Arizona House of Representatives Committee on Commerce Meeting Minutes and Bill Actions - January 17, 2023

Summary

Minutes of the regular meeting of the Arizona House of Representatives Committee on Commerce, Fifty-sixth Legislature, First Regular Session, held Tuesday, January 17, 2023, with Representative Wilmeth as Chairman and Representative Carbone as Vice-Chairman. The minutes record action on three bills sponsored by Representative Livingston: HB2005 (foreign captive insurers; definition) and HB2011 (state board of accountancy; continuation) received do-pass recommendations, and HB2010 (banking; licensing; fees) a do-pass-as-amended recommendation. The committee also adopted its rules. Attachments include the agenda, request-to-speak report, attendance record, House staff bill summaries, a proposed amendment to H.B. 2010, roll call votes and the committee rules. The HB 2011 summary states the bill continues the Arizona State Board of Accountancy until July 1, 2031.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

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ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

COMMITTEE ON COMMERCE

Report of Regular Meeting
Tuesday, January 17, 2023
House Hearing Room 3 -- 2:00 P.M.

Convened 2:07 P.M.
Recessed
Reconyened
Adjourned 3:04 P.M.

Members Present

Representative Aguilar
Representative Austin
Representative Carter
Representative Gress
Representative Heap
Representative Hendrix
Representative Ortiz
Representative Sun

Representative Carbone, Vice-Chairman
Representative Wilmeth, Chairman

Agenda
Original Agenda — Attachment 1

Request to Speak
Report — Attachment 2

Committee Attendance
Report — Attachment 3

Committee Action

Bill Action
HB2005 DP
HB2010 DPA
HB2011 DP

Committee on Commerce Rules Adopted

MINUTES RECEIVED
CHIEF CLERK'S OFFICE

(-([B-AS

Members Absent

Vote Attachments
9-1-0-0 4,5

10-0-0-0 6,7,8
10-0-0-0 9,10

Did du Vers

Susan Nelson, Committee Secretary
January 18, 2023

(Original attachments on file in the Office of the Chief Clerk; video archives available at http:/Avww.azleg.gov)

COMMITTEE ON COMMERCE
January 17, 2023
REVISED - 1/17/23

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature - First Regular Session

REVISED - 1/17/23

REVISED - 1/17/23

CONVENE? 9. '0'7pe)
AD SouRIEDS 3: O'4 py

REGULAR MEETING AGENDA

COMMITTEE ON COMMERCE

DATE Tuesday, January 17, 2023
Members of the public may access a livestream of the meeting here:

ROOM HHR3

TIME 2:00 P.M.

https://Awww.azleg.gov/videoplayer/?clientID=6361162879&eventI D=202301 1063

Members:

Representative Heap
Representative Hendrix
Representative Ortiz

Representative Aguilar
Representative Austin
Representative Carter
Representative Gress

Representative Sun
Representative Carbone, Vice-Chairman
Representative Wilmeth, Chairman

1. Introductions
2; Adoption of Committee Rules

Bills Short Title
i HB2605 D >

foreign captive insurers; definition
(Livingston)

Ge f*OrO COM, RULES

group-excesstiabitity-insuranee
——  (Livingston}
GOM;RULES

A HB2010 me ¥ banking; licensing; fees

(Livingston)
[Ou 6) . re) F Qo: RULES

HB2007

3 HB201L1 +p.
DP (Livingston)

JO ‘Or: O:CpOM, RULES

state board of accountancy; continuation

Strike Everything Title

ORDER OF BILLS TO BE SET BY THE CHAIRMAN

01/17/2023

People with disabilities may request reasonable accommodations such as interpreters, alternative formats, or
assistance with physical accessibility. If you require accommodations, please contact the Chief Clerk's Office at

(602) 926-3032 or through Arizona Relay Service 7-1-1.

Page 1 of 1

Attachment 1
Information Registered on the Request to Speak System

House Commerce (1/17/2023)

HB2005, foreign captive insurers: definition

Support:
Mare Osborn, Arizona Captive Insurance Association And Spring Consulting Group; Wendy Briggs, AMERICAN
PROPERTY CASUALTY INSURANCE ASSOCIATION

HB2010, banking; licensing: fees

Support:
Stephen Briggs, AZ DEPT OF INSURANCE AND FINANCIAL INSTITUTIONS; Ezra Grace, representing self

HB2011, state board of accountancy: continuation

Support:
John Baumer, AZ SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS; Ryan DeMenna, AZ SOCIETY OF CERTIFIED PUBLIC

ACCOUNTANTS

Attachment ab
ARIZONA STATE LEGISLATURE
Fifty-sixth Legislature - First Regular Session

COMMITTEE ATTENDANCE RECORD

COMMITTEE ON COMMERCE
CHAIRMAN: Justin Wilmeth VICE-CHAIRMAN: _ Michael Carbone
DATE 01/17/23 123 123 123 123
CONVENED At pm m m m m
RECESSED
RECONVENED
ADJOURNED 3/04) tr
MEMBERS :
Aguilar 4
Austin nf
Carter VA
Gress Vv
Heap a
Hendrix /
Ortiz Vv
Sun 4
Carbone, Vice-Chairman if
Wilmeth, Chairman v

v Present --- Absent exc Excused

Attachment mJ
ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature
First Regular Session

BSAA SER iE SEE TT ESE Ea EET ET TEE ET ESTES ESTER
HB2005: foreign captive insurers; definition
Sponsor: Representative Livingston, LD 28
Committee on Commerce

Overview
Allows a foreign captive insurer to form a branch captive office in Arizona

History .
A captive insurer is any pure, agency or group captive insurer or protected cell captive insurer

that is domiciled in this state and that is statutorily formed and licensed. An alien captive insurer
is any insurer formed to write insurance business for its affiliates and that is licensed pursuant to
the laws of an alien jurisdiction that imposes statutory or regulatory standards acceptable to the
director on companies transacting the business of insurance in ‘such a jurisdiction. A branch
captive insurer is an alien captive insurer that is licensed to transact the business of insurance
through a business unit with a principal place of business in this state (A.R.S. § 20-1098).

Statute requires alien branch captive insurers to file with the director of the Department of
Insurance and Financial institutions a copy of all reports and statements that are required to be
filed under the laws of the jurisdiction in which the alien captive insurer is formed and that are
verified by oath of two of its executive officers (A.R.S. § 20-1098.21).

Provisions
1. Includes foreign captive insurer to the definition of branch captive insurer. (Sec. 1)

2. Defines foreign captive insurer. (Sec. 1)

3. Allows a domestic captive insurer to merge or consolidate with any other domestic, foreign or
alien captive insurer regardless of the captive insurer being formed as a limited liability
company or a stock corporation. (Sec. 4)

4. Applies the same examination requirement, as a condition for licensure, for alien captive
insurers to foreign captive insurers. (Sec. 3)

5. Applies the same reporting requirements for an alien captive insurer to a foreign captive
insurer. (Sec. 5)

6. Clarifies the process of service for captive insurers. (Sec. 2)
7. Makes technical changes. (Sec. 1)

OD Prop 105 (45 votes) QO Prop 108 (40 votes) Of Emergency (40 votes) 1 Fiscal Note

HB 2005
initials LM/PB Page 1 Cammerce

Attachment

ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON Commerce BILL NO. HB 2005

DATE January 17, 2023 motion: DP
PASS AYE NAY PRESENT | ABSENT

Aguilar i

Austin ~

Carter ~~

Gress gf

Heap Vv

Hendrix Vv

Ortiz Vv

Sun Yv

Carbone, Vice-Chairman YW

Wilmeth, Chairman yr

aq|/1]oe0 10

APPROWED; COMMITTEE SECRETARY

JUSTIN WILMETH, Chairman
MICHAEL CARBONE, Vice-Chairman

ATTACHMENT. 5

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature
First Regular Session

HB 2010: banking; licensing; fees
f Sponsor: Representative Livingston, LD 28

stele oie \or Committee on Commerce

Overview

Establishes a late fee for a consumer lender and premium finance company license renewal.
Prohibits a mortgage broker, mortgage banker, and commercial mortgage banker from
maintaining records out of the state.

History
A person cannot engage in the business of advertising or soliciting to procure or make a consumer

lender loan without first obtaining a consumer lender license. The term of the license begins on
July 1 and ends on June 30 of each year. A licensee may obtain a license renewal by submitting
the renewal application and paying the renewal fee by June 30 (A.R.S. §§ 6-601, 6-603, 6-604).

A premium finance company is a person engaged in part or in whole in the business of financing
insurance premiums, entering into premium finance agreements with insureds or otherwise
acquiring premium finance agreements from insurance producers or other premium finance
companies. A person is prohibited from engaging in the business of a premium finance company
without first obtaining a license. The term of the license year begins on January 1 and ends on
December 31. In order to renew a license, licensees must submit a renewal application and the
required renewal fee by December 31 (A.R.S. §§ 6-1401, 6-1402, 6-1405).

Statute permits, after notifying the deputy director of the Department of Insurance and Financial
institutions (DIFI), a mortgage broker, mortgage banker, or commercial mortgage banker, who
operates two or more licensed places of businesses, to maintain records at their principal place
of business in this state. Additionally, with approval of the deputy director of DIFI, they may
maintain records outside this state (A.R.S. §§ 6-906, 6-946, 6-983).

Provisions

1. Allows the deputy director of DIF! to use the nationwide mortgage licensing system and
registry for all aspects of licensure relating to financial institutions, collection agencies and
sales finance companies. (Sec. 1)

2. Clarifies that a consumer lender license remains active until it either expires or is suspended,
revoked or terminated by the director of DIFI. (Sec. 2)

3. Requires a consumer lender licensee to apply for and pay the renewal fee by June 30 each
year. (Sec. 2)

4. Includes a late fee of $25 for each day after June 30 that a renewal application is not received
by the deputy director. (Sec. 2)

5. Prohibits a licensee from acting as a consumer lender until the license is renewed or a new
license is issued. (Sec. 2)

{} Prop 105 (45 votes) DF Prop 108 (40 votes} (Emergency (40 votes) © Fiscal Note

PB HB 2010
Initials Page 1 Commerce

Attachment te

6. Stipulates the license automatically expires if the deputy director of DIFI does not receive the
renewal application and fee by July 31. (Sec. 2)

7, Prevents an expired license from being renewed and allows for the issuance of a new license.
(Sec. 2)

8. Extends the deadline for applying for a debt management company license renewal, and
obtaining a license renewal without an investigation, from June 15 to June 30 of each year.
(Sec. 3, 4)

9. Deletes language allowing a mortgage broker, mortgage banker, and commercial mortgage
banker who operates two or more licensed places of business to maintain records at their
principal place of business. (Sec. 5, 7, 8)

10. Removes the authority for a mortgage broker, mortgage banker, and commercial mortgage
banker to maintain records outside of Arizona. (Section 5, 7, 8)

11. Increases the cap on the number of tests, from two to four, an applicant for a mortgage broker
license may take within a 12-month period. (Sec. 6)

12. Removes the approval requirement for a licensee that uses a computer or mechanical record
keeping system to not keep a written copy of records. (Sec. 7)

13. Removes the requirement for a mortgage broker, banker, consumer lender or registered
exempt person to request a loan originator’s license. (Sec. 9)

14. Eliminates the requirement for DIFI to send the loan originator's license to the loan originator's
employer. (Sec. 9)

15, Clarifies that a premium finance company license or permit remains active until it either
expires or is suspended, revoked or terminated by the director of DIFI. (Sec. 10)

16. Requires a premium finance company licensee or permit holder to apply for and pay the
renewal fee by June 30 each year. (Sec. 10)

17. Includes a late fee of $25 for each day after June 30 that a renewal application is not received
by the deputy director of DIFI. (Sec. 10)

18. Prohibits a licensee or permit holder from acting as a premium finance company or branch
office until the license or permit is renewed or a new license or permit is issued. (Sec. 10)

19. Stipulates the license or permit automatically expires if the deputy director of DIFI does not
receive the renewal application and fee by July 31. (Sec. 10)

20. Prevents an expired license or permit from being renewed and allows for the issuance of a
new license or permit. (Sec. 10)

21. Changes the deadline for collection agencies renewal applications from January 1 to
December 31. (Sec. 11)

22. Modifies the real estate appraiser license or certificate renewal period by removing the 30
days after the expiration date grace period. (Sec. 12)

23. Removes the $5 fee for a duplicate registration certificate for property tax agents. (Sec. 13)
24, Makes technical changes. (Sec. 1, 3, 5, 6, 8, 9, 10)

PB HB 2010
Initials Page 2 Commerce

Fifty-sixth Legislature
First Regular Session

PROPOSED
HOUSE OF REPRESENTATIVES AMENDMENTS TO H.B. 2010
(Reference to printed bill)

Page 11, line 42, strike “JUNE 30" insert "DECEMBER 31"
Line 43, strike "JUNE 30" insert "DECEMBER 31"

Page 12, line 2, strike "JUNE 30" insert "DECEMBER 31"
Line 6, strike "JULY 31" insert "JANUARY 31"

Amend title to conform

JUSTIN WILMETH

Z201O0WILMETH. docx
01/13/2023

09:42 AM

H: PRB/ra

Commerce
H.B. 2010

c
eieshraens 1
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON Commerce BILL NO. __ HB 2010

DATE January 17, 2023 motion: DPA

PASS AYE NAY PRESENT | ABSENT

Aguilar

Austin

Carter

Gress

Heap

Hendrix

Ortiz

Sun

ISN NSISISS S

Carbone, Vice-Chairman

Wilmeth, Chairman

NG

© | © Y

——

lisa LAN. Slo dag

roe Lye-—— GOMMITTEE SECRETARY

JSTIN WILMETH, Chairman
MIGHAEL CARBONE, Vice-Chairman

ATTACHMENT f

ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature
First Regular Session

HB 2011: state board of accountancy; continuation
Sponsor: Representative Livingston, LD 28
Committee on Commerce

Overview
Continues the Arizona State Board of Accountancy (Accountancy Board) for eight years.

History
Arizona State Board of Accountancy

Created by Laws 1919, Chapter 57, the Accountancy Board is statutorily required to protect the
public from unlawful, incompetent, unqualified, or unprofessional certified public accountants
(CPA) through certification, regulation, and rehabilitation. Furthermore, the Accountancy Board is
authorized to 1) investigate complaints; 2) establish and maintain high standards of competence,
independence, and integrity in practice of accounting; 3) establish reporting requirements for
registrants; 4) establish basic requirements for continuing professional education for CPAs; 5)
adopt procedures for disciplinary actions, administrative hearings, and consent decisions; 6)
issue certificates to qualified applicants; and 7) delegate certain authorities to the executive
director (A.R.S. § 32-703).

The Accountancy Board is comprised of seven members who are appointed by the Governor and
who must be residents of Arizona. Two public members who are not CPAs but have professional
or practical experience in using accounting services and financial statements and five members
must be CPAs, three of which must be in active public practice. No more than one of these
members may be from the same firm. Board members serve five-year terms (A.R.S. § 32-702).

Sunset Review Process

The sunset review process provides a system for the Legislature to evaluate the need to continue
the existence of state agencies which are reviewed by a legislative committee of reference (COR).
The COR is required to hold a public hearing, receive testimony from agency officials and the
public and consider certain sunset factors in determining whether to recommend continuing,
consolidating, or terminating the agency {A.R.S 41-2954).

The Senate Commerce and House Commerce COR held a public meeting on January 10, 2023
and recommended that the Legislature continue the Accountancy Board for eight years. The
Accountancy Board terminates on July 1, 2023, unless continued by the Legislature (A.R.S. 41-

3023.02).

Provisions
1. Continues, retroactively to July 1, 2023, the Accountancy Board until July 1, 2031. (Sec. 1, 2)

2. Repeals the Accountancy Board on January 1, 2032. (Sec. 2)
3. Includes a purpose statement. (Sec. 3)

O Prop 105 (45 votes) Oi Prop 108 (40 votes) (Emergency (40 votes) 1 Fiscal Note

PB HB 2011
Initials Page 1 Commerce

4
Attachment _f

‘
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature - First Regular Session

ROLL CALL VOTE

COMMITTEE ON Commerce BILL NO. __HB 2011

DATE January 17, 2023 MOTION: DP

PASS AYE NAY PRESENT | ABSENT

Aguilar

Austin

Carter

Gress

Heap

Hendrix

Ortiz

Sun

Carbone, Vice-Chairman

Wilmeth, Chairman

SINSNINISGAINISIAISS

© | O O

aie ae Auda (tx

APPROQY: COMMITTEE SECRETARY

STIN WILMETH, Chairman
I@HAEL CARBONE, Vice-Chairman

ATTACHMENT /[O_

Rules of the House Committee on

Commerce
RULE 1. A majority of the members of the committee shall constitute a quorum. No official
action may be taken unless a quorum is present in person at the time of taking such
action.
RULE 2. The chairman sets the agenda and determines the order of measures. The chairman

also controls all public testimony.

RULE 3. The following motions are customary and in order relating to actions on measures:

1. Do pass

2, Do pass amended

3. Return for consideration of the House

4, Hold for further study

5. Do not pass

6. Be assigned to subcommittee for...
RULE 4. The affirmative vote of a majority of those voting is required to take any action.
RULE 5, On a roll call vote the names of committee members shall be called alphabetically

by surname, except that the vice chairman and the chairman shall be called upon
last. Each member present shall be allowed to pass on one call of the roll, and shall
vote "aye" or "nay" (yes/no) or respond "present." Members may change their votes
before the announcement of the results and any member may explain his or her vote
on any measure.

RULE 6. Whenever a measure is reported from the committee on a divided vote, any member
may request a minority report.

RULE 7. All amendments (except strike-everything amendments; see House Rule 8(S)) shall
be distributed to each committee member's office by 12:00 P.M. the day before the
committee at which it will be offered. Verbal amendments may be offered during
the committee meeting at the discretion of the chairman.

In accordance with Rule 9 of the House Rules, the following House Rules are also incorporated
into the Committee Rules:

RULE 9(C) Each Standing Committee shall adopt and file with the Chief Clerk's Office rules
of procedure consistent with the Rules of the House and shall include the following:

1. With the exception of executive sessions ordered by a majority of the
committee constituting a quorum, all committee meetings shall be open to
the other members of the Legislature, the press and public so long as proper
decorum is maintained.

Attachment AL

RULE 9(E)

2, All committees shall meet at regularly scheduled times and places unless
cancelled with the permission of the Speaker. In the absence of the
chairman, the vice chairman shall preside. In the absence of both the
chairman and vice chairman, some other committee member designated by
the Speaker shall preside.

33 The committee chairman (presiding officer) other than the chairman of the
Committee on Rules shall prepare an agenda and distribute copies to
committee members, the Information Desk and the Chief Clerk's Office by
5:00 p.m. at least five days before the committee meeting. Absence of a bill,
memorial or resolution from the committee agenda will prohibit its
consideration unless unanimous consent of all committee members is
obtained, Unless a reconsideration motion has been offered and failed, a
chairman may place a measure that failed in committee on any subsequent
agenda.

4, A bill not on the committee agenda shall be scheduled for discussion at the
next subsequent committee meeting by presentation of a petition containing
the signatures of two-thirds or more of the committee members.

3, A roll call vote shall be taken in each standing committee when final action
on any bill is voted.

6. Written committee reports shall be filed with the Chief Clerk's Office within
a reasonable time but no later than two weeks from time of completion of
meetings. A recording of the meeting shall be made available for public
inspection three working days after the meeting. Attendance records of all

committee meetings shall be filed with the Chief Clerk's Office within 24
hours from time of completion of meetings. .

de Special meetings may be called by the chairman but require permission of
the Speaker and notice to members and the general public at the Information
Desk by 5:00 p.m. on the previous day, except that the notice of a special
meeting of the Committee on Rules may be given in open session prior to
the meeting and does not require the Speaker’s permission.

No committee other than the Committee on Rules shall meet while the House is
meeting in session without special permission of the Speaker.

RULE 1.

RULE 2.

RULE 3.

RULE 4.

RULE 5.

RULE 6.

RULE 7.

Rules of the House Committee on
Conumerce

A majority of the members of the committee shall constitute a quorum. No official
action may be taken unless a quorum is present in person at the time of taking such

action.

The chairman sets the agenda and determines the order of measures. The chairman
also controls all public testimony.

The following motions are customary and in order relating to actions on measures:

1. Do pass
e Do pass amended
By Return for consideration of the House
4. Hold for further study
a Do not pass
6.

Be assigned to subcommittee for...
The affirmative vote of a majority of those voting is required to take any action.

On a roll call vote the names of committee members shall be called alphabetically
by surname, except that the vice chairman and the chairman shall be called upon
last. Each member present shall be allowed to pass on one call of the roll, and shall
vote "aye" or "nay" (yes/no) or respond "present." Members may change their votes
before the announcement of the results and any member may explain his or her vote
on any measure,

Whenever a measure is reported from the committee on a divided vote, any member
may request a minority report.

All amendments (except strike-everything amendments, see House Rule 8(S)) shall
be distributed to each committee member's office by 12:00 P.M. the day before the
committee at which it will be offered. Verbal amendments may be offered during
the committee meeting at the discretion of the chairman.

In accordance with Rule 9 of the House Rules, the following House Rules are also incorporated
into the Committee Rules:

RULE 9(C) Each Standing Committee shall adopt and file with the Chief Clerk's Office rules

of procedure consistent with the Rules of the House and shall include the following:

hs With the exception of executive sessions ordered by a majority of the
committee constituting a quorum, all committee meetings shall be open to
the other members of the Legislature, the press and public so long as proper
decorum is maintained,

Attachment AL
RULE 9(£)

2 All committees shall meet at regularly scheduled times and places. unless
cancelled with the permission of the Speaker. In the absence of the
chairman, the vice chairman shall preside. In the absence of both the
chairman and vice chairman, some other committee member designated by
the Speaker shall preside.

S, The committee chairman (presiding officer) other than the chairman of the
Committee on Rules shall prepare an agenda and distribute copies to
committee members, the Information Desk and the Chief Clerk's Office by
5:00 p.m. at least five days before the committee meeting. Absence of a bill,
memorial or resolution from the committee agenda will prohibit its
consideration unless unanimous consent of all committee members is
obtained. Unless a reconsideration motion has been offered and failed, a
chairman may place a measure that failed in committee on any subsequent
agenda.

4. A bill not on the committee agenda shall be scheduled for discussion at the
next subsequent committee meeting by presentation of a petition containing
the signatures of two-thirds or more of the committee members.

5. A roll call vote shall be taken in each standing committee when final action
on any bill is voted.

6. Written committee reports shall be filed with the Chief Clerk's Office within
a reasonable time but no later than two weeks from time of completion of
meetings. A recording of the meeting shall be made available for public
inspection three working days after the meeting. Attendance records of all
committee meetings shall be filed with the Chief Clerk's Office within 24
hours from time of completion of meetings.

ve Special meetings may be called by the chairman but require permission of
the Speaker and notice to members and the general public at the Information
Desk by 5:00 p.m. on the previous day, except that the notice of a special
meeting of the Committee on Rules may be given in open session prior to
the meeting and does not require the Speaker’s permission,

No committee other than the Committee on Rules shall meet while the House is
meeting in session without special permission of the Speaker.

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