HB 163-FORM OF SIGNATURE ON VEHICLE TITLE  3:45:44 PM CHAIR SHOWER reconvened the meeting and announced the consideration of HOUSE BILL NO. 163 "An Act relating to vehicle title applications." He noted that this was the first hearing. 3:46:22 PM REPRESENTATIVE CALVIN SCHRAGE, Alaska State Legislature, Juneau, Alaska, sponsor of HB 163, introduced the bill with a very brief summary of the sponsor statement that read as follows: 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. 3:47:07 PM SENATOR HOLLAND asked if there was a problem signing titles in pencil. REPRESENTATIVE SCHRAGE said he didn't believe a pencil signature would be acceptable. 3:47:37 PM RYAN JOHNSTON, Staff, Representative Calvin Schrage, Alaska State Legislature, Juneau, Alaska, stated that HB 163 has one section that removes the words "in ink" in two places from AS 28.10.211(b), which is for the application for title or transfer of title of a vehicle. He advised that the fiscal note was indeterminate because the Division of Motor Vehicles (DMV) initially was unsure of the intent of the bill. The sponsor clarified that the intent was to allow DMV to move at its own pace in transitioning to electronic signatures. With that information, DMV has been on the record stating that the bill would have no fiscal impact. CHAIR SHOWER turned to invited testimony. 3:48:48 PM ED GRAVLEY, Chief Operations Officer (COO), Matanuska Valley Federal Credit Union, Palmer, Alaska, testified by invitation in support of HB 163. He said the credit union currently is able to help credit union members do business regardless of where they are in the state by using e-signatures. It's easier and a cost saving measure. The missing link is to be able to use e- signatures for DMV documents. CHAIR SHOWER asked for an explanation of the process for the credit union to use e-signatures. MR. GRAVLEY said the credit union uses the service called DocuSign that handles the entire process. It has out of bounds questions that the members must authenticate and it records, tracks, and stores the e-signatures. It's the same basic process that is used for the permanent fund dividend applications. CHAIR SHOWER commented that it's basically multi-factor identification. MR. GRAVLEY agreed and restated that out of bounds questions are required. 3:51:17 PM CHAIR SHOWER asked if the industry had any security concerns about transitioning to e-signatures. MR. GRAVLEY offered his belief that it was more secure when there were out of bounds questions. 3:51:59 PM DANIEL MCCUE, Alaska Credit Union League, Anchorage, Alaska, testified by invitation in support of HB 163. He said this change will open the door to technology changes that will enhance the ability for the credit union to provide more timely service to its members. This will also address the uncomfortable situation that lenders faced during the pandemic when there was a backlog of unprocessed titles because offices weren't open. He called the bill a smart change that will allow DMV to look at alternatives that will enhance its service to Alaskans. CHAIR SHOWER asked if he concurred with Mr. Gravley's responses to his questions. MR. MCCUE said he covered it well; technology requires all parties to ensure that security is at the highest level possible. It's part of the review process. 3:53:47 PM STEVE ALLWINE, Member, Alaska Auto Dealers Association (AADA), Juneau, Alaska, testified by invitation in support of HB 163. He said that striking the word "ink" from the application for title statute will modernize, streamline, and provide greater convenience to the motor vehicle purchase process. It also enhances the ability of automotive retailers and lenders to provide better service to people living in outlying areas of the state. Electronic signatures are secure and lenders and automotive retailers are already using them for the security agreements and financial contracts, which are more important. Allowing e-signatures falls in line with the steps that have already been taken. 3:55:32 PM SENATOR HOLLAND acknowledged that he was belaboring the point about losing the permanent mark on a title. He asked Jeffrey Schmitz with DMV if there were any implications to no longer having a signature in ink on a vehicle title. He also asked if there was anything in regulation about signatures in ink. 3:56:09 PM JEFFREY SCHMITZ, Director, Division of Motor Vehicles (DMV) Department of Administration (DOA), Anchorage, Alaska, stated that there are more than 60 places in current Alaska statutes that refer to certificate of title as an application for title signed in ink. He said this is an exciting first step and he understands the enthusiasm that industry has, but it's important to be clear about what the bill does and does not do. HB 163 only removes the requirement for the title to be signed in ink. This opens the door to the possibility for DMV to look at other solutions, but this is not required. DMV's analysis is that a feasibility study would need to be done before making any changes. The requirement for a signature in ink serves as a roadblock that impedes DMV's ability to look at any future solutions. SENATOR HOLLAND asked if DMV supports HB 163. MR. SCHMITZ replied that DMV has a neutral stance on the bill. CHAIR SHOWER asked if DMV had identified any problems it would have in transitioning to electronic signatures on vehicle titles. MR. SCHMITZ replied that's difficult to ascertain in the absence of a feasibility study. He relayed that multiple states are conducting pilot programs and Alaska could possibly look at some of those electronic solutions if the bill were to pass. He acknowledged that this was a wave of the future and that there likely was a solution but he didn't know what that might be at this point. CHAIR SHOWER asked if it was fair to say that a fiscal note from DMV would include a study and whatever else might need to be implemented. MR. SCHMITZ responded that DMV submitted an indeterminate fiscal note because implementing electronic signatures for vehicle titles would entail more than the removal of "in ink" from the statutes. DMV's estimate to build an electronic titling system is in the neighborhood of $3.5 million. It would require a well thought out and detailed project. 4:00:47 PM SENATOR KAWASAKI asked if he envisions that an electronic signature would be required on both the bill of sale and the title transfer. MR. SCHMITZ replied that DMV needs the signed title document to perform the title transfer. He acknowledged that there was a process if the title was missing. SENATOR KAWASAKI said he didn't know whether DMV needed direction from the legislature or the administration, but this was the wave of the future and the state would do well to start in that direction. CHAIR SHOWER said he understands why the fiscal note is indeterminate, but that leads to the question of whether the legislature would need to provide an allocation to do the study. He asked the sponsor if that had come up in discussion. REPRESENTATIVE SCHRAGE replied that the understanding from the start was that there would be a fiscal cost to transitioning to e-signatures on vehicle transfers. HB 163 is a step in that direction by simply removing the current requirement for the signature to be in ink. He said the bill does not mandate DMV to take this project on, but he would note that 36 other states had removed the signature in ink requirement and 26 of those states had looked at how to develop and enact such a process. HB 163 leaves the decision to DMV about when and whether to start the process to put an electronic system in place. CHAIR SHOWER said that makes sense. 4:04:22 PM CHAIR SHOWER asked the sponsor if he had any final comments. REPRESENTATIVE SCHRAGE restated that HB 163 removes the term "in ink" from the statutes. 4:04:34 PM CHAIR SHOWER held HB 163 in committee for future consideration.