HB 102 - UNIFORM COMMERCIAL CODE 1:08:05 PM CHAIR RAMRAS announced that the first order of business would be HOUSE BILL NO. 102, "An Act relating to the Uniform Commercial Code, to the general provisions of the Uniform Commercial Code, to documents of title under the Uniform Commercial Code, to the Uniform Electronic Transactions Act, and to lease-purchases of personal property; amending Rules 403 and 902, Alaska Rules of Evidence; and providing for an effective date." 1:08:14 PM REPRESENTATIVE DAHLSTROM moved to adopt the proposed committee substitute (CS) for HB 102, Version 26-LS0059\S, Bannister, 2/24/09, as the work draft. There being no objection, Version S was before the committee. REPRESENTATIVE GRUENBERG, noting that HB 102 was introduced [by the House Labor and Commerce Standing Committee] at the request of the National Conference of Commissioners on Uniform State Laws (NCCUSL), explained that the bill proposes technical changes to Alaska's statutes thereby reflecting changes made to Article 1 and Article 7 of the Uniform Commercial Code (UCC). 1:09:43 PM TERRY L. THURBON, Commissioner, National Conference of Commissioners on Uniform State Laws (NCCUSL), explained that the NCCUSL has identified changes to the UCC that would be beneficial for states to adopt, and that the changes proposed via HB 102 pertain to the statutes that govern the commercial transactions occurring in the state, reflect the use of modern- day technology for such transactions, and will help bring Alaska's laws up to date. She mentioned that she would only be addressing the sections in Version S that pertain to the UCC, and would not be speaking to the bill's proposed changes to Title 9 or Title 34. REPRESENTATIVE HOLMES noted that proposed AS 45.01.211(b)(15) says, "'defendant' includes a person in the position of defendant in a counterclaim, cross-claim, or third-party claim;" and questioned whether the word "claim" ought to be included as part of that definition. REPRESENTATIVE GRUENBERG explained that AS 01.10.040(b) states that when the words "includes" or "including" are used in a law, they shall be construed as though followed by the phrase, "but not limited to". He surmised, therefore, that the definition in proposed AS 45.01.211(b)(15) already includes claims. 1:18:24 PM WILLIAM H. HENNING, Commissioner, National Conference of Commissioners on Uniform State Laws (NCCUSL), concurred with that explanation, adding that the UCC contains the same definition as proposed AS 45.01.211(b)(15). REPRESENTATIVE GRUENBERG observed that Version S's proposed AS 45.07.302 - regarding through bills of lading and similar documents of title - now reflects current federal law. In response to a question regarding the bill's indirect court rule changes, he explained that proposed AS 45.01.303(g) would require that if there is evidence of a relevant trade practice offered by one party, that party must give sufficient notice to the other party so as not to surprise the other party; and that proposed AS 45.01.307 would establish that documents required by the contract to be issued by a third party would be what he characterized as "self-authenticating." Such documents, he proffered, would be easier to introduce [in court] and yet still be subject to challenge. MR. HENNING added that the language of proposed AS 45.01.307 [is identical to that currently] in the UCC; that proposed AS 45.01.303(g) contains language that has always been part of the UCC, and is not a burden-shifting mechanism; and that both provisions are consistent with federal [court] rules. MS. THURBON in response to comments, relayed that [Alaska's NCCUSL commissioners and the drafter] took a conservative approach with regard to including language that would effect indirect court rule changes, and are therefore not completely certain that the bill's proposed changes to the UCC really will result in "standards that are different than would occur under the court rules as they stand," but included the provisions authorizing indirect court rule changes in order to update Alaska's statutes even if indirect court rule changes do result. She offered her understanding that "these provisions of the revised [UCC] are consistent with other uniform Acts that [the NCCUSL] has developed except to the extent some of those might not yet have been updated." MS. THURBON, in response to a question, relayed that with regard to the UCC provisions, there is wide support - nationally - from the warehousing industries, and that the business section of the Alaska Bar Association (ABA) is amenable to [the proposed changes to state law]. Therefore, although it might not be urgent that the state adopt the proposed updates, doing so is in order if Alaska is going to stay on track with the rest of the country, particularly with regard to the warehousing provisions, and particularly given that [almost 40 states either already have adopted or will be adopting updates to the UCC]. Moreover, from the perspective of various operators, a failure to update Alaska's warehousing provisions could make it a little riskier to do business in Alaska. In conclusion, she said she doesn't see a downside to the [updated] UCC provisions. CHAIR RAMRAS agreed. 1:32:23 PM REPRESENTATIVE DAHLSTROM asked whether shipping rates to Alaska would be positively affected by the adoption of HB 102. MS. THURBON declined to venture whether such would be the case, but suggested that adopting the bill might make it easier to litigate excessive rates. In response to another question, she relayed that the bill is not intended to fix a particular problem with Alaska law, that Alaska is already behind other states with regard to updating its commercial code to reflect the use of new technology, and that the bill would conform state law to what is already occurring. MR. HENNING explained that during the 1990s, through about 2001, there was a major effort to revise the UCC generally, with one of the goals being to create a neutral playing field for technological advancements such as electronic signatures, for example. Of the several revisions to various articles of the UCC that have occurred over the last several years, HB 102 reflects some of the latest revisions as well as aspects of "the model that was created by the Uniform Transactions Act," which Alaska has adopted. Providing for electronic certificates of title, for example, will help knit the rest of the UCC together, and will bring Alaska up to date with regard to what's already occurring in the commercial community. In conclusion, he said he couldn't think of a single negative aspect [to adopting the revisions to the UCC]. CHAIR RAMRAS, after ascertaining that no one else wished to testify, closed public testimony on HB 102. 1:39:39 PM REPRESENTATIVE DAHLSTROM moved to report the proposed CS for HB 102, Version 26-LS0059\S, Bannister, 2/24/09, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 102(JUD) was reported out of the House Judiciary Standing Committee.