HB 163-FORM OF SIGNATURE ON VEHICLE TITLE  3:08:15 PM CHAIR KREISS-TOMKINS announced that the first order of business would be HOUSE BILL NO. 163, "An Act relating to vehicle title applications." 3:08:43 PM REPRESENTATIVE CALVIN SCHRAGE, Alaska State Legislature, as prime sponsor, introduced HB 163. He paraphrased the sponsor statement, 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. 3:11:42 PM LAUREN MACVAY, Chief Executive Officer, True North Federal Credit Union, said she was speaking in favor of HB 163. She stated that although simple, the bill would open the door to a significant amount of progress. She explained that electronic signature was used for many important things in Alaska; however, vehicle titling required a "wet" signature. She reported that a growing number of other states were implementing electronic lien and titling solutions to various degrees, but the "in ink" language in AS 28.10.211(b)(1) was preventing Alaska from exploring the benefits of modern technology, which had impacts on the DMV and its operation, as well as True North and its members. She explained that "ESign" had enabled True North to acquire members all throughout the state, despite its branches being in Juneau and Anchorage. Further, True North could open new memberships and close consumer and home equity loans electronically, which was a huge benefit when the pandemic hit. She emphasized that the credit union could not, however, complete any loan electronically that required a title application to secure the lien. When that occurred, the loan was held up until the original signatures were obtained. Another option, she explained, was to put the burden of securing the title work back on the borrower, then closing the loan and providing the borrower with the title application, from which point that individual would be required to go through the DMV process. She added that in that scenario, the title would be forwarded back to the credit union at the end. She said neither scenario was a good option, and both created inconveniences for everyone involved. She stated that if True North was able to secure electronic signature of title paperwork, the process would be far more convenient for members and more efficient for the credit union. She reiterated that by removing the words "in ink" from statute, the proposed legislation would remove the critical first barrier to progress. She encouraged the committee to move the bill forward for that reason. 3:14:55 PM REPRESENTATIVE TARR sought to understand the relationship between the Division of Motor Vehicle (DMV) component and the bank component. She specifically inquired about a scenario involving a cash transaction at the DMV. 3:15:40 PM JEFFERY SCHMITZ, Director, Division of Motor Vehicles, Department of Administration, asked Representative Tarr to rephrase her question. REPRESENTATIVE TARR proposed a scenario in which someone was [buying] a car from another individual with cash and without the involvement of a bank. She asked how the title transfer would occur in that circumstance. MR. SCHMITZ stressed that the proposed legislation would only remove the impairment created by the "in ink" requirement; further, the business procedures that would be implemented after changing the language had not been vetted in detail due to the current statutory language. He reiterated that there had been no evaluation on how a title transfer or cash transaction would actually transpire; therefore, he declined to comment on that scenario. He maintained that the proposed legislation would simply "open the door" to vetting the process. He surmised that a customer-to-customer transaction would likely be completed via portal and the DMV would be informed that the transfer occurred. 3:18:57 PM REPRESENTATIVE CLAMAN understood that in order to borrow money from True North to buy a car, the loan could be completed electronically; however, the title transfer would require its physical presence at the DMV for a signature. He asked if that was correct. MS. MACVAY answered, "Yes." She explained that the loan note could be signed electronically, but the loan would not be disbursed until the title application was received with the signed title in hand. REPRESENTATIVE CLAMAN understood that the next step in borrowing involved placing a lien on the title, which would be released after the loan was paid off entirely. He questioned how that process would change if electronic signatures were allowed. MS. MACVAY said currently, when a borrower paid off a car loan, the lien on the title would be signed off and released. The title would then be mailed back to the borrower. However, she noted that people did not always open their mail from financial institutions, which had resulted in titles being thrown away. REPRESENTATIVE CLAMAN asked how electronic signature would change that process. MS. MACVAY indicated that there were many answers to that question depending on the type of system the [DMV] would set up and how [True North] would interface with it. She explained that there were purely electronic lien and titling systems through which the lien could be released. That type of paperless system would be much faster and more efficient, she said; consequently, she believed that the end game should an entirely paperless method. 3:23:21 PM REPRESENTATIVE CLAMAN considered a scenario in which the borrower sold the car before the loan was paid off. He asked how electronic signature would allow the old owner to get his/her lien released and allow the new owner to receive the title as expeditiously as possible. MS. MACVAY believed electronic signature would be beneficial because True North would be able to note that the lien had been satisfied, which would allow the owner and the buyer to complete the transaction. 3:25:07 PM REPRESENTATIVE SCHRAGE expressed his appreciation for the opportunity to present HB 163. He said he looked forward to seeing the bill advance in the near future, as it would provide flexibility to the DMV and help Alaskans better conduct their businesses, as well as modernize state statute. CHAIR KREISS-TOMKINS announced [that HB 163 was held over.]