02/13/2009 03:15 PM House LABOR & COMMERCE

HB 102-UNIFORM COMMERCIAL CODE                                                                                                
                                                                                                                              
3:29:01 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE BILL  NO. 102, "An  Act relating to the  Uniform Commercial                                                               
Code, to the  general provisions of the  Uniform Commercial Code,                                                               
to documents of  title under the Uniform Commercial  Code, to the                                                               
Uniform Electronic  Transactions Act,  and to  lease-purchases of                                                               
personal property;  amending Rules 403  and 902, Alaska  Rules of                                                               
Evidence; and  providing for  an effective  date."   He explained                                                               
that the  bill is a  House Labor and Commerce  Standing Committee                                                               
bill at the request of  Representative Max Gruenberg, who is here                                                               
to testify on HB 102.                                                                                                           
                                                                                                                                
3:29:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MAX  GRUENBERG, Alaska State  Legislature, offered                                                               
his  appreciation  for  the work  of  the  uniform  commissioners                                                               
coming to the  legislature with a request to  update two articles                                                               
in the Uniform Commercial Code  (UCC).  He briefly explained that                                                               
Article 1  is the general  article in the  UCC, which is  the law                                                               
governing commerce and is in effect  in every state in the union.                                                               
He  further explained  that the  nine  articles undergo  periodic                                                               
revision  by the  Uniform Law  Commissioners (ULC).   He  related                                                               
that Article  1 was  last revised  in 2001,  and 34  other states                                                               
have adopted this  version.  He remarked that Alaska  will be the                                                               
35th state to adopt Article 1,  if HB 102 passes the legislature.                                                               
He  offered that  Article 7  pertains to  warehouse receipts  and                                                               
bills of lading,  which affects the warehouse  industry and self-                                                               
storage industry.   He opined that Article 7 is  important to the                                                               
industries and  was last revised  in 2007, which 31  other states                                                               
have adopted.                                                                                                                   
                                                                                                                                
3:32:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG,  in response to  Representative Neuman,                                                               
answered  that  he has  read  HB  102  in  its entirety  and  has                                                               
discussed   the  bill   several  times   with  the   uniform  law                                                               
commissioners.   He  offered that  a number  of issues  have been                                                               
resolved, including  a few grammatical alterations.   He remarked                                                               
that he  is not  an expert  in commercial  code or  the warehouse                                                               
provisions.   However,  he noted  that the  provisions in  HB 102                                                               
have been  vetted through the  Alaska Bar  Association's business                                                               
law  section,   specifically  an   attorney  familiar   with  the                                                               
warehouse industry.   He indicated that the ABA  attorney did not                                                               
raise any issues.                                                                                                               
                                                                                                                                
REPRESENTATIVE NEUMAN  related his understanding that  HB 102 has                                                               
a referral to the House  Judiciary Standing Committee.  He opined                                                               
that it  would be  appropriate for that  committee to  review the                                                               
bill in detail since the bill  contains legal issues.  He further                                                               
opined  that it  would  be appropriate  for  the House  Judiciary                                                               
Standing  Committee to  take up  any amendments  that pertain  to                                                               
legal issues.                                                                                                                   
                                                                                                                                
CHAIR OLSON related his  understanding that Representative Holmes                                                               
has also read the bill, as well as her attorney staff member.                                                                   
                                                                                                                                
CHAIR OLSON also noted that  Representative Gruenberg has several                                                               
amendments that he would like to  take up when HB 102 is referred                                                               
to the House Judiciary Standing Committee.                                                                                      
                                                                                                                                
3:34:44 PM                                                                                                                    
                                                                                                                                
TERRY   THURBON,  Alaska   Uniform  Law   Commissioner,  National                                                               
Conference  of  Commissioners  on Uniform  State  Laws  (NCCUSL),                                                               
explained that she  is the chief administrative law  judge in the                                                               
Office of Administrative Hearings for  the state, but that she is                                                               
speaking  as one  of  Alaska's Uniform  Law  Commissioners.   She                                                               
listed  the state's  delegation of  uniform law  commissioners as                                                               
Lynn  Levengood,  Michael  Geraghty,  Justice  Walter  Carpeneti,                                                               
Deborah  Behr, Arthur  Peterson, Grant  Callow, and  Tamara Cook.                                                               
She  related that  uniform law  commissioners are  volunteers for                                                               
the Uniform  Law Commission and  work with the NCCUSL  to develop                                                               
uniform and  model acts.   The  commissioners bring  back uniform                                                               
and model laws to the state  for consideration.  She offered that                                                               
this year  the UCC  revisions Representative  Gruenberg mentioned                                                               
are under consideration in HB 102.                                                                                              
                                                                                                                                
3:36:29 PM                                                                                                                    
                                                                                                                                
MS. THURBON offered an overview of  HB 102 and the changes to the                                                               
UCC.  She noted that most  of the UCC changes are not substantive                                                               
but  are simple  housekeeping measures  or updates.   She  stated                                                               
that the bill does essentially  two things.  First, it modernizes                                                               
and updates  Alaska law,  and brings us  into conformity  with 35                                                               
other states.  She offered  that several other states are working                                                               
to adopt the changes to Article 1  and Article 7 of the UCC.  She                                                               
mentioned that every  state has a UCC in place  using some of the                                                               
national  model  of  the  Uniform  Law  Commission  (ULC).    She                                                               
detailed that  adopting Article  7 of the  UCC will  bring Alaska                                                               
into the modern  age by recognizing how  shipping and warehousing                                                               
industries actually conduct  business.  This includes  the use of                                                               
electronic media as opposed to  paper media in tracking shipments                                                               
and passing ownership  and evidence of ownership  when goods pass                                                               
through a  third party  like FedEx.   She  stated that  Article 1                                                               
changes are revisions to what  are considered the general default                                                               
provisions  of  the UCC,  that  provide  definitions and  general                                                               
tools  in order  to  make the  other eight  articles  of the  UCC                                                               
function.                                                                                                                       
                                                                                                                                
3:38:42 PM                                                                                                                    
                                                                                                                                
MS.   THURBON   related   some  substantive   changes   such   as                                                               
clarification on  good faith, the parties'  course of performance                                                               
and dealings, and  the scope of the  general provisions, relative                                                               
to the  other articles  and non-UCC  law to  ensure that  the UCC                                                               
does not contain unnecessary provisions.   She offered her belief                                                               
that while HB  102 is lengthy and contains  many provisions, that                                                               
the changes are  straightforward.  She mentioned that  only 15 of                                                               
the 113 changes in the bill were substantive changes.                                                                           
                                                                                                                                
3:40:03 PM                                                                                                                    
                                                                                                                                
MS. THURBON,  in response to Representative  Buch, explained that                                                               
the  UCC  is   adopted  in  most  states   to  govern  commercial                                                               
transactions.   Thus, the UCC regulates  the transactions between                                                               
private  parties,  although  it  has some  impact  on  state  and                                                               
federal  government   as  the   entities  engage   in  interstate                                                               
commerce.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG interjected  that this  governs private                                                               
transactions.   He  offered a  scenario,  such that  if a  person                                                               
places his/her goods into storage,  the contract with the storage                                                               
company is  governed by the  UCC.  He  related that Article  2 of                                                               
the UCC pertains to sales, so if  a person purchases an item at a                                                               
store,  the transaction  is  governed  by the  UCC.   He  further                                                               
related that  Article 5 of  the UCC  pertains to banking.   Thus,                                                               
the government itself is not involved  except to enact the set of                                                               
laws.   He  pointed  out that  in  the event  of  a dispute,  the                                                               
parties  would resolve  the  dispute in  court.   Therefore,  the                                                               
government may be  a party to transaction, but  the vast majority                                                               
of transactions are  "between company A and company  B or company                                                               
A and individual B."  He said, "The government's not involved."                                                                 
                                                                                                                                
3:41:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BUCH inquired  as to  which agency  has oversight                                                               
over  the UCC,  whether it  would be  the Department  of Labor  &                                                               
Workforce Development  or the Department of  Commerce, Community,                                                               
& Economic Development.                                                                                                         
                                                                                                                                
3:42:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG   answered  that   there  is   no  more                                                               
oversight  than when  a  person  rents a  house  governed by  the                                                               
Landlord  Tenant  Act.   In  the  event  of  a dispute  with  the                                                               
landlord, no one oversee the  matter.  Instead, the dispute would                                                               
be adjudicated by  the court or the landlord  would take eviction                                                               
actions through the court.                                                                                                      
                                                                                                                                
3:43:59 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after first determining  no one wished  to testify,                                                               
closed public testimony on HB 102.                                                                                              
                                                                                                                                
3:44:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN moved to report HB 102, Version 26-                                                                       
LS0059\E  out of  committee with  individual recommendations  and                                                               
the accompanying fiscal notes.   There being no objection, HB 102                                                               
was  reported   from  the  House  Labor   and  Commerce  Standing                                                               
Committee.