HB 163-FORM OF SIGNATURE ON VEHICLE TITLE  8:03:08 AM CO-CHAIR HANNAN announced that the first order of business would be HOUSE BILL NO. 163, "An Act relating to vehicle title applications." 8:03:40 AM CO-CHAIR SCHRAGE, as prime sponsor, offered the sponsor statement for HB 163, which read as follows [original punctuation provided]: House Bill 163 eliminates the current requirement for ink signatures on applications for titles and title transfers within the Department of Motor Vehicles. HB 163 gives flexibility to the DMV to begin using electronic signatures. HB 163 does not force the use of electronic signatures. AS 28.10.211(b) states that "applications for title or transfer of title must contain the signature in ink of the owner, or if there is more than one owner, the signature in ink of at least one of the owners and the name of each owner stated in the conjunctive or in the disjunctive." HB 163 deletes the words "in ink" in both places. Under the Uniform Electronic Transactions Act of 2004 (AS 09.80.010-09.80.195) electronic signatures satisfy the general definition of a signature unless otherwise prohibited. Since the current statute explicitly requires "ink" signatures for title applications, the DMV cannot accept electronic signatures. HB 163 will give the Department the latitude to determine for itself if it wants to accept electronic signatures in the cases of title transfers and title applications. Covid has taught us that electronic signatures can provide extra convenience to Alaskans in remote or rural parts of the state and can provide long-term efficiencies for the DMV. 8:06:25 AM LAUREN MACVAY, President/CEO, True North Federal Credit Union, stated that True North Federal Credit Union tries to make doing business easier for its members, and [requiring a signature in ink rather than electronically] is problematic. Electronic capabilities have been a boon, especially during the pandemic. The impediment to online transactions has been in title work. She predicted the change proposed under HB 163 would result in more efficient services with far fewer delays for the credit union's members. 8:09:57 AM JEFFREY SCHMITZ, Director, Division of Motor Vehicles, Department of Administration (DOA), stated that HB 163 would remove an impediment faced by the Division of Motor Vehicles (DMV) by no longer requiring signatures in ink on titles. He said the proposed bill would allow the DMV to begin conversations with banks, car dealerships, and other entities that deal with titles to change the way the division addresses titles. He noted there are other states in the Union that have implemented electronic titling and signatures. All the states have "caveats to how it currently works," he remarked. For example, [the use of electronic titles] is only for new vehicles. In Arizona, the [paperless] transaction can be done person to person. Texas has a good model, he said. Mr. Schmitz stated that HB 163 would allow Alaskans to "throw their hat in the ring, to see how this would work and vet this." He indicated there would be work needed to define all the places in statute that describe [signature certification]. He expressed excitement about this being the beginning of a change and the opportunity to assess what this will cost and how long it would take to implement. 8:13:44 AM REPRESENTATIVE MCCABE noted there are other instances when people must go in person to the DMV, and he questioned what would happen if all transactions were changed to electronic processes. MR. SCHMITZ responded that that is possible, but cautioned not to make safety too much of a convenience for patrons. He said there are certain reasons for requiring drivers to come in, for example to get take their driver's test. Nevertheless, he acknowledged that many of the systems within the DMV are moving toward electronic measures, and he said there is no reason not to look for additional efficiencies while making safety a priority. In response to a follow-up question, he said he could provide the committee with a list of other transactions that could be electronic [if statute relating to them were changed]. He relayed that earlier in the year, the DMV was involved with its "law officers" to determine where in statute changes were needed, and he remarked that mostly it is wherever the word "certificate" appears. He said "minor word-crafting" would be necessary to allow patrons to interact with the DMV electronically. 8:17:24 AM CO-CHAIR SCHRAGE characterized HB 163 as a step in the right direction toward providing flexibility to the DMV, businesses, and consumers. He said he would look for opportunities to [expand opportunities for online transactions] and would like to see the list [of transactions with DMV that require patrons to appear in person]. 8:17:48 AM REPRESENTATIVE PRAX asked Mr. Schmitz if he knew why some other states allowing limited electronic transactions were "hesitant to just let everything happen on line with an electronic signature." MR. SCHMITZ answered that he does not know the specific restrictions of platforms being built in other states. He talked about having interoperability between all states. He suggested budgets may be limited in other states or they may be trying a pilot program to ensure the system works properly. He said the idea of going electronic has been discussed since the 1990s, but it is not until the last few years that states have been able to implement the standards involved. He mentioned there is a national working group, with which Alaska is involved, that is establishing standards for electronic title ("e-title") solutions. REPRESENTATIVE PRAX suggested that the concerns are administrative rather than concern for the security of titles. MR. SCHMITZ responded yes. He added that he believes these are first steps in "a phased approach." 8:21:33 AM REPRESENTATIVE MCCARTY asked what the DMV would do to ensure that the person signing electronically is who he/she claims to be. CO-CHAIR SCHRAGE pointed out that currently a person can sign electronically for a loan but not for the title. He pointed out that even a signature written by someone in person could be forged. He said HB 163 would bring the signature from physical to digital. MR. SCHMITZ indicated those questions are yet to be answered, but said the perception is that a consumer to consumer portal would be built. He mentioned Venmo, where money is exchanged electronically, and he said there are many models available by which transparency can be ensured during electronic transactions. He said there would certainly be a vetting process. REPRESENTATIVE MCCARTY shared that he is selling property and is required to provide a notarized signature in ink. He again expressed concern that Alaskans are protected from those who would attempt fraud. 8:26:42 AM MS. MACVAY, in response to a request from the bill sponsor, talked about the means by which True North Federal Credit Union keeps its members' accounts secure when utilizing digital transaction methods. She mentioned identity verification questions and comparison of driver's license photos with optically captured images. She said artificial intelligence (AI) technology is involving rapidly. She imparted that the law that would allow an electronic notary went into effect January 1, 2021, and the infrastructure to support that law is being worked on to "catch up." 8:28:12 AM REPRESENTATIVE MCCABE asked Mr. Schmitz, "How many 'PCNs' do you think it'll save in the future?" MR. SCHMITZ answered that is difficult to say, since the division is just beginning to determine how this will work and how it will save the department money. He said not having a clerk at the front counter processing paperwork will "save time." He mentioned backroom auditing to ensure the system is working. He said the division would know more after looking at the business flow and process and receiving feedback from all of its stakeholders. He indicated that there could be cost-savings long term for the state because there will be fewer hardcopies of documents made. 8:30:39 AM REPRESENTATIVE DRUMMOND said, "Be careful what you wish for." She talked about the Municipality of Anchorage spending about a year to prepare for vote by mail ballots and said there were about 62,000 ballots submitted by mail. She emphasized the work involved and offered her understand that the amount of fraud was miniscule. She shared that she is refinancing her mortgage and has been told most all of the transactions will be done electronically. She said she is glad to see the state moving forward in increasing convenience to Alaska consumers. 8:32:42 AM CO-CHAIR HANNAN asked whether the registration of vehicles must be done in person. MR. SCHMITZ answered no, it can be done electronically. CO-CHAIR HANNAN mused that she had never financed a car; her purchases have all been title transfers in parking lot, handing over "a stack of twenties." She mentioned getting registration and insurance can be done on line and said the title "is a limiting gate." She reflected that there would be a solution "not too far off." 8:34:02 AM CO-CHAIR HANNAN opened public testimony on HB 163. After ascertaining that there was no one who wished to testify, she closed public testimony. CO-CHAIR HANNAN announced that HB 163 was held over.