commissioners on Uniform State Laws.
She observed that it is the first time that the code has
been updated in 25 years. She maintained that all interested
parties reviewed the legislation. The legislation
accommodates electronic filing and centralized filing
systems, expands the scope of property for secured
transactions, and updates the uniform commercial code (UCC).
The bill would take affect July 1, 2001. The House Labor and
Commerce and Judiciary committees passed the legislation
with "do pass" recommendations.
SHARON YOUNG, STATE RECORDER, STATE RECORDER'S OFFICE,
DEPARTMENT OF NATURAL RESOURCES, ANCHORAGE testified via
teleconference in support of the legislation. She maintained
that the legislation would simplify and modernize the filing
system and would benefit users with a modest fiscal cost.
Most of the operational impacts could be handled internally.
(TAPE CHANGE, HFC 00 - 78, SIDE 2)
Ms. Young review the contractual expense. Programming
changes would be needed to bring the system into compliance
with the legislation. The central filing system would need
to implement the usage of check digits, as a means to verify
accuracy of a file number. The contractual costs in FY01
would be $10.5 thousand dollars. There would be additional
programming costs of $20 thousand dollars in the second
year, related to electronic filing of applications.
In response to a question by Representative J. Davies, Ms.
Young explained that procedures for the secured transactions
would be largely the same. The legislation changes where the
filings occur. Alaska currently has a convoluted system of
filing. The bulk of filings are done in the central filing
office. Many lenders also file at the local level due to
their uncertainty regarding filing requirements. This
results in unnecessary dual filings and duplication. The
legislation would eliminate the bulk of local filings. There
are 35 local filing locations. The legislation includes a
lengthy transition period. She did not think that any policy
issues were addressed in the legislation.
Representative J. Davies questioned who makes the filings
and if the legislation would make filings easier. Ms. Young
noted that the user groups are principally financial
institutions, including out-of-state lending institutions.
Ms. Young explained that the system is currently paper
based. Electronic filing would do away with signature
requirements. Lenders in and out-of-state could do
electronic filings.
Representative Foster questioned if the legislation would
affect the Nome Office. Ms. Young stated that most of the
rural offices do not do a lot of UCC filings. She did not
think that the remote offices (with the possible exception
of Bethel) would be significantly impacted. The major impact
would be in urban areas.
Vice Chair Bunde observed that the entire component
generates more than it takes for operation. Ms. Young
clarified that their agency does not receive the benefit of
the funds that they generate.
LINDA KESTERSON, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW testified via teleconference. She stated that the only
policy decision is to change filings from local areas around
the state to a central location. She noted that there has
been a general policy shift around the country toward the
use of central filing locations. Changes to the UCC are to
bring it up to date; there are no substantive changes beyond
an attempt to make it easier and better to use. She reviewed
the articles affected by the legislation. She maintained
that there are no significant legal shifts in any of the
articles. She observed that the intent is for the changes to
be enacted throughout the nation by July 1, 2001.
Representative J. Davies questioned if the legislation has
been reviewed in depth. Ms. Kesterson assured him that the
Department of Law reviewed the legislation in depth.
JERRY KURTZ, ATTORNEY, ANCHORAGE testified via
teleconference in support of the legislation. He gave a
brief review of his credentials. He was Alaska's
representative to the National Conference of Commissioners
on Uniform State Law. The legislation gives security for
lenders and debtors. He maintained that no major policy
changes have been made by the legislation. He stressed that
the balance between creditors and debtors has not been
changed. Some additional protections were added for debtors.
Creditors must act in good faith.
DONALD RAPSON, DRAFTING COMMITTEE ON ARTICLE IX, NATIONAL
CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAW testified
via teleconference in support of the legislation. He
explained that he has been involved with this body of law
for 50 years. He observed that the body of law has been in
existence for a long time. The law serves the needs of
business: lenders and debtors. The legislation updates the
law to take advantage of new technology, such as financial
software. It allows the use of healthcare insurance
receivables as a form of collateral. He agreed that there
have been no major policy changes and observed that all
sides discussed the changes with care. He stressed that the
legislation requires a bank or lending company with offices
in multiple locations throughout the United States to file
only in the state in which it is incorporated. Currently,
filings are required in every state in which the entity is
in business.
Representative Foster MOVED to report CSHB 239 (FIN) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
Vice Chair Bunde maintained that since the filing fees
generated more than they cost that they could be reduced.
CSHB 239 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with fiscal impact note by the
Department of Natural Resources, publish date 2/11/00.
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