Legislature(2003 - 2004)

05/12/2003 03:20 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                          May 12, 2003                                                                                          
                           3:20 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom Anderson, Chair                                                                                              
Representative Bob Lynn, Vice Chair                                                                                             
Representative Nancy Dahlstrom                                                                                                  
Representative Carl Gatto                                                                                                       
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative David Guttenberg                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 210                                                                                                             
"An  Act regarding  the computation  of overtime  compensation by                                                               
employers before  June 2,  1999; and  providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED SB 210 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 285                                                                                                              
"An  Act  adopting  the   Uniform  Electronic  Transactions  Act;                                                               
repealing  certain statutes  relating to  electronic records  and                                                               
electronic  signatures;  amending  Rule   402,  Alaska  Rules  of                                                               
Evidence; and providing for an effective date."                                                                                 
                                                                                                                                
     - MOVED HB 285 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 277                                                                                                              
"An Act  relating to the  powers of the Regulatory  Commission of                                                               
Alaska in  regard to intrastate pipeline  transportation services                                                               
and pipeline facilities, to the rate  of interest for funds to be                                                               
paid by pipeline shippers or carriers  at the end of a suspension                                                               
of  tariff   filing,  and  to  the   prospective  application  of                                                               
increased  standards on  regulated  pipeline utilities;  allowing                                                               
the  commission  to  accept  rates   set  in  conformity  with  a                                                               
settlement agreement between  the state and one  or more pipeline                                                               
carriers and  to enforce the  terms of a settlement  agreement in                                                               
regard to intrastate rates; and providing for an effective                                                                      
date."                                                                                                                          
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: SB 210                                                                                                                  
SHORT TITLE:WAGE AND HOUR OVERTIME COMPUTATION                                                                                  
SPONSOR(S): LABOR & COMMERCE                                                                                                    
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
05/01/03     1075       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
05/01/03     1076       (S)        L&C                                                                                          
05/06/03                (S)        L&C AT 1:30 PM BELTZ 211                                                                     
05/06/03                (S)        Moved Out of Committee                                                                       
05/06/03                (S)        MINUTE(L&C)                                                                                  
05/07/03     1202       (S)        L&C RPT 4DP 1NR                                                                              
05/07/03     1203       (S)        DP: BUNDE, DAVIS, SEEKINS,                                                                   
                                   STEVENS G;                                                                                   
05/07/03     1203       (S)        NR: FRENCH                                                                                   
05/07/03     1203       (S)        FN1: ZERO(LWF)                                                                               
05/08/03     1253       (S)        RULES TO CALENDAR 5/8/2003                                                                   
05/08/03     1253       (S)        READ THE SECOND TIME                                                                         
05/08/03     1253       (S)        ADVANCED TO THIRD READING 5/9                                                                
                                   CALENDAR                                                                                     
05/09/03     1283       (S)        READ THE THIRD TIME SB 210                                                                   
05/09/03     1284       (S)        PASSED Y20 N-                                                                                
05/09/03     1287       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
05/09/03     1287       (S)        TRANSMITTED TO (H)                                                                           
05/09/03     1287       (S)        VERSION: SB 210                                                                              
05/10/03     1530       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
05/10/03     1530       (H)        L&C                                                                                          
05/12/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
BILL: HB 285                                                                                                                  
SHORT TITLE:ELECTRONIC TRANSACTIONS & SIGNATURES                                                                                
SPONSOR(S): REPRESENTATIVE(S)MCGUIRE                                                                                            
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/25/03     1127       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/25/03     1127       (H)        L&C, JUD                                                                                     
05/07/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
05/07/03                (H)        Scheduled But Not Heard                                                                      
05/09/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
05/09/03                (H)        Scheduled But Not Heard                                                                      
05/12/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JANE ALBERTS, Staff                                                                                                             
to Senator Con Bunde                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented SB 210 on behalf of its sponsor,                                                                 
Senator Bunde.                                                                                                                  
                                                                                                                                
GREG O'CLARAY, Commissioner                                                                                                     
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in favor of SB 210.                                                                              
                                                                                                                                
JOHN SHIVELY, Vice President                                                                                                    
Government and Community Relations                                                                                              
Holland America                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Urged the committee to pass SB 210.                                                                        
                                                                                                                                
DON ETHERIDGE                                                                                                                   
AFL-CIO - Alaska                                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in favor of SB 210.                                                                              
                                                                                                                                
DAVE OESTING, Attorney at Law                                                                                                   
Davis, Wright and Tremaine                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During hearing on SB 210, answered                                                                         
questions.                                                                                                                      
                                                                                                                                
HEATH HILYARD, Staff                                                                                                            
to Representative Lesil McGuire                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 285 on behalf of the sponsor.                                                                 
                                                                                                                                
SHARON YOUNG, State Recorder                                                                                                    
Division of Support Services                                                                                                    
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 285.                                                                            
                                                                                                                                
DAVID JONES, Assistant Attorney General                                                                                         
Governmental Affairs Section                                                                                                    
Civil Division (Anchorage)                                                                                                      
Department of Law                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     During  hearing  on   HB  285,  answered                                                               
questions.                                                                                                                      
                                                                                                                                
SCOTT CLARK, Notary Clerk                                                                                                       
Office of the Lieutenant Governor                                                                                               
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Testified  on behalf  of  the  lieutenant                                                               
governor in favor of HB 285.                                                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-51, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order  at   3:20  p.m.    Representatives                                                               
Anderson, Lynn, Dahlstrom, Gatto,  and Guttenberg were present at                                                               
the  call  to  order.    Representatives  Rokeberg  and  Crawford                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
SB 210-WAGE AND HOUR OVERTIME COMPUTATION                                                                                     
                                                                                                                                
CHAIR ANDERSON announced  that the first order  of business would                                                               
be  SENATE BILL  NO. 210,  "An Act  regarding the  computation of                                                               
overtime  compensation  by employers  before  June  2, 1999;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 0162                                                                                                                     
                                                                                                                                
JANE  ALBERTS,   Staff  to  Senator   Con  Bunde,   Alaska  State                                                               
Legislature, presented SB  210 on behalf of  its sponsor, Senator                                                               
Bunde.    Ms. Alberts  paraphrased  from  the sponsor  statement,                                                               
which reads as follows [original punctuation provided]:                                                                         
                                                                                                                                
     This   legislation  is   designed  to   protect  Alaska                                                                    
     employers  who properly  calculated overtime  wages for                                                                    
     their employees  prior to the effective  date of Ch.43,                                                                    
     SLA  99(HB201),  and   correct  an  erroneous  judicial                                                                    
     interpretation of Alaska's Wage and Hour Act.                                                                              
                                                                                                                                
     In 1999  the Alaska  Legislature passed HB  201 dealing                                                                    
     with the  issue of  wage "pyramiding"  (paying overtime                                                                    
     wages  more than  once for  the same  hour of  overtime                                                                    
     work).  Unfortunately, a  last minute amendment deleted                                                                    
     the Act's  retroactive effective date (April  1, 1997).                                                                    
     Though  future  claims  were clearly  precluded,  those                                                                    
     claims existing on  or before the effective  date of HB
     201  remained active.   As  a result  several employers                                                                    
     were sued  for calculating  overtime wages  exactly how                                                                    
     the Alaska  Department of Labor had  instructed them to                                                                    
     do  it.   Every other  business in  the state  used the                                                                    
     same method.                                                                                                               
                                                                                                                                
     This  measure, once  and for  all, brings  certainty to                                                                    
     the   interpretation   of  computing   overtime   under                                                                    
     Alaska's  Wage   &  Hour  Act.     These   changes  are                                                                    
     consistent   with  both   concerns  and   policy  goals                                                                    
     expressed  by  the  Legislature  in  the  enactment  of                                                                    
     Chapter  43, SLA  99 and  official State  Department of                                                                    
     Labor practice going back to pre-statehood.                                                                                
                                                                                                                                
CHAIR ANDERSON  informed the committee  that per  Mason's Manual,                                                               
these court  cases can't  be spoken of  directly.   Therefore, he                                                               
instructed  the committee  not to  ask questions  on those  court                                                               
cases.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GATTO  inquired as to  how much money  is involved                                                               
in these pending cases.                                                                                                         
                                                                                                                                
MS.  ALBERTS answered  that although  she didn't  believe it  had                                                               
been determined,  it could potentially  be a large sum  of money.                                                               
In fact, she  believes that these could  potentially become class                                                               
action suits.                                                                                                                   
                                                                                                                                
Number 0383                                                                                                                     
                                                                                                                                
GREG  O'CLARAY, Commissioner,  Department  of  Labor &  Workforce                                                               
Development (DLWD),  testified in  favor of SB  210.   He related                                                               
that in his nearly 40  years of representing workers, negotiating                                                               
labor  contracts,  and  interpreting  the  law  with  respect  to                                                               
employment, he  has never seen a  decision as odd as  this.  [The                                                               
judicial  interpretation]   requires  an  employer  to   pay  the                                                               
employee  twice  for  the  same hour  [when  there  are  overtime                                                               
hours].  He related his  understanding that potential exposure to                                                               
the  companies  in the  pending  cases  could amount  to  several                                                               
hundreds  of thousands  of dollars.   He  urged the  committee to                                                               
pass this legislation along.                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO surmised  that in  some cases  some of  the                                                               
overtime  would  be  time  and   a  half,  but  as  the  employee                                                               
accumulated  over  40  hours  the   pay  would  be  double  time.                                                               
Therefore,  if an  employee was  paid  six hours  of overtime  on                                                               
Monday, the employee  would be pushed over the  40-hour limit and                                                               
thus requiring  one hour of  double time  rather than time  and a                                                               
half.  He asked if the  aforementioned has ever intervened in any                                                               
of these cases.                                                                                                                 
                                                                                                                                
COMMISSIONER O'CLARAY remarked  that it's worse.   If an employee                                                               
works six hours of overtime on  Monday in a five-day workweek and                                                               
the  employee works  eight hours  a  day for  the remaining  four                                                               
days, the employee would be paid  six hours of overtime on Monday                                                               
and under this  court ruling at the end of  the week the employee                                                               
would be  time and  a half  again.  Therefore,  the six  hours of                                                               
overtime would  be paid  triple time,  although the  statute only                                                               
requires time and  a half after eight hours [in  a day] and after                                                               
40 hours [in  a week].  Through this  judicial interpretation the                                                               
employers were being hit twice for  the same number of hours.  In                                                               
further response  to Representative Gatto,  Commissioner O'Claray                                                               
said [this legislation] doesn't deal with double time.                                                                          
                                                                                                                                
Number 0587                                                                                                                     
                                                                                                                                
JOHN   SHIVELY,   Vice   President,  Government   and   Community                                                               
Relations, Holland  America, informed the committee  that Holland                                                               
America is  one of the  companies that was  sued [as a  result of                                                               
this  judicial interpretation].   Mr.  Shively reviewed  the long                                                               
and tortured legal  history of the case  against Holland America.                                                               
The  original  claim  was  $21   and  Holland  America  paid  it.                                                               
However,  the  [Alaska] Supreme  Court  ruled  that it  could  be                                                               
turned into a class action suit, which  is the case now.  A class                                                               
action  suit  could expose  Holland  America  to millions.    Mr.                                                               
Shively  related that  Holland America  doesn't believe  there is                                                               
any  legal   impediment  to  making   the  law  passed   in  1999                                                               
retroactive, which legislative legal  counsel agrees.  Therefore,                                                               
Mr. Shively requested that SB 210 be passed on.                                                                                 
                                                                                                                                
CHAIR  ANDERSON  commented  on  the  absurdity  that  this  could                                                               
happen.                                                                                                                         
                                                                                                                                
Number 0615                                                                                                                     
                                                                                                                                
MR. SHIVELY  noted that in the  other case the judge  came to the                                                               
opposite conclusion.                                                                                                            
                                                                                                                                
REPRESENTATIVE  GATTO  asked if  the  statute  specifies that  an                                                               
employer  "shall" pay  time  and  a half  overtime  for hours  in                                                               
excess of  eight hours a  day and overtime  in excess of  over 40                                                               
hours a week.  He asked if that was the difficulty.                                                                             
                                                                                                                                
MR. SHIVELY said  that it was a wording problem  that was open to                                                               
some  judicial  interpretation,   but  never  any  administrative                                                               
determination.   "It's  the  way  wage and  hour  laws have  been                                                               
interpreted by  the state since statehood,  before statehood, and                                                               
by every other state in the union," he said.                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO said  that is a very  compelling argument if                                                               
the language was such that it used "and".                                                                                       
                                                                                                                                
MR.  SHIVELY  reiterated  that  a different  judge  came  to  the                                                               
opposite   conclusion   when   reviewing   the   same   language.                                                               
Furthermore,   when   the   legislature  discovered   this,   the                                                               
legislature went  back and made  the language very specific.   He                                                               
said  that  [this  legislation]  merely  places  the  retroactive                                                               
clause back in.                                                                                                                 
                                                                                                                                
REPRESENTATIVE GUTTENBERG  surmised that other types  of overtime                                                               
problems   are  sunsetted   out   or  not   applicable  to   this                                                               
[legislation].                                                                                                                  
                                                                                                                                
Number 0830                                                                                                                     
                                                                                                                                
DAVE  OESTING,  Attorney  at Law,  Davis,  Wright  and  Tremaine,                                                               
informed  the committee  that the  separator in  the statute  was                                                               
"or" not "and", which gave rise to the confused interpretation.                                                                 
                                                                                                                                
Number 0875                                                                                                                     
                                                                                                                                
DON ETHERIDGE, AFL-CIO - Alaska,  announced that he is present to                                                               
relate the AFL-CIO's support of SB  210 as it did of the original                                                               
legislation in 1998.  The  AFL-CIO doesn't believe that employees                                                               
should take advantage of loopholes any more than employers.                                                                     
                                                                                                                                
Number 0988                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  turned attention to the  April 22, 2003,                                                               
memorandum from  Barbara Craver, Attorney, Legislative  Legal and                                                               
Research  Services.    He  asked  if there  is  Alaska  case  law                                                               
regarding whether  a retrospective  activity could  be undertaken                                                               
if  there wasn't  a  final  judgment as  it  relates  to the  due                                                               
process rights.                                                                                                                 
                                                                                                                                
MR. OESTING said  there is only one such case,  a land regulation                                                               
property tax dispute  in Homer, and it would be  favorable to the                                                               
position  Ms.  Craver  takes.    He  related  that  Ms.  Craver's                                                               
position  is that  the  legislature  may retroactively  legislate                                                               
this matter because  there is no absolute vested  right until the                                                               
final judgment occurs, which isn't the case in this situation.                                                                  
                                                                                                                                
REPRESENTATIVE  ROKEBERG  inquired  as to  the  equal  protection                                                               
arguments with regard to a compelling state interest.                                                                           
                                                                                                                                
MR. OESTING  opined that the equal  protection arguments wouldn't                                                               
be applicable  in this situation  because there is  no irrational                                                               
decision  made by  the state  in an  area in  which the  state is                                                               
legally competent  to regulate.   In this situation, there  was a                                                               
derelict  decision   that  came  to  a   strange  conclusion  and                                                               
retroactively was  amplified into a  potential class action.   No                                                               
one heretofore has sought or  been granted the type of protection                                                               
that  this  plaintiff was  awarded  by  the  trial court  in  its                                                               
initial determination in the case.                                                                                              
                                                                                                                                
REPRESENTATIVE ROKEBERG asked if it  could be determined that the                                                               
judge had found that the legislature had made a mistake.                                                                        
                                                                                                                                
MR.  OESTING agreed  that  the  above could  be  said, but  other                                                               
judges have come to the opposite conclusion on this case.                                                                       
                                                                                                                                
Number 1069                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  pointed out that the  legislature drafts                                                               
the  statute  and  when  the judges  interpreted  it  there  were                                                               
conflicting interpretations.   He inquired  as to why HB  201 had                                                               
to  be  introduced to  correct  language  if the  statute  wasn't                                                               
defective.                                                                                                                      
                                                                                                                                
MR. OESTING  agreed that the  fault would initially lie  with the                                                               
legislature which wrote the statute  in an ambiguous manner [that                                                               
resulted in] two courts arriving at different conclusions.                                                                      
                                                                                                                                
REPRESENTATIVE  ROKEBERG turned  attention to  the impairment  of                                                               
property rights for retroactivities.                                                                                            
                                                                                                                                
MR. OESTING said  that the above is a due  process concern.  When                                                               
a legal  provision becomes, as a  matter of law, a  term of every                                                               
contract, it brings with it the  ability to be removed or altered                                                               
to any  contract in which  it is included  so long as  the rights                                                               
under  that  legal provision  haven't  been  reduced to  a  final                                                               
judgment.  The  aforementioned is the situation in  this case and                                                               
is  one  of  the  main   thrusts  of  arguments  with  regard  to                                                               
defamation of  property due  process.  It  has been  addressed in                                                               
exactly the  same context  in three to  four cases,  including in                                                               
the 9th Circuit  by the Fair Labor & Standards  Act, which is the                                                               
federal counterpart  to Alaska  Wage &  Hour Act.   Consistently,                                                               
the  conclusion  has  been  that  absent  a  final  nonappealable                                                               
judgment  that  statutory  formulation  can be  revoked  even  if                                                               
expressly  revoked  because  of  an  ambiguity  in  the  original                                                               
statute.                                                                                                                        
                                                                                                                                
CHAIR ANDERSON, upon  determining no one else  wished to testify,                                                               
closed public testimony.                                                                                                        
                                                                                                                                
Number 1205                                                                                                                     
                                                                                                                                
REPRESENTATIVE DAHLSTROM moved to report  SB 210 out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection, it was so ordered.                                                                            
                                                                                                                                
HB 285-ELECTRONIC TRANSACTIONS & SIGNATURES                                                                                   
                                                                                                                                
CHAIR ANDERSON announced  that the final order  of business would                                                               
be HOUSE  BILL NO. 285,  "An Act adopting the  Uniform Electronic                                                               
Transactions   Act;  repealing   certain  statutes   relating  to                                                               
electronic records and electronic  signatures; amending Rule 402,                                                               
Alaska Rules of Evidence; and providing for an effective date."                                                                 
                                                                                                                                
Number 1241                                                                                                                     
                                                                                                                                
HEATH  HILYARD, Staff  to  Representative  Lesil McGuire,  Alaska                                                               
State Legislature,  presented HB  285 on  behalf of  the sponsor.                                                               
Mr. Hilyard provided the following testimony:                                                                                   
                                                                                                                                
     The  fundamental  purpose  of  adopting  UETA  [Uniform                                                                    
     Electronic   Transactions   Act],  as   it's   commonly                                                                    
     referred  to,  is  to   remove  perceived  barriers  to                                                                    
     electronic commerce.  UETA is  a procedural statute and                                                                    
     does  not  mandate   either  electronic  signatures  or                                                                    
     records   but   provides    a   means   to   effectuate                                                                    
     transactions when they're used.   The primary objective                                                                    
     is  to establish  the legal  equivalence of  electronic                                                                    
     records  and signatures  with  the  paper writings  and                                                                    
     manually  signed  signatures.    In  a  position  paper                                                                    
     prepared  by the  National Conference  of Commissioners                                                                    
     on Uniform  State Laws,  they offer  several compelling                                                                    
     reasons  why states  should adopt  UETA.   Among  these                                                                    
     being,   UETA   defines    and   validates   electronic                                                                    
     signatures.   An electronic signature is  defined as an                                                                    
     electronic  sound, symbol,  or  process  attached to  a                                                                    
     logically  associated  with  an electronic  record  and                                                                    
     executed  or adopted  by a  person with  the intent  to                                                                    
     sign the  electronic record.  UETA  removes writing and                                                                    
     signature   requirements  which   create  barriers   to                                                                    
     electronic  transactions; UETA  ensures that  contracts                                                                    
     and  transactions are  not  denied enforcement  because                                                                    
     electronic media  are used.   UETA ensures  that courts                                                                    
     accept electronic records  into evidence [and] protects                                                                    
     against errors  by providing appropriate  standards for                                                                    
     the use  of technology to assure  party identification.                                                                    
     UETA avoids  having the selection of  medium govern the                                                                    
     outcome  of  any disputes  or  disagreements.   And  it                                                                    
     assures  that parties  have the  freedom to  select the                                                                    
     media  for their  transactions by  agreement.   Lastly,                                                                    
     UETA authorizes state  governmental agencies to create,                                                                    
     communicate, receive, and  store records electronically                                                                    
     and encourage state  government, governmental entities,                                                                    
     to move to electronic media.                                                                                               
                                                                                                                                
Number 1361                                                                                                                     
                                                                                                                                
SHARON  YOUNG,  State  Recorder, Division  of  Support  Services,                                                               
Department of  Natural Resources  (DNR), testified in  support of                                                               
HB  285.    As  Mr.  Hilyard noted,  such  legislation  has  been                                                               
presented in  a number of  legislatures across the country.   She                                                               
recalled that 40  states have adopted UETA.   This legislation is                                                               
important  to the  land  recording system  in  Alaska because  it                                                               
would  provide a  uniform framework  for dealing  with electronic                                                               
reporting in the future.  She  opined that enactment of this type                                                               
of provision  will benefit  commerce in  those states  that enact                                                               
this type of  provision.  Other agencies would  also benefit from                                                               
this legislation.  Government work  and services are increasingly                                                               
being performed electronically.   The UETA is the  means by which                                                               
consistent  procedures for  these transactions  can be  developed                                                               
and  assured.   A  high percentage  of  mortgage transactions  in                                                               
Alaska involve out-of-state lenders, she noted.                                                                                 
                                                                                                                                
MS.  YOUNG pointed  out  that  UETA gives  states  the option  of                                                               
determining  whether to  adopt  and  implement electronic  filing                                                               
systems  or   electronic  reporting   systems.     Such  optional                                                               
provisions are  located in Sections 140-160  of this legislation.                                                               
Together, Sections  140-160, provide broader authorization  for a                                                               
state   to   develop   electronic  systems   and   processes   in                                                               
interactions   with   nongovernmental   entities   and   persons.                                                               
Historically, land recording systems  have evolved around written                                                               
records and  processes based on  paper documents.   However, this                                                               
legislation  would  mean that  those  papers  would be  equal  to                                                               
electronic media.   She opined that  this will be the  future for                                                               
recording systems.                                                                                                              
                                                                                                                                
Number 1534                                                                                                                     
                                                                                                                                
CHAIR  ANDERSON highlighted  the lack  of a  fiscal note  with HB
285.  He  surmised that the lack  of a fiscal note  is because it                                                               
is difficult  to extrapolate the  potential benefits  [that would                                                               
save money].                                                                                                                    
                                                                                                                                
MS.  YOUNG  reiterated  that  HB  285  doesn't  require  anything                                                               
different  than what  is  being done  today;  it doesn't  require                                                               
electronic  recording.   Therefore, no  fiscal note  was created.                                                               
The  legislation  merely provides  a  framework  if [the  agency]                                                               
moves to that in the future.                                                                                                    
                                                                                                                                
Number 1645                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  inquired as  to how  this would  work if                                                               
[an individual] wanted  to "side step" a local  title company and                                                               
refinance property  with an out-of-state company.   Specifically,                                                               
he asked how the closing would  occur and ensure that the correct                                                               
parties are involved.                                                                                                           
                                                                                                                                
MS.  YOUNG said  that  [the department]  doesn't  have all  those                                                               
procedures defined.   In fact, UETA recommends  that these states                                                               
develop   standards    and   uniform   approaches    to   provide                                                               
"interoperability" so  that the  electronic recording  systems in                                                               
one  state are  compatible  with  those in  another.   Ms.  Young                                                               
mentioned that a number of  national organizations are supportive                                                               
and involved  with UETA, including the  Property Records Industry                                                               
Association.   The  aforementioned association  is a  private and                                                               
public  organization, which  is  currently developing  standards.                                                               
Ms. Young  emphasized that  UETA is available  for any  agency to                                                               
use with transactions between parties;  the electronic filing and                                                               
recording aspect of UETA is a small portion of this legislation.                                                                
                                                                                                                                
REPRESENTATIVE  CRAWFORD  surmised then  that  there  is no  real                                                               
national  standard.   In  the case  of  electronic signatures  on                                                               
state forms, he inquired as to how one would verify those.                                                                      
                                                                                                                                
MS.  YOUNG  opined  that  part of  the  standards  would  address                                                               
electronic notaries.   She  assured Representative  Crawford that                                                               
there  would be  assurances for  authentication of  an individual                                                               
before a notary or certification authority.                                                                                     
                                                                                                                                
REPRESENTATIVE  CRAWFORD   said  that  he  wanted   to  pass  the                                                               
legislation, but  it seems that  the cart is being  placed before                                                               
the  horse by  making it  legal  to do  electronic recording  and                                                               
filing without having the standards in place.                                                                                   
                                                                                                                                
Number 1858                                                                                                                     
                                                                                                                                
MS. YOUNG informed the committee  that there is already a federal                                                               
electronic   signatures   law   in  place,   E-Sign   [Electronic                                                               
Signatures in Global and National  Commerce Act].  In fact, there                                                               
was  an electronic  signature  law in  Alaska  before E-Sign  was                                                               
adopted.   If  UETA is  adopted in  its entirety,  it provides  a                                                               
broader  authorization for  dealing with  electronic transactions                                                               
and would actually prevail over the federal law.                                                                                
                                                                                                                                
REPRESENTATIVE  CRAWFORD  inquired  as  to how  the  federal  law                                                               
works.                                                                                                                          
                                                                                                                                
Number 1975                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO referred  to a  document from  the National                                                               
Conference of Commissioners on Uniform  State Laws dated 11/20/01                                                               
in the committee  packet.  He said this document  relates that 46                                                               
states have adopted UETA.                                                                                                       
                                                                                                                                
MS. YOUNG  said that she  was only aware  of 40 states  that have                                                               
adopted UETA.  However, she  said that the National Conference of                                                               
Commissioners  on Uniform  State Laws  would be  reliable because                                                               
the organization actually develops the uniform laws.                                                                            
                                                                                                                                
Number 2037                                                                                                                     
                                                                                                                                
DAVID  JONES, Assistant  Attorney  General, Governmental  Affairs                                                               
Section, Civil  Division (Anchorage),  Department of  Law, turned                                                               
to  Representative  Crawford's  earlier   question.    Mr.  Jones                                                               
reiterated Ms. Young's  testimony that HB 285 is  designed to set                                                               
up  a framework  for the  enforcement of  electronic transactions                                                               
and  not to  specify requirements  regarding those  transactions.                                                               
He  explained  that UETA  doesn't  require  people to  engage  in                                                               
electronic transactions  rather UETA  is designed  as enforcement                                                               
for those who have chosen  to use electronic transactions.  Those                                                               
using electronic transactions  are in the best  position to judge                                                               
what level  of security  or assurance they  need from  the others                                                               
involved in the  transactions.  Mr. Jones pointed  out that there                                                               
are  various  levels  of  securities  available  to  those  using                                                               
electronic transactions,  such as the  use of  a pin number  as a                                                               
signature or  the public key  infrastructure.  He noted  that the                                                               
public  key infrastructure  has a  cost to  it, and  therefore it                                                               
would be cheaper to use a  pin number.  This legislation wouldn't                                                               
make the  aforementioned choices,  rather those choices  would be                                                               
left  to the  individuals  involved in  the  transactions.   This                                                               
legislation merely  specifies that  the state will  recognize the                                                               
enforceability of electronic transactions.                                                                                      
                                                                                                                                
REPRESENTATIVE  CRAWFORD reiterated  his  question regarding  how                                                               
electronic transactions would work.                                                                                             
                                                                                                                                
CHAIR ANDERSON  drew attention to  a memorandum from  USKH [Unwin                                                               
Scheben Korynta  Heuttl, Inc.] which  provided an example  of how                                                               
the  production  process of  designing  a  project is  completely                                                               
electronic, except  for the requirement  of a "wet"  signature on                                                               
the final drawings.                                                                                                             
                                                                                                                                
MR. JONES said  that he has performed  electronic transactions in                                                               
ordering services and goods over  the Internet.  This legislation                                                               
would  merely  make  those   transactions  enforceable  when  one                                                               
doesn't get what he/she ordered.                                                                                                
                                                                                                                                
Number 2214                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUTTENBERG remarked that  if this legislation does                                                               
merely establish  a framework, then  he is concerned  with regard                                                               
to the  organization that does  it and the problems  that already                                                               
exist with  electronic matters, such  as the  readability between                                                               
PCs and Macintosh computers.                                                                                                    
                                                                                                                                
MR.  JONES specified  that  this legislation  is  a framework  to                                                               
allow  people  to  answer those  questions  and  create  specific                                                               
requirements just  as is currently done  with paper transactions.                                                               
In  further  response  to Representative  Guttenberg,  Mr.  Jones                                                               
highlighted that the  federal E-Sign law specifies  that no state                                                               
law can favor a particular  technology over another, otherwise it                                                               
will  be  preempted by  the  federal  law.   Since  UETA  doesn't                                                               
specifically  favor a  particular technology,  it has  been given                                                               
the  express exemption  from preemption  under  the federal  law.                                                               
Mr.  Jones  pointed out  that  if  the  state  were to  choose  a                                                               
particular technology  the law could  become obsolete due  to the                                                               
speed at which technology is changing.                                                                                          
                                                                                                                                
Number 2355                                                                                                                     
                                                                                                                                
SCOTT  CLARK, Notary  Clerk, Office  of the  Lieutenant Governor,                                                               
testified on  behalf of  the lieutenant governor  in favor  of HB
285.   Mr.  Clark  stated  that Alaska  does  have an  electronic                                                               
signature law,  although it is  restricted to a specific  type of                                                               
technology.   He related his observation  that the aforementioned                                                               
has  limited  the  advancement   of  the  electronic  transaction                                                               
process.   Therefore,  UETA  would step  backwards  and create  a                                                               
broad  framework  with  regard  to the  legal  definition  of  an                                                               
electronic signature.                                                                                                           
                                                                                                                                
TAPE 03-51 SIDE B                                                                                                             
                                                                                                                                
MR. CLARK  echoed earlier testimony  regarding the  importance of                                                               
not  penning the  state into  a corner  by adopting  [legislation                                                               
that specifies a particular technology  to be used for electronic                                                               
transactions].                                                                                                                  
                                                                                                                                
REPRESENTATIVE  GATTO   asked  of   notaries  could   lose  their                                                               
livelihood [with the adoption of this legislation].                                                                             
                                                                                                                                
MR. CLARK answered  that it wouldn't be likely  because there are                                                               
aspects of  notarization that an electronic  signature will never                                                               
be  able  to  replace.    For example,  notaries  check  for  the                                                               
willingness  and competency  of the  signer.   He said  he wasn't                                                               
sure  how  technology  would  replace  the  aforementioned  human                                                               
interaction.   Mr. Clark  commented that  UETA would  provide the                                                               
framework by  which the  state could look  at what  an electronic                                                               
notarization would  look like.   He reiterated  earlier testimony                                                               
that  HB 285  wouldn't mandate  an electronic  notarization.   In                                                               
fact, current  notary law requires  a handwritten signature.   He                                                               
mentioned that the  notary laws will need to be  updated in order                                                               
to accommodate this electronic notarization/signature.                                                                          
                                                                                                                                
CHAIR ANDERSON, upon  determining no one else  wished to testify,                                                               
closed public testimony.                                                                                                        
                                                                                                                                
Number 2278                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN moved to report  HB 285 out of committee with                                                               
individual  recommendations  and  the  accompanying  zero  fiscal                                                               
note.                                                                                                                           
                                                                                                                                
REPRESENTATIVE CRAWFORD remarked  that he is at  a complete loss.                                                               
He said that he didn't  receive much clarification with regard to                                                               
how this would work.  He  related that although he isn't going to                                                               
object to HB  285 moving out of committee, he  might not vote for                                                               
it on  the House floor  if he doesn't  receive some answers.   He                                                               
mentioned that perhaps the local  title companies would have some                                                               
input on this.                                                                                                                  
                                                                                                                                
REPRESENTATIVE LYNN noted that for  real estate transactions, one                                                               
can  do   many  things   by  e-mail   and  fax,   but  hardcopies                                                               
[handwritten signatures] have to follow at some point.                                                                          
                                                                                                                                
REPRESENTATIVE  CRAWFORD asked  if Representative  Lynn was  sure                                                               
that was the case because  he understood electronic signatures to                                                               
hail the end of [the need for handwritten signatures].                                                                          
                                                                                                                                
REPRESENTATIVE  GUTTENBERG said  that he  wasn't going  to oppose                                                               
the  legislation moving  from committee,  but  he suggested  that                                                               
there needs to be a model or direction for this.                                                                                
                                                                                                                                
Number 2123                                                                                                                     
                                                                                                                                
MR.  HILYARD  informed  the  committee  that  the  House  Finance                                                               
Committee is hearing legislation today  that will promote a pilot                                                               
program for electronic procurement.   Although this pilot program                                                               
wouldn't   necessarily  require   UETA  or   advanced  electronic                                                               
signature  technology,  UETA  or  advanced  electronic  signature                                                               
technology  would  potentially  make   this  pilot  program  more                                                               
effective.   He noted that the  State of Virginia has  a thorough                                                               
electronic procurement  process and  is moving toward  using many                                                               
of the on-line  technologies to effectuate state  business.  With                                                               
respect  to  electronic  signatures,   Mr.  Hilyard  related  his                                                               
understanding  that  the legislature  will  have  the ability  to                                                               
specify  when electronic  signatures can  be used  and when  they                                                               
can't.    He offered  to  do  further  research and  provide  the                                                               
committee   with  information   regarding  what   the  state   of                                                               
Washington, Virginia,  and Texas  are doing  since implementation                                                               
of electronic  procurement.  Mr.  Hilyard remarked  that [passage                                                               
of the  legislation] will allow  [the state] to  more effectively                                                               
leverage technology for streamlining state government.                                                                          
                                                                                                                                
CHAIR  ANDERSON interjected  the possibility  of an  [electronic]                                                               
permanent fund dividend application or voter registration.                                                                      
                                                                                                                                
MR. HILYARD  highlighted that income taxes  can be electronically                                                               
filed.   However,  one  can't completely  file  a permanent  fund                                                               
dividend electronically.                                                                                                        
                                                                                                                                
REPRESENTATIVE CRAWFORD  commented that  he understands  the move                                                               
toward  electronic business,  but he  merely wants  to know  more                                                               
about it.                                                                                                                       
                                                                                                                                
CHAIR ANDERSON, upon hearing no objection, announced that HB 285                                                                
was reported from the House Labor and Commerce Standing                                                                         
Committee.                                                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
4:20 p.m.                                                                                                                       

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