HOUSE LABOR AND COMMERCE STANDING COMMITTEE April 30, 1999 3:28 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative Andrew Halcro, Vice Chairman Representative John Harris Representative Sharon Cissna MEMBERS ABSENT Representative Jerry Sanders Representative Lisa Murkowski Representative Tom Brice COMMITTEE CALENDAR HOUSE BILL NO. 183 "An Act relating to the powers and duties of the chair of the Alaska Public Utilities Commission; relating to membership on the Alaska Public Utilities Commission; and relating to the annual report of the Alaska Public Utilities Commission." - HEARD AND HELD CS FOR SENATE BILL NO. 93(FIN) "An Act relating to the purposes of certain businesses and corporations; relating to the names of businesses and organizations; relating to the registration under the Alaska Trademark Act of marks that resemble the name of another business or organization; and providing for an effective date." - MOVED CSSB 93(FIN) HOUSE BILL NO. 81 "An Act relating to the provision of electric service in the state; and providing for an effective date." - BILL HEARING CANCELLED HOUSE BILL NO. 185 "An Act exempting certain small water utilities from regulation by the Alaska Public Utilities Commission." - BILL HEARING CANCELLED (* First public hearing) PREVIOUS ACTION BILL: HB 183 SHORT TITLE: ALASKA PUBLIC UTILITIES COMMISSION SPONSOR(S): SPECIAL COMMITTEE ON UTIL RESTRUCTURING Jrn-Date Jrn-Page Action 4/09/99 702 (H) URS, L&C 4/14/99 (H) URS AT 8:00 AM BUTROVICH ROOM 205 4/14/99 (H) SCHEDULED BUT NOT HEARD 4/16/99 (H) URS AT 2:00 PM CAPITOL 120 4/16/99 (H) MOVED CSHB 183(URS) OUT OF COMMITTEE 4/16/99 (H) MINUTE(URS) 4/20/99 880 (H) URS RPT CS(URS) NT 6DP 4/20/99 880 (H) DP: PORTER, KOTT, COWDERY, HUDSON, 4/20/99 880 (H) GREEN, ROKEBERG 4/20/99 880 (H) ZERO FISCAL NOTE (DCED) 4/20/99 880 (H) REFERRED TO L&C 4/09/99 702 (H) READ THE FIRST TIME - REFERRAL(S) 4/23/99 (H) L&C AT 3:15 PM CAPITOL 17 4/23/99 (H) HEARD AND HELD 4/23/99 (H) MINUTE(L&C) 4/26/99 (H) L&C AT 3:15 PM CAPITOL 17 4/26/99 (H) HEARD AND HELD 4/26/99 (H) MINUTE(L&C) 4/28/99 (H) L&C AT 3:15 PM CAPITOL 17 4/28/99 (H) HEARD AND HELD 4/28/99 (H) MINUTE(L&C) 4/30/99 (H) L&C AT 3:15 PM CAPITOL 17 BILL: SB 93 SHORT TITLE: NAMES OF ORGANIZATIONS & BUSINESSES SPONSOR(S): LABOR & COMMERCE Jrn-Date Jrn-Page Action 3/04/99 408 (S) READ THE FIRST TIME - REFERRAL(S) 3/04/99 408 (S) L&C 3/25/99 (S) L&C AT 1:30 PM BELTZ 211 3/25/99 (S) MOVED CS (L&C) OUT OF COMMITTEE 3/25/99 (S) MINUTE(L&C) 3/26/99 700 (S) L&C RPT CS 4DP 1NR NEW TITLE 3/26/99 700 (S) DP: MACKIE, TIM KELLY, LEMAN, DONLEY; 3/26/99 700 (S) NR: HOFFMAN 3/26/99 700 (S) FISCAL NOTE (DCED) 3/26/99 700 (S) FIN REFERRAL ADDED 4/09/99 (S) FIN AT 8:00 AM SENATE FINANCE 532 4/09/99 (S) HEARD AND HELD 4/09/99 (S) MINUTE(FIN) 4/19/99 (S) FIN AT 9:00 AM SENATE FINANCE 532 4/19/99 (S) MOVED CS (FIN) OUT OF COMMITTEE 4/19/99 (S) MINUTE(FIN) 4/21/99 (S) RLS AT 11:30 AM FAHRENKAMP 203 4/21/99 (S) MINUTE(RLS) 4/21/99 982 (S) FIN RPT CS 2DP 5NR NEW TITLE 4/21/99 983 (S) DP: TORGERSON, LEMAN; NR: PARNELL, 4/21/99 983 (S) PETE KELLY, ADAMS, WILKEN, GREEN 4/21/99 983 (S) FISCAL NOTE (DCED) 4/26/99 1087 (S) RULES TO CALENDAR AND 1 OR 4/26/99 4/26/99 1115 (S) READ THE SECOND TIME 4/26/99 1116 (S) FIN CS ADOPTED UNAN CONSENT 4/26/99 1116 (S) ADVANCED TO THIRD READING UNAN 4/26/99 1116 (S) CONSENT 4/26/99 1116 (S) READ THE THIRD TIME CSSB 93(FIN) 4/26/99 1116 (S) PASSED Y18 N- E2 4/26/99 1116 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 4/26/99 1120 (S) TRANSMITTED TO (H) 4/27/99 1019 (H) READ THE FIRST TIME - REFERRAL(S) 4/27/99 1020 (H) L&C, FIN 4/30/99 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER DOUGLAS NEELEY Copper Basin Sanitation Service Company P.O. Box 88 Glennallen, Alaska 99588-0088 Telephone: (907) 822-3600 POSITION STATEMENT: Interested in refuse regulation issue, which HB 183 does not speak to. JANET SEITZ, Legislative Assistant to Representative Rokeberg Alaska State Legislature Capitol Building, Room 24 Juneau, Alaska 99801 Telephone: (907) 465-4968 POSITION STATEMENT: Provided information during HB 183 hearing as aide to the House Labor and Commerce Standing Committee. RON ZOBEL, Assistant Attorney General Fair Business Practices Section Civil Division (Anchorage) Department of Law 1031 West Fourth Avenue, Suite 200 Anchorage, Alaska 99501-1994 Telephone: (907) 269-5100 POSITION STATEMENT: Testified on HB 183, agreed to provide possible amendment language. DAVID GRAY, Legislative Assistant to Senator Jerry Mackie Alaska State Legislature Capitol Building, Room 427 Juneau, Alaska 99801 Telephone: (907) 465-3844 POSITION STATEMENT: Presented SB 93 as aide to the Senate Labor and Commerce Standing Committee, the bill sponsor. DAWN WILLIAMS, Records and Licensing Supervisor Division of Banking, Securities and Corporations Department of Commerce and Economic Development P.O. Box 110807 Juneau, Alaska 99811-0907 Telephone: (907) 465-2297 POSITION STATEMENT: Testified on SB 93. ACTION NARRATIVE TAPE 99-50, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:28 p.m. Members present at the call to order were Representatives Rokeberg, Halcro, Harris and Cissna. HB 183 - ALASKA PUBLIC UTILITIES COMMISSION Number 0090 CHAIRMAN ROKEBERG announced the committee's first order of business is HB 183, "An Act relating to the powers and duties of the chair of the Alaska Public Utilities Commission; relating to membership on the Alaska Public Utilities Commission; and relating to the annual report of the Alaska Public Utilities Commission." The chairman indicated he had intended to postpone the hearing on HB 183 because two committee members who wished to propose amendments are absent. The chairman noted, however, he wishes to take the testimony of the two witnesses who have signed up, and hold the legislation over after that testimony. He informed the committee no amendments or action would be taken up on HB 183 at this hearing. Chairman Rokeberg requested the testimony of Douglas Neeley in Glennallen. Number 0122 DOUGLAS NEELEY, Copper Basin Sanitation Service Company, responded via teleconference from Glennallen. Mr. Neeley commented he had intended to listen to the discussion and the amendments. He questioned if the committee planned to take any action at all on this legislation today. CHAIRMAN ROKEBERG responded in the negative. He noted the two proposed amendments are from absent members. Representative Murkowski had intended to offer a "clean-up" amendment recommended by the Department of Law. Representative Brice had intended to offer an amendment to remove the qualifications of office regarding political affiliations [for commissioners]. REPRESENTATIVE HARRIS informed the chairman that Mr. Neeley's concern is in relation to garbage deregulation, and the chairman might wish to explain that this legislation is not the right vehicle for that. He confirmed for the chairman that Mr. Neeley's business is Copper Basin Sanitation Service Company. CHAIRMAN ROKEBERG indicated the committee had received Copper Basin Sanitation's letter and thanked Mr. Neeley. The chairman pointed out that HB 183 does not speak to the refuse regulation issue. He informed Mr. Neeley that the committee is in receipt of the latest version of SB 133, which had originally taken up the refuse issue by deleting it from the APUC [Alaska Public Utilities Commission]. However, as the chairman understands it, the latest version of SB 133 excludes those provisions and maintains the status quo. He asked Ms. Seitz if that is correct. Number 0272 JANET SEITZ, Legislative Assistant to Representative Rokeberg, Alaska State Legislature, came forward as the aide to the House Labor and Commerce Standing Committee. Ms. Seitz noted the latest version of SB 133 the committee is in receipt of, Version K, does contain reference to garbage-related services in the definition of a public utility. She stated, "It does describe furnishing, collection and disposal services of garbage, refuse, trash or other waste material to the public for compensation; that is part of the definition of a public utility contained in the latest draft of SB 133 that we have." CHAIRMAN ROKEBERG confirmed, therefore, the commission would retain its regulatory control. The chairman recommended Mr. Neeley obtain a copy of SB 133, Version K, adopted that day by the Senate Finance Standing Committee. Chairman Rokeberg believes SB 133 will ultimately be the vehicle utilized. The chairman indicated the committee is using HB 183 for coordination and to develop some potential amendments; HB 183 may also be held as a possible back-up bill. He questioned if Mr. Neeley had any further comments. MR. NEELEY indicated his questions had been answered and thanked the committee. CHAIRMAN ROKEBERG asked Mr. Zobel in Anchorage if he had comments or if he was present to listen and answer questions. Number 0427 RON ZOBEL, Assistant Attorney General, Fair Business Practices Section, Civil Division (Anchorage), Department of Law, testified next via teleconference from Anchorage. He is one of the two assistant attorney generals assigned to the APUC. Mr. Zobel indicated he has a comment he had intended to make at the April 28 hearing that he thinks is now more important in retrospect. Mr. Zobel said, "One of the things you've done by this bill is put in Section 10 of the committee substitute [Version I] which amends [AS] 42.05.171, provisions about an arbitrator." He indicated he thinks the intention was to allow case hearing and proposed decision making to be delegated to an arbitrator. Mr. Zobel said his comment would also apply to the delegation to hearing officers. [Section 10 of HB 183, Version I, reads: * Sec. 10. AS 42.05.171 is amended to read: Sec. 42.05.171. Formal hearings. A formal hearing that the commission has power to hold may be held by or before three or more commissioners, a hearing officer, or an administrative law judge designated for the purpose by the commission. In appropriate cases, a formal hearing may be held before an arbitrator designated for the purpose by the commission. The testimony and evidence in a formal hearing may be taken by the commissioners, by the hearing officer, [OR] by the administrative law judge, or by the arbitrator to whom the hearing has been assigned. A commissioner who has not heard or read the testimony, including the argument, may not participate in making a decision of the commission. In determining the place of a hearing, the commission shall give preference to holding the hearing at a place most convenient for those interested in the subject of the hearing.] MR. ZOBEL directed the committee's attention to the language in existing law in Section 10 of Version I beginning on line 29, page 4, "A commissioner who has not heard or read the testimony, including the argument, may not participate in making a decision of the commission." That provision has been interpreted by some commissioners to - and probably does - prevent the commission from delegating the hearing of a case and the making of a proposed decision to a hearing officer or an arbitrator. Mr. Zobel indicated this procedure, however, is allowed under similar provisions in AS 44.62.500 of the Administrative Procedure Act, regarding decision in a contested case. He noted, however, the Administrative Procedure Act does not apply to the APUC. [AS 42.62.500 read: Sec. 44.62.500. Decision in a contested case. (a) If a contested case is heard before an agency (1) the hearing officer who presided at the hearing shall be present during the consideration of the case and, if requested, shall assist and advise the agency; and (2) a member of the agency who has not heard the evidence may not vote on the decision. (b) If a contested case is heard by a hearing officer alone, the hearing officer shall prepare a proposed decision in a form that may be adopted as the decision in the case. A copy of the proposed decision shall be filed by the agency as a public record with the lieutenant governor and a copy of the proposed decision shall be served by the agency on each party in the case and the party's attorney. The agency itself may adopt the proposed decision in its entirety, or may reduce the proposed penalty and adopt the balance of the proposed decision. (c) If the proposed decision is not adopted as provided in (b) of this section the agency may decide the case upon the record, including the transcript, with or without taking additional evidence, or may refer the case to the same or another hearing officer to take additional evidence. If the case is so assigned the hearing officer shall prepare a proposed decision as provided in (b) of this section upon the additional evidence and the transcript and other papers that are part of the record of the earlier hearing. A copy of the proposed decision shall be furnished to each party and the party's attorney as prescribed by (b) of this section. The agency may not decide a case provided for in this subsection without giving the parties the opportunity to present either oral or written argument before the agency. If additional oral evidence is introduced before the agency, an agency member may not vote unless that member has heard the additional oral evidence.] Number 0562 MR. ZOBEL commented AS 44.62.500 has a section which allows delegation to a hearing officer to hear the matter and to submit a proposed decision. The agency in that instance can approve the decision in its entirety without reading the whole transcript or having attended the hearing. If the agency wants to modify the decision, it has to read the record or take additional evidence. Mr. Zobel indicated he thinks the sentence he has mentioned in the existing APUC statute, "A commissioner who has not heard or read the testimony, including the argument, may not participate in making a decision of the commission.", would need to be altered along the lines of the language in AS 42.62.500 if it is the committee's intention to allow more efficiency by the commission through delegation to hearing officers or arbitrators. Mr. Zobel further indicated he might be able to provide possible language early next week. He noted there has been previous talk at the commission about delegating to hearing officers and that sentence in the existing law is pointed to as inhibiting that; the commissioner either has to be there or read the whole record, which somewhat defeats the purpose of delegation to a hearing officer or arbitrator. That completed Mr. Zobel's testimony. Number 0659 CHAIRMAN ROKEBERG said he appreciated and agreed with Mr. Zobel's comment. The chairman questioned if it might be possible for Mr. Zobel to make a recommendation and even a draft amendment by the committee's 3:15 p.m. meeting on Monday [May 3, 1999]. MR. ZOBEL indicated he could do so. CHAIRMAN ROKEBERG indicated he thought an accompanying summary explaining the situation would be very helpful, if it didn't cause Mr. Zobel too much work. The chairman provided the committee's fax number. Proceeding onward, the chairman questioned if the committee is working from Version I. MS. SEITZ confirmed the committee is working from Version I of HB 183 and has two pending amendments to this version. The committee adopted Amendment 3 to Version I [adopted 4/28/99; labeled 1-LS0764\I.3, Cramer, 4/28/99] . Ms. Seitz confirmed that Amendment 1 [offered and amended 4/28/99; labeled 1-LS0764\I.1, Cramer, 4/28/99] and Amendment 2 [offered 4/28/99; labeled 1-LS0764\I.2, Cramer, 4/28/99] are both still before the committee. Number 0741 REPRESENTATIVE HALCRO indicated the committee also still has Amendment 8 to Version H offered at the Monday, April 26 hearing [stated as "Friday"]. Representative Halcro noted the committee had been waiting on the determination of constitutionality and now has the opinion. CHAIRMAN ROKEBERG asked Ms. Seitz to organize materials with the committee in preparation for the Monday hearing [May 3]. He noted there is Amendment 1 and commented Representative Murkowski has an amendment to Amendment 1 which can be handled then. MS. SEITZ commented Amendment 1 is marked I.1. She indicated Amendment 2, marked I.2, was held by the chairman on April 28. It is the amendment regarding rate charges. Ms. Seitz pointed out there is also the corrected Amendment 8 [to Version H] from Representative Halcro, which was being held for the legal opinion. She confirmed this amendment concerns the appointment of the chair and copies of the legal opinion are being distributed to the committee. Additionally there is a new amendment, from Representative Brice, relating to the political qualifications. Number 0852 CHAIRMAN ROKEBERG stated the committee should be prepared to bring these items forward. The chairman indicated he would like Ms. Seitz to discuss the legal opinion on Amendment 8 with Representative Halcro and Walt Wilcox [aide to the House Special Committee on Utility Restructuring] to ensure this can be addressed. Chairman Rokeberg requested Mr. Zobel's comments on Amendment 1. The chairman confirmed Mr. Zobel and Representative Murkowski had had a conversation regarding deletion of the amendment language, "complexity of issues, or another reason", on line 19 of the original written amendment. [Amendment 1, labeled 1-LS0764\I.1, Cramer, 4/28/99, as amended by the committee on 4/28/99, read: Page 1, line 5, following ";": Insert "relating to timely action by the Alaska Public Utilities Commission;" Page 3, line 26: Delete "a new subsection" Insert "new subsections" Page 3, lines 28 - 30: Delete ", the chair of the commission shall promptly fix a date for hearing when a hearing is appropriate. The hearing shall be without undue delay. The" Insert "for which a hearing is clearly warranted, the chair of the commission shall assign a priority rating to the issue and promptly fix a date for hearing. The hearing shall be expedited in accordance with the priority rating. Regardless of the priority rating, a" Page 4, following line 2: Insert a new subsection to read: "(c) Unless to do so would violate the due process rights of a party, the commission shall ensure that its dockets are closed in a timely fashion and not delayed due to inaction, complexity of issues, or another reason. Failure of a commission member to comply with this subsection constitutes grounds for removal from the commission under AS 42.05.035. The chair of the commission may dismiss a commission employee for failure to comply with this subsection."] Number 0955 MR. ZOBEL agreed with the view Representative Murkowski had expressed at the previous hearing: this language would not allow for any reason. The phrase "another reason" is particularly troublesome, it is too broad; there is no reason for delay at all. Mr. Zobel additionally commented he thinks the phrase, "Unless to do so would violate the due process rights of a party,", is rather superfluous. It is implied that the commission cannot violate due process rights of a party. However, he said he has not tried to rewrite this particular section. Mr. Zobel indicated one reason is that these issues are in Jim Baldwin's [Assistant Attorney General, Governmental Affairs Section, Civil Division (Juneau), Department of Law] area of expertise. Number 1024 CHAIRMAN ROKEBERG indicated his wish had been to take Mr. Zobel's testimony for the committee's information so less time would have to be spent at the May 3 hearing. The chairman repeated that Representative Murkowski would be offering an amendment to the amendment, and looking at the balance of that statement. He confirmed no one else wished to testify on HB 183 and announced HB 183 would be held over for further action on Monday [May 3]. CSSB 93(FIN) - NAMES OF ORGANIZATIONS & BUSINESSES Number 1115 CHAIRMAN ROKEBERG announced the committee's next order of business is CSSB 93(FIN), "An Act relating to the purposes of certain businesses and corporations; relating to the names of businesses and organizations; relating to the registration under the Alaska Trademark Act of marks that resemble the name of another business or organization; and providing for an effective date." Number 1130 DAVID GRAY, Legislative Assistant to Senator Jerry Mackie, Alaska State Legislature, came forward to present SB 93 as aide to the Senate Labor and Commerce Standing Committee, the bill sponsor. Senate Bill 93 was introduced in response to a request from the Department of Commerce and Economic Development (DCED) to attempt to clear up a real confusion in the state's responsibility for registry or acknowledging names of the various corporations and private businesses throughout the state. The state recognizes names of different corporations and private entities in three ways. In Alaska Statutes 10.06, 10.20, 10.35, 32.11, the standard is that the name may not be the same or deceptively similar to the name of another corporation or public entity. In Alaska Statute 10.25, the guideline is that the name shall be distinct from the name of another corporation. In Alaska Statutes 10.50 and 32.05, the guideline is that the name is distinguishable on the records of the department. These three different standards distributed through the state's statutes are cause for a tremendous amount of confusion and draws the DCED into an enormous amount of controversy. MR. GRAY stated SB 93 is an attempt to establish one standard, "distinguishable on the record," which is used by most states and is recommended by the "Uniform Code Commission." He indicated a representative of the department is also present to answer technical questions. Mr. Gray explained to the newer members of the legislature that, from his experience, without something like this they would indeed receive some complaint from an irate constituent on this subject. He described the complaint could be that someone else was, in the constituent's view, taking the constituent's [business] name, or it could be that the constituent filed a name and found out someone else has that name. Mr. Gray indicated there is not much which can be done in these situations; in his experience it has been a very difficult issue to resolve to anyone satisfactorily. Number 1292 CHAIRMAN ROKEBERG asked if the committee had any questions for Mr. Gray. The chairman noted the bill's length seems to result from repeating the same thing in different sections of the statute, questioning if they were being relatively repetitive. MR. GRAY answered that is correct. There are three different standards distributed through a great deal of statute which are being reduced to one standard, "distinguishable on the record." He indicated he wished the department to describe why it wishes to have this standard, why it should be in this place, and how this might resolve the current confusion. CHAIRMAN ROKEBERG questioned if there has been any testimony from businesses providing an example this could correct. MR. GRAY replied he does not have any direct testimony from businesses on record. However, there has certainly been no objection. CHAIRMAN ROKEBERG indicated he is thinking of the Alaska State Chamber of Commerce, the National Federation of Independent Business (NFIB), et cetera. Number 1373 REPRESENTATIVE HALCRO pointed to the Senate Finance Standing Committee minutes of April 9, 1999, in the bill packet which mention the case of "Wild Iris" and the "Wild Iris Cafe" provided by Dawn Williams of the DCED. Representative Halcro quoted, "'She said the department felt they were different but "Wild Iris" did not. Therefore, a lawsuit was filed and the State was brought into the suit.'" MR. GRAY indicated the Senate Finance changes were mainly technical amendments. The language in SB 93 regarding the adoption of regulations to "interpret or implement" a subsection, et cetera, was changed to "implement". Mr. Gray indicated this change was made in about 15 places and had been the wish of one of the Senate Finance co-chairs. Mr. Gray noted there had also been one small technical amendment requested by the department which had made eminent sense. CHAIRMAN ROKEBERG indicated the detail-oriented nature of the House Labor and Commerce Standing Committee. Number 1485 DAWN WILLIAMS, Records and Licensing Supervisor, Division of Banking, Securities and Corporations, Department of Commerce and Economic Development, came forward. Ms. Williams stated she is the corporations supervisor for the DCED and asked for the committee's questions. CHAIRMAN ROKEBERG requested she explain the legislation. MS. WILLIAMS replied the department has corporations, limited liability companies (LLCs), limited partnerships, limited liability partnerships (LLPs), nonprofit corporations, religious corporations, plus a few more. Basically, there are three standards for deciding who can have what name. Ms. Williams indicated the current standards for the limited liability companies are unfair. The department is attempting to require all entities to use one standard to determine whether or not their name is available. Additionally, this legislation would allow more entities to file with the state, either as a corporation, limited liability company, or simply as a business name. Number 1539 REPRESENTATIVE HALCRO noted it was mentioned in the Senate testimony that 25 other states have adopted this same language. He questioned if these states had solicited comments from chambers of commerce, et cetera. Representative Halcro questioned if this is a problem that exists and if that is the impetus for the legislation in other states. MS. WILLIAMS said she really does not know the answer. She would think that most states have adopted the wording through the Revised Model Business Corporation Act (RMBCA) done by the American Bar Association ["national bar association"]. Ms. Williams noted that language is "the (indisc.) must be distinguishable on the record." CHAIRMAN ROKEBERG requested Ms. Williams repeat the example of the Iris case and possibly a few others. MS. WILLIAMS answered that "The Wild Iris" was on file with the Division of Banking, Securities and Corporations as a registered business name. The division received a new registration for "Wild Iris Cafe." The division felt the names were different; it was not confused by the two names at that time. The Wild Iris decided the department was wrong and basically brought suit against the Wild Iris Cafe and against the state. Through the department, with the assistant AG [attorney general], it was decided that possibly The Wild Iris was correct, maybe there is confusion, because the two entities are in the same type of business. Ms. Williams noted she thought this is the restaurant business; she thinks one entity is in Anchorage and the other in Fairbanks. She commented she had been confused about that at the Senate Finance hearing. CHAIRMAN ROKEBERG questioned if she was no longer confused. Number 1657 MS. WILLIAMS replied she believes so. The department decided that the names were possibly confusing to the public. Unfortunately for the state, business entity conflicts should not be decided by the state - they should be decided by each individual entity. A new corporation first of all needs to make sure there is no other entity with the same name the corporation wishes to use. CHAIRMAN ROKEBERG asked how one does this. MS. WILLIAMS answered one looks in trade magazines, newspapers, business licensing, and the Division of Banking, Securities and Corporations of the DCED. She described the example of a business obtaining a business license and then attempting to register the business name with the division. In the example, Ms. Williams noted she was simply speaking of a business obtaining a business license, not a corporation, partnership, et cetera. In her example, the division already has a corporation on file with this same name and therefore will not file that business registration. However, the first business is still out there doing business under that name because it has a business license to do that. It is up to the corporation to stop that business entity from using the name. CHAIRMAN ROKEBERG questioned that the corporation would have to bring cause of action for this. MS. WILLIAMS answered in the affirmative. She described that there could be a business with a business license out there doing business on its own. A corporation starts up, picking this great name. The corporation files with the division as a corporation and the division has no other name like that on file. Two years later the corporation finds out this small entity has the same name and had it first. Ms. Williams questioned which entity has rights to the name. She said it is not up to the state to decide who has right to the name; it is up to those entities to go to court and determine that. Number 1748 REPRESENTATIVE HALCRO mentioned he knew of a restaurant called Chilly's in Anchorage on the Old Seward Highway towards Huffman which suddenly went from "Chilly's" to "Eric's (ph)." Representative Halcro noted the only thing he could think of was that "Chilly's (ph)," the national chain, came in and said "'Hey, excuse us, but you're using our name.'" He asked if the division gets involved in that type of situation where a name is trademarked or copyrighted. MS. WILLIAMS replied the division cannot get involved in that. She indicated, however, SB 93 contains a statute change regarding trademarks within the state. Ms. Williams explained no duplications are allowed with federally-registered trademarks but she indicated state trademarks extend only to the state they are registered in. She noted someone can register a trademark in Alaska that may already be registered in Washington; the division does not do any searching or anything. Ms. Williams stated, "The trademark statutes and the business name or corporate name standards don't look at each other. What we're doing with the statute change is making it so that if when somebody files trademark, we actually at our corporate database or our registered business name database and make sure that somebody's not stepping on somebody's toes within our own section, so that we can stop those problems." She noted these problems have occurred. REPRESENTATIVE CISSNA assumed because of the onus of responsibility on the business owner, that there must be numerous cases of businesses with the same name in various towns, and even in the same town. She commented her own business name is very close to another business name; it has been true for 20 years and neither business cares. Representative Cissna said she is assuming this wouldn't change that ability. Number 1861 MS. WILLIAMS answered that every business has to have a business license; business licensing does not have name statutes. Numerous businesses can have the same business license name. However, the Division of Banking, Securities and Corporations, which deals with corporations, liability companies, partnerships and registered business names, cannot have one name on file that is the same as another. It doesn't matter who has a name outside who has not registered with the division - this doesn't change anything for those people. If there is a conflict between these businesses that are outside the division, they have to settle that themselves. It is not the state's problem; it is not something that the state can determine. Ms. Williams said no other state she knows of is in the name conflict business. She commented, "They don't determine whether this person way out here and this person way out here shouldn't have the same name or not. It's when they come to register with the state that they have the problem." CHAIRMAN ROKEBERG confirmed from Ms. Williams that the business licensing is under the Division of Occupational Licensing. He indicated there has been some discussion about changing that. The chairman asked if she knew the procedure regarding using a name on a business license; he questioned if there wasn't some warning or something on the application itself. MS. WILLIAMS replied she is not sure about warnings. If a business has "Inc." [incorporated] in its business name when it files its business license, Business Licensing will send the business a small blue card informing the business it should contact the Division of Banking, Securities and Corporations. If a business has "Inc." in its name, it should be a corporation. Business Licensing also sends a blue card to inform a business that it can register its name and that it might want to check with the Division of Banking, Securities and Corporations to see if another business has a name like that. Number 1960 CHAIRMAN ROKEBERG asked how a non-corporate entity registers a name with the division. MS. WILLIAMS answered, under Section 10.35. She explained that a business can file an application with the division if it has a business license. Currently, the business can register that business name if the business's name is not the same as or deceptively similar to another name on file. CHAIRMAN ROKEBERG indicated he wondered if this applied to any type of business, mentioning sole proprietorship, partnership, LLC, LLP, et cetera. MS. WILLIAMS answered that only business names or d/b/a [doing business as] names could be registered as sole proprietorship entities. LLCs, LLPs, and all of those entities, have to file articles of incorporation or certificates of partnership. CHAIRMAN ROKEBERG noted, then, they would already be under the division's jurisdiction. However, if a sole proprietorship wanted to register a name with the Division of Banking, Securities and Corporations, they could do so. MS. WILLIAMS confirmed that is correct. CHAIRMAN ROKEBERG questioned whether a common multiple partner-type business would be required to be registered with the division. Number 2010 MS. WILLIAMS indicated this type of business would not necessarily be registered. She explained the only entities that must register with the Division of Banking, Securities and Corporations are corporations - whether nonprofit or for-profit and including religious corporations, limited liability companies, limited liability partnerships, limited partnerships, and cooperative corporations. CHAIRMAN ROKEBERG commented, then, sole proprietorships or combinations of family businesses wouldn't necessarily be registered [with the division]. MS. WILLIAMS indicated that is correct. CHAIRMAN ROKEBERG confirmed, though, these businesses could register under the business name registrations. The chairman noted the committee had received some correspondence a year or two previously from a gentleman in Juneau with a landscaping business. As the chairman recalls, a disgruntled employee of this business left and then filed the business name with the business registry, in effect almost stealing the business. The chairman indicated there was a large conflict because the owner of the business did not have the business name currently registered, lacked a business license or something. Chairman Rokeberg asked Ms. Williams if that rang a bell with her. MS. WILLIAMS replied it did, but not clearly. She commented, "Our statutes -- and this is why I say we're not in the name finding business ...." The entities have to go to court themselves to determine who has legal right to that name. The first person who registers a name with the division, whether corporate name or business registration, is the one who has it. That doesn't necessarily give the entity legal title to that name; it is up to the courts to decide who has legal right to that name. CHAIRMAN ROKEBERG indicated this is because the name could be copyrighted or trademarked in another jurisdiction, or the business might be a sole proprietorship which has had a business license for a number years but finally decided to incorporate, and wouldn't be on the registry, et cetera. MS. WILLIAMS indicated the chairman is correct. CHAIRMAN ROKEBERG noted, though, the issue here is what the courts should use in interpreting the criteria or standard for the name. He questioned which standard is being used for the registry (indisc.). Number 2123 MS. WILLIAMS answered the standard most used currently is "the same as or deceptively similar." This has been in use for years, but the "distinguishable" standard is the newest standard. It is the one most states are currently using; at least 25 states have adopted it in recent years. CHAIRMAN ROKEBERG asked, "Was it using 'deceptively similar'?" MS. WILLIAMS agreed. CHAIRMAN ROKEBERG questioned that the division believes by changing the standard, more businesses with deceptively similar names that are distinguishable on the record will be able to register, resulting in the $30,000 and progressively increasing fiscal note. He confirmed Ms. Williams agreed. The chairman asked if the division believes it will actually increase its revenue. MS. WILLIAMS answered that she personally sends out several letters a month informing businesses their names are deceptively similar to another name on file and therefore cannot be registered. The business can choose another name or does not even have to register it. With the "distinguishable" standard, the business will be able to register that name, resulting in more revenue [for the state]. Ms. Williams noted it is not a great deal of revenue, but it is a bit more. In response to the chairman's question, Ms. Williams informed the committee the fee to register a business name for five years is $25. CHAIRMAN ROKEBERG indicated in the landscaping case the name may have been registered but not renewed after five years, and thus someone else could have filed it. MS. WILLIAMS agreed. Number 2200 CHAIRMAN ROKEBERG questioned if there is anything in statute that the division should warn (indisc.) business that there is another business with a similar name, if an entity had what would formerly be considered a deceptively similar name but would now be allowed under "distinguishable on the record." MS. WILLIAMS answered there is nothing currently in statute. However, the division does inform businesses of other similar names when businesses inquire about registering their name. CHAIRMAN ROKEBERG asked if there is any regulatory or statutory requirement for the division to do this. MS. WILLIAMS replied not at this time. If the legislation passes, the division is planning adopt a policy which would include that. It would be similar to Utah's current policy. CHAIRMAN ROKEBERG questioned the length in pages in Utah's policy. MS. WILLIAMS answered that Utah's is approximately two to three pages. It encompasses a great deal, explaining what names would be available compared to names on file, et cetera. CHAIRMAN ROKEBERG asked Mr. Gray if he thought the bill sponsor would mind if the committee amended the legislation slightly to tell the division to do this. MR. GRAY replied whatever works for the division and is good government. MS. WILLIAMS indicated the division would have no objections. CHAIRMAN ROKEBERG noted the division's testimony is that it is doing this now but it does not have an obligation to do so. It seems to him the division might have an obligation - that is why it is doing it. He mentioned providing good service. Number 2279 MS. WILLIAMS thinks the division probably feels it should and therefore does so in most cases. The division would not mind having that in statute. In response to the chairman's comment about not wanting to add two or three pages, Ms. Williams indicated she thinks a statement could accomplish this purpose. CHAIRMAN ROKEBERG interjected they could put something in to the effect of implementing regulations to provide for informing the public of similar names so the public is aware there are other names out there which could be used, to avoid any conflict. The chairman asked if that would be helpful for the division. MS. WILLIAMS replied she doesn't know if it would be helpful. She thinks it would be helpful to the public and the division is there to help the public. The division is attempting to get as many corporations, entities, et cetera, to file with the state so that these entities can continue doing business. 2328 CHAIRMAN ROKEBERG called an at-ease at 4:10 p.m. The committee came back to order at 4:13 p.m. [TAPE CHANGED MANUALLY DURING THE AT-EASE] TAPE 99-50, SIDE B Number 0001 CHAIRMAN ROKEBERG commented he would like to get some more information regarding the trademarking (indisc.) in order to carry the legislation on the floor, unless it is assigned to Representative Halcro. The chairman confirmed there were no further witnesses on SB 93 and closed the public hearing. Number 0035 REPRESENTATIVE HALCRO made a motion to move CSSB 93(FIN) out of committee with the accompanying positive fiscal note and individual recommendations. There being no objection, CSSB 93(FIN) moved out of the House Labor and Commerce Standing Committee. ADJOURNMENT Number 0055 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 4:14 p.m.