Legislature(1999 - 2000)

03/22/2000 01:50 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
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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