73rd Legislative Session -- 1998
Committee: House Commerce
Thursday, February 5, 1998
P - Present
E - Excused
A - Absent
Roll Call
P
Fischer-Clemens
P
Gleason
P
Schaunaman
E
Sperry
P
Broderick
P
Brown (Gary)
P
Brown (Jarvis)
P
Konold
P
Rost
P
Smidt
P
Windhorst
P
Pederson (Gordon), Vice-Chair
P
Roe, Chair
OTHERS PRESENT: See Original Minutes
The meeting was called to order by Chair Roe
MOTION:
TO APPROVE THE MINUTES OF February 3
Moved by:
Representative Gleason
Second by:
Representative Fischer-Clemens
Action:
Prevailed by voice vote.
HB 1222:
to regulate the treatment of the loans and other assets of any qualified
education loan insurer during receivership, rehabilitation, or liquidation.
Proponents:
Representative Schaunaman, Sponsor
MOTION:
TO TABLE HB 1222
Moved by:
Representative Broderick
Second by:
Representative Schaunaman
Action:
Prevailed by roll call vote.
(12-0-1-0)
Voting yes:
Fischer-Clemens, Gleason, Schaunaman, Broderick, Brown (Gary), Brown (Jarvis),
Konold, Rost, Smidt, Windhorst, Pederson (Gordon), Roe
Excused:
Sperry
HB 1221:
to define and regulate a qualified education loan insurer, to provide for
the investment of certain funds, to allow surety student loan insurance, and to
declare an emergency.
Proponents:
N. Sanderson, Student Loans, Aberdeen
Darla Lyon, Div of Insurance
MOTION:
AMEND HB 1221
f-1221
On the printed bill,
delete everything after the enacting clause and insert:
"
Section 1. The term, qualified education loan insurer, means a domestic stock insurer formed
under chapter 58-5 for the principal purposes of transacting surety insurance, in this state only, in
the education loan market and principally or beneficially owning or through a wholly-owned
subsidiary investing in education loans, including loans originated in accordance with the terms of
the Higher Education Act of 1965, as amended.
Section 2. Any qualified education loan insurer is subject to the provisions of Title 58 except as
otherwise specifically provided in this Act. Notwithstanding any other provision of Title 58, a
qualified education loan insurer is not subject to the following provisions of Title 58 and any rules
promulgated to implement any such provisions:
(1) Sections 58-4-48, 58-5-85, and 58-27-63;
(2) Subdivision 58-5-7(5) to the extent that this subdivision permits only one class of
authorized voting common stock or otherwise restricts the authorization of preferred
stock, with or without voting rights;
(3) Section 58-5-92 to the extent that this section prohibits agreements with respect to
investments permitted under section 4 of this Act; and
(4) Chapter 58-5A.
Section 3. Notwithstanding any other provision of Title 58 and in addition to any investment
permitted pursuant to chapter 58-27, a qualified education loan insurer may invest funds in the
following, and any such investment made by a qualified education loan insurer is not subject to any
aggregate amount limitations or other investment limitations except as specifically provided below:
(1) A loan originated under the terms of the Higher Education Act of 1965, as amended;
(2) An education loan not originated under the Higher Education Act of 1965, as amended,
the principal and interest of which may be insured or uninsured;
(3) A direct obligation of the United States of America or an obligation with respect to which
the full and timely payment of principal and interest is unconditionally guaranteed by the
United States of America;
(4) An interest bearing time or demand deposit, certificate of deposit, or a similar banking
arrangement with any bank, trust company, national banking association, or other
depository institution, provided that, at the time of deposit or purchase, if the investment
is for a period exceeding one year, the depository institution shall have long-term
unsecured debt rated by at least one nationally recognized statistical rating organization
in a permitted rating category or, if the investment is for a period of less than one year,
shall have short-term unsecured debt rated by at least one nationally recognized statistical
rating organization in a permitted rating category;
(5) An obligation issued or guaranteed as to the principal and interest by any of the following:
(a) The Government National Mortgage Association;
(b) The Federal National Mortgage Association; or
(c) A Federal Farm Credit Bank, a Federal Intermediate Credit Bank, the Export-
Import Bank of the United States, a Federal Land Bank, the Student Loan
Marketing Association, the Federal Financing Bank, a Federal Home Loan Bank,
the Federal Home Loan Mortgage Corporation, the Rural and Community
Development Administration, or the Federal Farm Mortgage Acceptance
Corporation, provided that any obligation described in this subdivision shall be
rated by at least one nationally recognized statistical rating organization in a
permitted rating category;
(6) A repurchase agreement or reverse repurchase agreement with any bank which is a
member of the Federal Deposit Insurance Corporation or with any government bond
dealer insured by the Securities Investor Protection Corporation, which agreement with
a bank or government bond dealer is secured by any government obligation described in
subdivision (3) of this section at a level sufficient to obtain a rating by at least one
nationally recognized statistical rating organization in a permitted rating category, or with
any broker or dealer the unsecured long-term debt of which is rated by at least one
nationally recognized statistical rating organization in a permitted rating category;
(7) Any money market fund, including a qualified regulated investment company described
in the Internal Revenue Service Notice 87-22, rated by at least one nationally recognized
statistical rating organization in a permitted rating category;
(8) Any debt instrument, provided that the debt instrument is rated by at least one nationally
recognized statistical rating organization in a permitted rating category; and
(9) Any investment agreement constituting a general obligation of an entity whose debt,
unsecured securities, deposits, or claims paying ability is rated by at least one nationally
recognized statistical rating organization in a permitted rating category.
For the purposes of this section, a permitted rating category is one of the four highest rating
categories assigned long-term debt or an equivalent short-term category within either of which there
may be subcategories or gradations indicating relative standing.
Section 4. In addition to any investment permitted pursuant to section 3 of this Act, a qualified
education loan insurer may also invest any amount in common stock, preferred stock, debt
obligations, and other securities, including without limitation, membership in a limited liability
company, of any subsidiary engaged or organized to engage in any of the following:
(1) The principal or beneficial ownership and management of assets authorized as
investments for the qualified education loan insurer under section 3 of this Act; or
(2) The origination, administration, and servicing of education loans, the provision of
services to any school, lender, student, and borrower and otherwise providing services for
any educational purposes.
Section 5. Notwithstanding
§
58-4-43 or any other provision of Title 58, a qualified education
loan insurer's subsidiary investment permitted under section 4 of this Act shall be counted fully as
an admitted asset on the qualified education loan insurer's balance sheet and may not be disregarded
as an admitted asset by the director of the Division of Insurance in enforcing the provisions of
§
§
58-
4-39 to 58-4-43, inclusive, and chapter 58-29B, and any rule promulgated to implement such
provisions.
Section 6. Notwithstanding the other provisions of chapter 58-29B, for the purposes of
determining:
(1) If a qualified education loan insurer has, in any transaction involving the transfer of any
education loans or other assets, sold such education loans or other assets or pledged such
education loans or other assets to secure indebtedness of the qualified education loan
insurer; and
(2) If a wholly owned subsidiary of a qualified education loan insurer shall be treated as a
separate entity, distinct from the qualified education loan insurer, or the subsidiary's assets
and liabilities shall be consolidated with the assets and liabilities of the qualified
education loan insurer;
chapter 58-29B shall be construed as referring to available and analogous case law under the federal
bankruptcy code for making determinations in any receivership, rehabilitation, or liquidation of the
qualified education loan insurer.
Section 7. The director of the Division of Insurance may promulgate rules, pursuant to chapter
1-26, to provide any qualified education loan insurer with additional exemptions from the provisions
of Title 58 or to provide additional investment authority.
Section 8. Whereas, this Act is necessary for the support of the state government and its existing
public institutions, an emergency is hereby declared to exist, and this Act shall be in full force and
effect from and after its passage and approval.
"
Moved by:
Representative Broderick
Second by:
Representative Brown (Gary)
Action:
Prevailed by voice vote.
MOTION:
DO PASS HB 1221 AS AMENDED
Moved by:
Representative Brown (Jarvis)
Second by:
Representative Fischer-Clemens
Action:
Prevailed by roll call vote.
(12-0-1-0)
Voting yes:
Fischer-Clemens, Gleason, Schaunaman, Broderick, Brown (Gary), Brown (Jarvis),
Konold, Rost, Smidt, Windhorst, Pederson (Gordon), Roe
Excused:
Sperry
MOTION:
TO AMEND TITLE OF HB 1221
f-1221ta
On page
1
,
line
1 of the printed bill
,
delete everything after "
to
"
and insert "
define and regulate
a qualified education loan insurer, to provide for the investment of certain funds, to allow surety
student loan insurance, and to declare an emergency.
"
.
On page
1
,
delete line
2
.
Moved by:
Representative Schaunaman
Second by:
Representative Broderick
Action:
Prevailed by voice vote.
HB 1153:
to provide for the succession to a vehicle dealership by a legal heir or
devisee.
Proponents:
Representative Kredit, Sponsor
R. Van Johnson, SDADA
Dave Gerdes, GMC
MOTION:
AMEND HB 1153
j-1153
On the printed bill,
delete everything after the enacting clause and insert:
"
Section
1.
That chapter 32-6B be amended by adding thereto a NEW SECTION to read as
follows:
The owner of a vehicle dealership may appoint by trust, will, or any other valid written
instrument a successor to the owner's dealership interest upon the owner's death or incapacity. Unless
the franchisor has good cause to refuse to honor the succession, the successor may succeed to the
ownership of the dealership under the existing franchise if:
(1) Within ninety days of the owner's death or incapacity, the successor gives written notice
of the successor's intent to succeed to ownership of the dealership; and
(2) The successor agrees to be bound by all the terms and conditions of the franchise
agreement with the prior owner.
Upon request, the successor shall promptly provide the franchisor evidence of the
successorship appointment, as well as personal and financial information reasonably necessary to
determine whether the succession should be honored by the franchisor.
Section
2.
That chapter 32-6B be amended by adding thereto a NEW SECTION to read as
follows:
If a franchisor believes that good cause exists to refuse to honor the intended succession under
section 1 of this Act, the franchisor shall serve the named successor written notice of refusal to honor
the intended succession within sixty days of its receipt of the notice of intended succession, or within
sixty days of receiving the information requested pursuant to section 1 of this Act, whichever is later.
The notice shall contain specific grounds for the refusal to honor the succession.
If the notice of refusal to honor the intended succession is not timely served upon the intended
successor, the successor may continue the franchise subject only to termination as otherwise
permitted in this chapter.
In determining whether good cause exists for the refusal to honor the intended succession, the
franchisor has the burden of proving that the intended successor is not a person of good moral
character or does not meet the franchisor's existing and reasonable standards. Good cause for refusal
to honor succession does not include the owner's dealership being dualed with another franchisor's
line.
"
Moved by:
Representative Schaunaman
Second by:
Representative Pederson (Gordon)
Action:
Prevailed by voice vote.
MOTION:
DO PASS HB 1153 AS AMENDED
Moved by:
Representative Pederson (Gordon)
Second by:
Representative Schaunaman
Action:
Prevailed by roll call vote.
(12-0-1-0)
Voting yes:
Fischer-Clemens, Gleason, Schaunaman, Broderick, Brown (Gary), Brown (Jarvis),
Konold, Rost, Smidt, Windhorst, Pederson (Gordon), Roe
Excused:
Sperry
HB 1262:
to require health insurance coverage for mental illness.
Proponents:
Representativew Fischer Clemens, Sponsor
Terry Dosch,SD Council of Mental Health
Hal Birsch, Self, Huron SD
Helen Dafoe, Self, Sioux Falls, SD
Dr. Bob Armi, Indipendent Psychologist, Rapid City, SDS
Opponents:
Craig Matson, State Farm Insurance
Mike Shaw, Amer Fam Ins
Kris Kreiter, BCBS
Darla Pollman Rogers, Health Ins of America & SDALU
Jerry Wheeler, SD Retailers Assn
John Brown, NFIB
MOTION:
DO PASS HB 1262
Moved by:
Representative Broderick
Second by:
Representative Fischer-Clemens
Action:
Prevailed by roll call vote.
(10-2-1)
Voting yes:
Fischer-Clemens, Gleason, Schaunaman, Broderick, Brown (Gary), Brown (Jarvis),
Konold, Rost, Smidt, Roe
Voting no: Windhorst, Pederson(Gordon)
Excused:
Sperry
HB 1175:
to provide for the reasonable compensation for warranty services
performed by dealers selling agricultural and industrial equipment.
Proponents:
Representative McNenny, Sponsor
David Hersrud, Farm Equipment Dealer, Sturgis
Opponents:
Jerry Thomsen, Trail King, Mitchell
MOTION:
DEFER HB 1175 UNTIL Feb 10 (Tues)
Moved by:
None
Second by:
None
Action:
Died for a lack of a second
HB 1314:
to provide consumer protection for members of managed care plans.
Proponents:
Dr. Allen Unruh, SDCA, Sioux Falls, SD
MOTION:
DEFER HB 1314 UNTIL February 10
Moved by:
None
Second by:
None
Action:
Died for a lack of a second
MOTION:
ADJOURN
Moved by:
Representative Pederson (Gordon)
Second by:
Representative Broderick
Action:
Prevailed by voice vote.
Margaret Nickels
_________________________________
Committee Secretary
Robert A. Roe, Chair
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