House Standing Committee on Consumer Protection & Commerce

Good afternoon, everyone. It is we are convening the committee on consumer protection and commerce. It is Wednesday, 03/18/2026 at 2PM in Conference Room 329. Maestro, take it away.

Thank you. Just a reminder to folks that we have a two minute timer for testimony just to make sure that we have time to get through all of the items on the agenda. So I have a little timer here, and when it starts to light up, I will politely ask you to wrap up your comments. First on the agenda is SB 1166 SD two relating to insurance. This bill allows the Hawaii Property Insurance Association to file and litigate subrogation claims against responsible parties for claims paid by the insurer for losses relating from climate disasters and extreme weather attributable to climate change.

It establishes a new specific cause of action that allows insured and injured parties to file claims against the responsible party for damages resulting from climate disasters, extreme weather attributable to climate change, and other long term changes in the climate system. First up is DCCA's insurance division offering comments.

Afternoon chair, vice chair, members of the committee, Matt Sujimore on behalf of the insurance division. You have our written comments. I do just wanna call out two main points from our written testimony. First being that the division does have concerns that the, I guess, the breadth of the bill does not seem to fit within the actual meaning or intent behind 43113.

So we feel that it may be an inappropriate section to insert this language as 43113 is the insurance codes unfair deceptive trade practices section, which is meant to not only define and and, you know, allow for the insurance to regulate those things, but it specifically is meant to regulate the trade practice in the business of insurance, which we feel that this bill may go beyond that scope as it provides any person a civil right of action to sue for climate damages. So that's the first concern. The other thing is that on page 22, lines eight through 11, we feel that there may be a duplicate language just in the sense that subrogation proceeds are typically already accounted for in rate filings by the division upon rate filing approval. So just put it in the statute. I suppose it wouldn't hurt, but it's also somewhat duplicative of what already happens.

But other than that, I'm happy to answer any questions. Thank you.

Thank you. Department of the attorney general offering comments.

Good afternoon. Deputy attorney general Christopher Hahn with comments on the bill. We just wanted to reiterate our concerns from last year that with the way this bill has been amended, there may not be a potential subject title issue, especially authorizing any persons to file a lawsuit despite the title of the bill being titled relating to a truce. Thank you.

Thank you. Polluters Pay Hawaii Coalition in support.

Aloha. My name is Kayla Economou with the Pollution Pay Hawaii Coalition. I'm also a current resident of Kaluku, and I am here in strong support of SB 1166 which would empower insurance companies and injured individuals with major oil and gas companies accountable for climate related harms. We're seeing this occur more and more frequently over the state as increased, weather events happen. Just this past weekend, we have the events of

the Kona Low storm come through. And as a resident of the North Shore and the Windward Side, major flooding, major impacts on Waialua, Palaiva, and Wahiawa. And this bill would offer some relief to local residents and families living here. I've also had conversations with multiple families in Maui, part working conversations, to be honest, about how expensive insurance has become for their families. One family had to list their home on the market, and they put it, you know, hundreds of thousands of dollars below what they bought it for, and no one is offering to, you know, buy their house because the insurance costs are so steep.

Same thing with condo owners in Maui. It's not just homeowners, and then renters are also feeling the pain of this. So this bill would really offer some relief and support for our residents and families here. Mahalo for the opportunity to testify.

Thank you. Hawaii Association for Justice and Opposition.

Aloha, chair, vice chairman of the committee Evan Oue. I'm on behalf of the Hawaii Association for Justice. We stand in strong opposition to this measure. And, you know, primarily, you have you have a written testimony, but our primary point of concern is, that the bill's requirements for subrogation appears to conflict with the statutory, the law and the statutory interpretation under Yukimura and Takara. You know, for under sections 63310 it is clear that a policyholder has entered into a settlement or obtained a judgment against an alleged tortfeasor against which an insurer wishes to assert subrogation rates, additionally managed, being claimed processes exclusive avenue of relief.

So this is clearly set forth in our case law. Furthermore, you know, we do have some concerns, in regards to, you know, the the recent, 02/10/2025 Court Supreme Court order, which we affirmed this as well. So this law would, in a sense, conflict with that recent ruling. So we for those reasons, we respectfully oppose this measure and are available for any questions. Thank you.

Thank you. American Petroleum Institute. Sorry.

Good afternoon Chair Matayoshi, vice chair Grandinetti, Representative Iwamoto. Laurie Lum on behalf of American Petroleum Institute. We respectively oppose this bill. This bill would impose liability on companies that have operated for decades under both federal and state approved permits and regulatory approvals that expressly enable Hawaii's fossil fuel based energy system. Fuel remains a legal essential product that underpins critical sectors such as transportation, emergency services, and interisland commerce.

In fact, Hawaii's fuel network is deemed critical infrastructure, and specifically identified under the state emergency support function number 12. Adding new liability exposure in litigation would discourage continued investment and long term planning, which is needed to maintain reliable supplies of transportation fuels, marine fuels, and the backup generation that our households and businesses still depend on every day. So finally, this bill is being considered at a time when litigation in the state and elsewhere is ongoing. The state, city and county of Honolulu, and Maui County are currently litigating climate related claims against major energy companies in Hawaii state courts. Pending litigation is is rife with uncertainty and legal questions.

So we support practical forward looking policies that reduce emissions while preserving affordable, reliable energy, including investment in low carbon fuels. And this bill, we see it as it would undermine these objectives and could destabilize a sector that remains essential to Hawaii's economy. Thank you for the opportunity to testify. And for these reasons, we urge you to consider departing the bill.

Thank you. Center for Climate Integrity and Support on Zoom.

Good afternoon, Chair Matayoshi, Vice Chair Grandinetti, and members of the committee. For the record, I'm Gordon Levitt on behalf of the Center for Climate Integrity. CCI submits this testimony in strong support of Senate Bill 1166 with suggested amendments. Based on efforts to stabilize Hawaii's insurance marketplace in the past year, CCI encourages the committee to amend the bill, in order to provide the attorney general, the Hawaii Property Insurance Association, the Hawaii Hurricane Relief Fund, and private insurers licensed in the state with a civil cause of action, to recover costs and losses resulting from climate disasters. And those costs are here.

Hawaii needs every tool in the toolbox to protect its residents, including expanded attorney general authority. Last year, home insurance rates rose by up to 50% for some households in the aftermath of the Maui fires. And over the course of five years, non renewal rates have increased dramatically across the islands, including by almost 300% on Oahu. These rising insurance costs should be placed back on the entities whose business practices and deliberate decisions created the climate fueled insurance crisis that we find ourselves in now. We urge the committee to support Senate Bill 1166 with the suggested amendments and continue protecting the stability of Hawaii's insurance market.

Thank you for your consideration.

Thank you. Next up is Polluters pay Hawai'i coalition Advisory Committee in support.

Aloha, chair Marayoshi, vice chair Grandinetti, and representative Iawamoto. My name is Maka Gibson, and I live in Kaneohe. And I'm here in strong support of SB 1166 SD two. Over the past month, our communities have experienced historic storms, record rainfall, flooding, and real damage to homes and infrastructure. We recently learned that only 4% of Hawaii residents have flood insurance. For many families, each storm now brings a new fear.

Rising insurance costs or losing coverage altogether. This is climate change in real time, and the costs are being directly passed on to Hawaii residents. At the end of the day, this is about fairness. Local families should not be left paying for a crisis they did not create. Our crew leadership. Mahalo for the opportunity to testify. Thank you.

Earthjustice in support on Zoom. Not present. Hawaiian council in support.

Aloha kaku. Madeline McKeague on behalf of Hawaiian council, standing on our written testimony and strong support. I think I just wanted to emphasize how active we were after the Maui wildfires. We saw a lot of people were underinsured or even if they had adequate insurance that it was not appropriate and isn't going to be doing how much it needs to do. I think we are in strong support of this bill in large part because we know that it is important for the people who are causing the harms are also the ones accountable and the ones who can help rebuild. Mahalo

Our Hawaii in support.

Aloha, chair, vice chair, members of the committee. Mahalo for well, first of all, mahalo for hearing this bill. I was really happy to see this come back from last session. And, you know, it's clear that this committee has taken this issue seriously and understands the gravity of the climate driven insurance crisis from previous actions like establishing reestablishing the hurricane relief fund. And we submitted our written testimony, but I just wanna kind of reemphasize that this crisis is here now.

Right now, our staff and volunteers in West Valley are literally digging out houses from streams because of

the second 100 year storm that we have had here in the islands in the last month. And this crisis, which is the broader climate crisis but also the insurance crisis that it's causing, has been driven by the fossil fuel industry. And it's not a problem that that they provide energy. The problem is that they lied about it. And with all due respect to miss Lum and her client API, groups like API lied about it, and they spent decades deceiving the public, lobbying politicians from the federal to the state level and around the world and and and spending money to basically sound confusion.

And that's the real issue, and it's why they deserve to be held accountable. And and just like corporations have been held held accountable in the past, tobacco, opioids, etcetera, for that same kind of deception, the same thing should apply here, especially now that the state is in the business of insurance as well, which, again, really important heroic effort. So our request on this legislation would be, yes, support, but also make sure that the state has that right of action to go after these companies for cost as well. Mahalo

Thank you. Sierra Club of Hawaii in support on Zoom.

Good afternoon, chair Madoshi, vice chair Grant Nelian, members of the committee, Wayne Tanaka with the Sierra Club of Hawaii. We are in strong support of this measure with some with our suggested amendments. I think this measure provides opportunity to shore up the insurance relief that the legislature passed last year by utilizing the Hawaii hurricane relief fund. And to the extent that that fund will, you know, will eventually be used, to, pay out claims and, you know, taxpayer dollars will be used to to to cover the cost of this insurance and climate crisis. We think it's it'll be a wise move now to authorize the attorney general, to pursue, recovery of those payouts, you know, should if and when they occur.

So with that, happy to answer any questions. Wish you the best. Thank you so much for your time. Mahalo.

Thank you. Dave Jones, individual in support on Zoom.

Mister chair, madam, vice chair, members of the committee, Dave Jones. I served as California's insurance commissioner from 2011 through 2018. I urge you to support this measure with the proposed amendments. The amendments would provide that the state attorney general would have explicit authority to recover insurance related losses and costs from major oil and gas companies in the wake of the climate catastrophes that they're contributing to. It would provide private insurers, the Hawaii Property Insurance Association, the Hawaii Hurricane Relief Fund with the authority as well to bring civil actions to recover their losses associated with climate disasters.

And finally, we provide that the losses recovered from these legal actions would benefit policyholders by requiring that they be incorporated into insurance rates. These amendments address the concerns, I believe, that have been raised previously about the prior version of the bill which dealt with subrogation. The bill would no longer deal with subrogation, but rather would empower the state of Hawaii through its attorney general, and, private insurers, and the relief fund, and the property insurance association with the ability to recover their losses associated with these climatic events. Hawaii is suffering greatly as a result of the insurance crisis. Rates have been going up dramatically.

Non renewals have been going up dramatically. That's going to continue. Residents of Hawaii should not be the ones that have to bear this risk. Those that contributed to this problem, the oil and gas industry to its emissions should be held accountable for those emissions and should be not only held accountable, but through this measure, the state why it could recover losses that their emissions have contributed to. I urge your support with the proposed amendments. Thank you.

Thank you. Is there anyone else in person or on Zoom who'd like to testify on this measure? Seeing none, just noting an additional 65 individuals who submitted for testimony in support. Members, any questions?

Can you guys represent HPIA? No? Okay. Yeah. You wanna explain

It's a violation of HRS 26 dash seven, which specifies that AG is only permitted to represent government agencies. HPIA, while created by statute, is technically a nonprofit unincorporated legal entity that's made up of private insurance.

Thank you. And that that also made me a little uncomfortable about this bill, having invested the state AG represent what is kind of a private company. So HHRF, you can all can you already represent HHRF for example?

Represent HHR pursuant to 26 dash seven. I would like to know that HHR already has the power to sue and be sued pursuant to HRS 431 P-5A.

So under this bill, if we were to pass, h h HHRF could your with your representation, file a lawsuit under this bill.

I'm not sure if that would be appropriate given that the AG already filed a lawsuit last year against fossil fuel companies for climate change on behalf of the state. So a state agency trying to file a separate lawsuit now could be seen as an attempt at an unlawful double recovery.

You know, I'm trying to kinda work through that whether this bill and giving HHRF the ability to sue would be would be that. I mean, this bill would be a little more specific, I think. It would be actual damages that we've sustained that bill that for for future hurricane. I would assume that the lawsuit that you both filed is more backwards looking. So would it would the lawsuit you filed also include any subsequent hurricane damage?

I'm not sure about that. Okay. But, you know, generally, when these kinda lawsuits get settled or resolved, everything up until a point of resolution gets thrown into the bucket, so to speak. It's resolved and the claims cut off, if that makes sense. Okay.

I I assume that you don't need this bill to file a suit since you already have it. Would this bill further help to justify your ability to file that lawsuit?

Well, you know, I think the concern that would raise is that if we if this legislature were to suddenly pass a law giving us a cause of action, it would call into question the validity of the current lawsuit. You know, it would get the court to ask, hey. Why do you need why does the state need to give a cause of action now if you had it in the first, if you had it in the first place? That makes sense.

That makes sense. You also brought up a title issue that that I also had flagged and and before reading your testimony. But if since this bill has been expanded in the previous committees to allow a private right of action for individuals, but the title is relating to insurance. Do do you see that as a constitutional issue here?

I think we do.

Okay. So your advice would be to remove the private right of action for individuals. Okay. But you're okay with the insurance companies having that right of action under under this?

I don't think the department has a necessarily position against that.

Okay. Hold on one second. Let me see if there's anything else I got for you. Okay. I think I'm okay. Thank you. Evan, you wanna come up? Oh, sorry. Matt. Oh, no. No. Evan. Sorry.

Did you

What's your name?

I was looking right at you and I I I was thinking of Evan.

Oh, boy.

Hello.

Hi, Jack. How are you doing? So I understand you guys are against this. I understand 663 dash HR 663 dash 10 is. Right? But if we were to I guess we've we've looked it up. I understand the Supreme Court's interpretation. I don't know. Did did the Supreme Court interpret 663 dash 10 to be exclusive remedy for insurers? Because they they've always been able to subrogate claims in the past. Right?

Right. Right. So what happened was in Yukimura, the court did reaffirm that as a sole the digital lean process as a sole mechanism for in order to do so. So that's and it was reaffirmed in the 02/10/2025 Supreme Court ruling.

And I think we added that link in our testimony, but that they further affirm that at 6310 at that to go forward.

And so pre Maui wildfire let's go back a decade. Someone's house burned down here. My my house burns down. Insurance company pays me out. They determine that, oh, it's it's actually someone's fault. The insurance company couldn't go after couldn't subrogate to go after that claim because I I I feel like that's part of just about every insurance contract you've ever seen.

Right. Right. So the way that 6310 pans out is it it does create, like, a more it's not directly as obligation. Right? It creates kind of that judicial process in which the court will manage the lien and then allow the the third party to our fees in order to be able to process it.

And then the they kinda it allows the money to come out, but then they kinda it allows the the parties who are part of the suit to to participate in that process.

Does that require the homeowner to sue, or could the insurance company subrogate and sue on their behalf? Because if the homeowner decides not to sue because they already got the money from the insurer and they just don't wanna go through the hassle, doesn't that leave the insurance company kinda high and dry with no recourse?

Well, that's so I think that's why the the process for the insurance company to recover would be through that judicial lien, if I'm if I'm interpreting that correctly through tomorrow.

Judicial lien of a settlement, though. Right? I mean, the settlement doesn't happen, and the judgment doesn't happen. What do they what do they have?

True. Right. Right.

I I can I can and

Right.

I can follow-up offline with you on on the details of the key model in that regard? Yeah.

Okay. I'm just considering changing 663 dash 10 to allow for it. I mean, I I seems kind of unfair that the party responsible wouldn't be held responsible just because the or couldn't couldn't be held responsible by responsible by the insurer through subrogation action. But I I just want to confirm your, I guess, interpretation of it.

Right. Right. And I think the the main, you know, point of opposition for us is to preserve what's already within 6, 66310 and that prop the judicial need process. So yeah. And I understand, you know, what you're saying there, but, you know, I think our preference would be and our position would be, you know, that this would kinda abridge that in that sense. So

K. So just to confirm, your your status right now is the insurance company could not file suit against the if you want to well, why don't we touch base in a little bit Yep. After. But I I'd like to just I'd like to hear your thoughts though before decision making.

Yep.

I have a question for Center for Climate Integrity online.

Yes. Vice chair Grandinetti.

Thank you. I I wanted to follow-up on the question chair post to the attorney general and was wondering if you can speak to because I I know you track these kinds of lawsuits across the country. Can you speak to the additional authority, if any, this bill is it would give and how it differs from the broader lawsuit that we're already engaged in?

Yeah. Absolutely. So what this bill and the amendments that are suggested in CCI's testimony go to is giving the state explicit legal authority to recover insurance related cost insurance related costs and losses specifically for the hurricane relief fund or HPIA that have a statewide impact and are connected to climate change. So the state's existing lawsuit against the fossil fuel companies filed last year is quite broad and expansive, but doesn't explicitly address insurance related harms. And respectfully to the attorney general's testimony there, attorney general office testimony.

So we're seeking to provide additional clear authority that would buttress what the state has done by deploying the hurricane relief fund to cover these extraordinary costs in different parts of the insurance marketplace.

K. Thank you. Any other questions, members?

Sorry. I'm gonna have a bit of a nerdy conversation with AG, but could you could you have me come back up? So we were kicking this around with the other attorneys. Insurance company pays out, let's say, half a million dollars for a for a burned down house. Is that half a million dollars considered damages to the insurance company if they were giving it through a contractual obligation?

Wow. That's sorry. I I'm not sure if I have an answer free ready for you at this moment.

And and and the reason I ask is because if an insurance company would have to show harm.

Yeah.

In order to press this lawsuit, even if we're to give them the ability to do that, the insurance company itself is not being I I don't know if we can if they're gonna be able to prove harm because they're paying out based on a contractual obligation to do so. I'm not sure that that payment is a harm. It sounds like there's a contractual obligation. Their their house didn't burn down. If they could subrogate and they could stand on the shoes of the homeowner, then I

could see the harm. But what we've got is people saying that they can't subrogate. So So if they don't stand in the shoes and their harm needs to be individual, I I don't see how they have standing to bring a lawsuit for damages if the damages are claimed if the alleged damages are just payment out of a payment for contract. So, I mean, even if we were to pass this, unless we allow insurance companies to consider the debt the claims paid out as damages, I'm not sure they'd have any damages to all that. I'm just I'm kinda thinking out loud but.

I'm wondering if you have any thoughts on on that situation.

First thing that comes to mind is that, sure, it's a contractual payout, but it's something that's contingent contingent upon a condition that was alleged that would purportedly be caused by fossil fuel companies. But that said, before I can conclusively give a definite definitive answer whether that does or does not legally qualify as damages, I would probably want to look into it.

I mean, it's contingent upon that, but all, all, their, their initial payout through their insurance contract was that's not contingent upon that. Right? The payout to the customer wouldn't be contingent. They're not just paying if it's a, if it's a climate related.

Right. It's they're paying out because the property was damaged, but that property was damaged because of, allegedly, fossil fuels, climate change, and so forth.

So, the argument would be that they had a contractual obligation to pay, but that was triggered by someone else, and therefore, they're damaged by that contractual payout because of the other third party's action?

Just again, this isn't a definitive...but just giving you my immediate thoughts and inclinations that come to mind.

Yeah. Okay. Yeah, but I'm a little bit caught up on it. But if, if you guys could maybe think about it, we could talk better. Thanks. Okay.

Thanks. Any other questions? Okay. Seeing none, moving on to the next measure, SB 888, SD 2, relating to consumer protection.

Prohibits operators of smart household security devices from sharing user data with law enforcement agencies unless the user consents or the law enforcement agency obtains a judicial warrant; prohibits operators from requiring users to consent to share data with law enforcement agencies to use a smart household security device and allows the department of their attorney general or the Office of Consumer Protection to bring a civil action against operators who violate certain requirements. First up is DCCA, Office of Consumer Protection, with comments.

Good afternoon. My name is Dominic Jenkieri. I'm the Enforcement Attorney for the State of Hawaii Office of Consumer Protection, standing on written testimony and available for questions.

Thank you. Christine Andrews, individual in support on Zoom.

Aloha. Thank you, Chair, Vice Chair, and members of the committee for the opportunity to testify. I will stand on my written testimony, but I did want to kind of clarify some of the... around this. So, I'm a constitutional observer and know-your-rights educator here on Maui. If you are a member of the immigrant community, you know, the federal agents like to, like, wait outside of your house at the end of work or before school to make sure you're home.

And so, the fear is now that people's ring cameras will essentially be turned against them so that they can track, you know, people coming and going. This isn't just a fear for the immigrant community. This is all fear for, like, federal judges who have ruled in cases against the current federal executive. So, it is really concerning to think that our private data could be used to do an end run around the Fourth Amendment, and the threats to our judges and community members are real. Thank you so much.

Thank you. Anyone else in person or online who'd like to testify on this measure? Seeing none. Members, any questions?

OCP. In your testimony, you added a provision from Illinois law, I think. There wasn't a clear explanation in your testimony whether you were suggesting we add it in order to bolster this model or whether you're just pointing it out as, like, something. I, I just wanted you to expound on it.

It was something to suggest or at least point to, with respect to, you know, your ultimate decision as to whether or not to pass this.

So, you think that it would make a stronger bill if more of that provision like that to be added? Is that fair?

Correct. It would definitely specify some situations where, you know, the warrant requirement can essentially be waived or or worked around, and I think the Illinois law provides a good kind of template in that regard. Okay.

Okay. Yep.

Thank you. Any other questions?

Moving on to SB 2387 SD1, relating to Digital Financial Asset Transaction Kiosks. This establishes limits on transactions through digital financial asset transaction kiosks, requires operators of those kiosks to use blockchain analytics and tracing software to prevent fraud, make certain disclosures, provide receipts to customers, provide full refunds under certain circumstances, and provide live customer service and a dedicated communications line for the AG, Office of Consumer Protection, Department of Law Enforcement, and County Police departments.

Hawaii State Council on Developmental Disabilities in support.

Thank you, chair, vice chair, committee members. Daintry Bartoldus, Executive Director for Hawaii State Council on Developmental Disabilities. We're in strong support of this measure. We respectfully ask for amendment. It's a third paragraph of our fourth paragraph of our testimony that we respectfully request that the following amendment on page two, lines thirteen and fourteen I apologize.

And bit six. That's lines thirteen and fourteen. After activities of digital finance assets transaction kiosk inserted provided that all disclosures required under this section shall be written in plain language and designed to be accessible to individuals with access and cultural needs, including cognitive sensory, and communication disabilities. Consistent with Act 172 from session laws 2022 related to plain language. Thank you very much for this opportunity to testify.

Thank you. Office of Consumer Protection with comments.

Aloha, chair, vice chair, members of the committee. Emma Olson for the Office of Consumer Protection. We support the intent of this measure, and we will stand on our testimony with comments. Thank you.

Thank you. Honolulu Department Of The Prosecuting Attorney in support.

Not present. AARP Hawaii in support.

Good afternoon. I'm Audrey Suga-Nakagawa from AARP, and we stand in strong support of this measure. And I thank you for hearing this bill. You know, SB 2387 really puts forth common sense safeguards that protects consumers. And I just wanna be really clear.

AARP is not opposed to cryptocurrency, but what concerns us is the growing rate of cryptocurrency scams, especially that's involving the kiosk. And that is really a big concern to us as health fraud prediction is is one of our highest priorities. And in my in our testimony, you just see the data of the losses that's been experienced by big towns of this type of kiosk frauds.

But what really concerns us, is that this course disproportionately the is at high risk, and we just cannot jeopardize their life savings. So we really appreciate having this bill put forth.

Just to let you know that we also did support HB 1641 which was heard today. Decision making has been deferred to next Tuesday, and we just like to see both bills go to conferences so that bills can be reconciled and put forth a very strong consumer protection bill that will protect wise consumers. So we thank you very much for the opportunity to testify in strong support of this bill.

Thank you. Hawaii Bankers Association in support on Zoom.

Not present. Anyone else in person around Zoom, who'd like to testify on this measure?

We had 130, go ahead. Come up. Sorry.

Good afternoon. My name is Larry Lipka. I'm the General Counse for CoinFlip. We are the largest crypto kiosk operator in the world. We have about 17 kiosks here in Hawaii and 5,000 across the globe, including in Canada, New Zealand, Australia, South Africa, Italy, and Spain.

We're a licensed money transmitter in 40 states, and I'm here today to support the bill. And that may be surprising that we want a regulatory regime, but I, my company has been here for a couple years pushing for the state to regulate us because we all share the same goal of pushing bad actors out of the state.

And right now, in the State of Hawaii, money transmitter licenses are not granted to crypto kiosk operators, which means that there are some operators who don't have the same controls in place that CoinFlip does.

So I actually would push the legislature to go farther than what this bill is doing to include additional things like a call requirement for 80 plus customers because those are the highest risk customers that we have. We already do that at CoinFlip.

We require them to call us before we can let them transact. We would also push for a hold period or cooling off period for new customer transactions because that allows a person to realize something bad has happened to them, call us, and get a full refund.

I do wanna point out in this bill, there is requirement for a full refund for scam victims. So, there is no harm to customers in Hawaii if someone gets scammed. It goes right back to the company.

If we don't prevent someone from getting scammed, we have to refund them fully. I do think the language needs to be tweaked sweat slightly on that but, you know, we're happy to engage on that.

And, you know, requiring money to their licensing is something that is very important. You know, 40 states have licensed us and the states that have required money to their licensing required money to their licensing earlier on have had better results for scam victims. Those are states like Vermont and Nevada that require us to get licensed very early on.

Hawaii, we apply for license, and we were told that the state does not license crypto companies. And that's a big mistake because that allows operators to thrive in this state under no regulations on other than federal regulations.

And one other thing that we think is that for there's a should be a new user and an existing user. The existing user should be able to buy more crypto to have the freedom to buy more because they're not at risk of being scam victims. Thank you very much. I'd love to answer questions too.

Thank you. Anyone else? Oh, come on up.

Good afternoon, chair, vice chair, members of the committee. My name is Louise Pais Myers. I'm with Hilt Ventures. We are a very small kiosk operator on the global scale or even US scale, but we are the largest in Hawaii, pure ATM operator in Hawaii. We have 24 kiosks on four islands, and we've been here since 2021 serving our community here.

We actually operate out of Honolulu, so we're pretty local. We know a lot of our customers. We know the store owners. We know local law enforcement, local FBI. And in our testimony, we are in support of regulations.

What a CoinFlip was saying. We think that's the best thing for the industry. Why is a state that doesn't have a money transmitter license? We are licensed or we're registered with the FinCEN in federal level. We have state licenses in other states where we operate.

And then the one state we don't have a state license because they don't have a licensing body, they have regulations similar to what's in 2387. The one caveat, I would say, kind of building on the last comment is we believe there should be a differentiation between first time user and existing user when it comes to transaction limits and refunds.

As someone on the front lines of this on a daily basis, I can tell you that 99.9% of scams happen with first time users. These are people that have never used a kiosk, don't know what crypto is, they're scared to death, they get a phone call, they're coming to the machine. There are security measures in this in the systems that flag different behavioral things and we can stop.

We are in favor of holds also on first time customers because that's where you're really gonna get the most consumer protection is doing that. And if that's in line with the dozen other states at least and with laws that AARP has supported.

The Federal Government has also a bill pending in Congress that differentiates between first time and existing users as well. So I urge you to consider that, and I appreciate your time. Thank you. And I'm here to answer any questions today.

Thank you.

Thank you. Anyone else who'd like to testify on this measure?

We had an another 13 individuals submit testimonies. Members, any questions?

So we've talked a bunch.

Yes.

And I wanna say I do appreciate both your companies for the kind of work you do to prevent fraud. I think you're both going out of your way much more so than certain other companies here to identify people being defrauded and for taking affirmative action to stop that from happening. So I appreciate that.

There are certain aspects of the other bill, which I kind of colloquially call the wallet bidding bill proposed by CoinFlip when we were talking earlier before session started that are not present in this current bill that I'm considering adding to it. One is more opinion.

One is kind of provision differentiating first time customers from our long term customers. What am I missing? What other what other items would do you think would be should be added to this bill to make it a stronger build to prevent fraud?

Yeah. So I think the two things that are most important are what I mentioned, the hold period for new users because that allows them to a cooling off period. Our data is that 60% of customers who are defrauded call us in 24 hours. So we sort of settled on that 48 hours as compromised. We can do 72 hours as well if that's what the legislature wanted.

There are other things like the Chief Compliance Officer shouldn't own the company. You know, that is a conflict of interest if your chief compliance officer is also an owner of the company. So that's in our our model legislation.

The wallet pending is very important because then only one customer uses one wallet. So there are a lot of other things that we would support and, you know, the call requirement for 80 plus as well, I think, is very important.

Our data is that is the most at risk category. It's not 60 plus. Some states have a call requirement for 60 plus. That's Connecticut and Vermont, But we found that it's actually 80 plus. I think that's when people start having some pre dementia issues where if they're not you know, they don't know and their family doesn't know, so there's not the right controls in that family to prevent them from doing something they shouldn't with their money.

And, you know, the industry did not support our refund provision for scam victims a couple of years ago when the first states regulated us, but we know now that we can control the fraud to and still stay in business. There are states like you know, a couple of states have had refund provisions for a number of years, and we're still operating in those states because the scam rate is low enough, and we can refund those victims.

You know, there is a problem that the cost goes up for us, but that's the cost of doing business. And we think it's the right thing to do. In states that a full refund is not required, we already refund the victims their fees.

So we would argue that there should be a full refund for new users because they're the most vulnerable and then a fee refund for anybody who's scammed because nobody should profit off of a scam at all. And that's why we do that voluntarily.

Very brave of you to say that about plus people when AARP is right behind you.

I'm kind of more thinking that new users shouldn't be able to buy any crypto at all and have that cooling off period just be a certain number of days. What is your argument for allowing the purchase of any crypto for a period of 48 to 72 hours after someone registers with one of your services?

Yeah. So I think it's a good question. And, you know, there is no potential for harm if you hold that crypto. So what we're arguing is that the person should be able to go to the kiosk. There's a bunch of scam warnings and, you know, that bill has those as well.

And, you know, the crypto then the money goes into the machine, but the crypto is not sent to the wallet until a certain amount of time elapses. So that means that the person has the time to realize that they've been scammed, call us, and then we would fund them fully because that crypto transaction hasn't completed. But if after 72 hours, say, that's the whole period that the crypto gets sent, the person realizes a week later that they've been scammed, then the refund provision goes into place where they out.

They get a full refund even after we've completed that transaction at a cost to us. So for those new users, there's no chance of any loss because they get a full refund of that transaction.

Did that answer the question?

It did. I'm just, it seems like you guys should be in favor then of the I mean, I guess you you do lose some initial business, but why go through all the hoops of having to refund, having to hopefully, the person will call us in time within the 72-48 hour period, whatnot, instead of just not letting them I'm having the cooling off period be purchased crypto during that period of time.

I mean, it just seems simpler, especially if we are to put the limit for new users down significantly. I mean, I'm wondering if it just makes more sense to to say, if you can register with us, and then three days later, you can come start purchasing crypto. And then it'll get rid of market discrepancy for those three days.

I don't know. It's a cleaner way to do things, but I wanted to give you a chance to at least defend the ability to purchase during the New Year's or period.

Yeah. So I think the issue is that legitimate customers don't wanna go back to our product twice in a row. So it's very convenient to go to the kiosk, register, and have to come back three days later. So a lot of people.

Which is the point, though. Right? I mean, we're creating friction. That that's the

Right.

And I think that's what the hold does. So the hold is the compromise. Right? So the legitimate customer gets to put the cash into the kiosk, and then they get their crypto after a couple day period. The non legitimate fraud victim has an opportunity to call us to block that transaction from happening.

But even if they don't, you know, the current bill says that someone has 90 days to ask for a refund. You know, if you're a scam victim and you have 90 days, you'll realize within that period that you've been scammed. And if you don't realize within the ninety days, I would argue that you'll never realize it, and you would never contact us. Right? Because these are pressure scams we're talking about.

So this is when somebody gets a pop up on their computer, an email, a text message, something from social media saying, I'm the FBI. If you don't pay this money into this machine today, you're going to go to jail because you missed your jury duty or there's a warrant for your arrest. So these these scammers rely on the pressure of like, yelling at someone on the phone.

So I've been testifying across the country, and people, the victims that testify often say, you know, I knew right after I put the money in that I did something wrong or if I had just had a cooling off period before the crypto was sent, they could have called.

And our data supports that, you know, and they said 60% of people do call due within 24 hours. So we're trying to look for a compromise to allow legitimate customers to transact and not make it so annoying that they never come back to us, but also protecting the scam victim. And I think they're protected a 100% here, or 99.9% because they'll have ninety days to ask for that refund.

Thank you.

And like, the last thing is, you know, we do have customers who call us and complain about the hold period.

They're like, what you're stealing from us because I didn't get my crypto right away. But that's the balance that we're trying to protect consumers. But, you know, some of the legitimate customers hate that hold period because the value proposition of crypto kiosks is that you get your crypto right away.

welcome for some questions.

Yeah. I wonder, are you aware is there a percentage of people that get scammed that are so embarrassed to have fallen for it that they don't have to report it, and they would therefore never get refunded. They might not even know that's an option, but they just can't see what they did and they just let it go.

That that clearly is possible. Right? It's hard to know all the data when it's proving a negative, so I don't know if there's good data on that. I think AARP would say most people are too embarrassed to report it. But I argue that if you have to disclose that there's a refund, you have to do it at the kiosk and on the receipt.

So the person is informed the process to get a refund if they're a scam victim. So that's the solution to try to prevent those people who are too embarrassed from reporting it. And I can understand being too embarrassed to report it when there's no chance of getting a refund. But if you're able to get your money back, I think that outweighs the potential embarrassment. But you know, I can't stand here and say that every single person will do that.

There may be someone that slips the cracks, frankly, but the bill is drafted in a way so that people are notified of this refund potential so that they will end up just calling us, submitting a police report, and then they get a full refund.

Or they they don't realize what the yeah. No. It's your point.

No. I just I didn't know they got a receipt there with a path forward. That's a good strategy.

Okay. Anybody else's questions?

Let's move on.

Thank you very much.

Thank you. Moving on to the final measure, SB 2471 SD 2, relating to the powers of artificial persons. Reaffirms that artificial persons created under state law possess only those powers that are necessary or convenient to carry out awful business and charitable or organizational purposes.

And that those powers do not include the power to spend money or contribute anything of value to influence elections or ballot measures revoke all higher grants of corporate and and key powers, and regrants only those that the state determines to be necessary or convenient to conduct awful business under the constitution and laws of this state.

First up is DCCA Business Registration Division with comments.

Good afternoon, chair, vice chair, and members of the committee. Marilyn Knightle for the DCCA business registration division. We stand on our written testimony, but I'm available to answer any questions. Thank you.

Thank you. Department of the Attorney General in opposition.

Deputy Attorney General, Christopher Hahn in opposition to this measure. We understand how deeply unpopular the US Supreme Court Citizens United decision is. But no matter how flawed that decision may be, it is still the prevailing law of the land today. As the department responsible for defending the constitutionality of our bills, we respectfully ask that you withhold this measure. This bill relies on an untested legal theory, the viability of which we find questionable.

No matter how one engages in this philosophical exercise of distinguishing between rights and powers, the freedom to engage in political discourse is a fundamental bedrock of our democracy that is closely guarded by force. This bill purports to take away that freedom based on the speaker's corporate identity.

Not only that, it targets a specific type of speech, political speech. This type of content based discrimination will be subject to strict scrutiny under the first amendment. We're concerned as to the consequences of this measure as a successful legal challenge would result in substantial legal fees for our state.

This unprecedented exercise of the state's power is incredibly broad and could have other unforeseen consequences as well. We understand that this is not an easy task, but please defer this bill. Thank you.

Thank you. Center for American Progress in support on Zoom.

Thank you. Good afternoon, chair, vice chair, and the members of the committee. Thank you for providing the opportunity to testify today in strong support of SB 2471. My name is Tom Moore. I'm a Senior Fellow for democracy policy at the Center for American Progress.

Prior to joining CAP, I served for seven years at the Federal Election Commission as Senior Counsel and chief of staff to former chair Ellen Windrow. I've spent a decade working in campaign finance law and specifically, I've been up to my eyeballs in the law surrounding Citizens United. That's why I designed this legal approach the way I designed it.

SB 2471 which reflects that approach is a genuinely new and promising approach to addressing corporate dark money in politics. It avoids the legal pitfalls that have undermined reform efforts for the past sixteen years.

Respectfully, your Attorney General's Office is making a category error when it analyzes this bill as a speech restriction speech regulation. It is not. This does not restrict. It does not prohibit. It does not regulate.

Instead, this bill defines the powers that the State of Hawaii wishes to extend to the corporations that operate within your borders. This is an authority states haven't used much in the last hundred years, so your Attorney General's Office hasn't ever seen a bill like this.

But there's no question that states have that authority. They used it all the way through the 19th century throughout every state in The union in The United States. The Supreme Court simply did not opine on this question in Citizens United as your Attorney General's Office states.

Citizens United addressed a regulation of political spending by corporations that already possess political spending power. It did not hold that states are constitutionally required to grant corporations political spending power. I invite your Attorney General's Office to find any language in that decision or any Supreme Court decision that states otherwise.

Corporations only exist because states create them. A basic principle of corporate, excuse me, corporation law is that artificial entities possess only the powers that the state grants them.

This bill simply clarifies that political spending is not among the powers that Hawaii grants to the artificial entities that operate within its borders. The authority to make that clarification for both domestic and out of state corporations was reserved by Hawaii decades ago.

No Supreme Court decision ever has required any state to grant political spending power to corporations or grant any power. It is totally up to you. A written testimony goes into these issues in greater detail. Thank you again for the opportunity to testify, and I look forward to your questions.

Thank you. Imoa Alliance in support.

Indivisible Hawaii Statewide Network in support. Not present. Hawaii Alliance for Progressive Action in support.

Aloha. Aria Juliet Castillo from Hawaii Alliance for Progressive Action. In strong support of SB 2471. At its core, this bill is about who our democracy belongs to. For too long, we've accepted the system where money drowns out voices and outcomes feel predetermined by who can spend the most.

This bill is a statement that Hawaii is not willing to accept that as inevitable. Even with ongoing campaign finance reforms, candidates would still be forced to compete against unlimited outside spending. From county council to statewide contest, we've seen millions of dollars from super PACs flood our elections every year, making it nearly impossible to level the playing field. SB 2471 is transformative because it addresses that problem at its roots. It clarifies something foundational.

Corporations are created by the state, and they only have the powers we give them, and those powers should not be including influencing our elections. It does not limit individual rights. People can still donate, organize, and speak. It simply draws a clear line. Democracy is for the people, not the entities with unlimited capital.

The legislature should not shy away from old policy because a Supreme Court precedent that is actively eroding our democracy. We cannot wait for the Federal Government to fix what it broke. The states must take the lead and protect fair and accountable elections. Is it bold? Yes. Will it face challenges? Yes. But if we don't assert our authority, we are conceding to the fact that our democracy can be bought and that is not a future that we should accept. Thank you.

Thank you. Hawaii Public Health Institute in support.

Hello, chair, vice chair, members of the committee. Nate Hix with Hawaii Public Health Institute in support. We should not allow money to influence our elections at all. Of the $10,000,000 in candidate donations during the 2024 election cycle, half of them came from just 800 donors. That is a extreme concentration of influence.

For non candidate committees, for these corporations that are spending money, only three committees spent $13,000,000. And so this is a extremely outsized influence that these entities have and this bill can end that. We can just make sure that our democracy is more suited towards those the people that live in the state rather than those who are trying to earn money and take away from us.

So Mahalo for the opportunity, and please support this bill.

Thank you. James Raymond, individual in support on Zoom.

James Raymond?

Aloha. I'm just trying to adjust my my Zoom call here. Can you hear me?

Yes. We can hear you.

Okay. Is the video on?

No. But you can go ahead.

Here we go. Aloha, Chair, Vice Chair, and Committee Members. My name is James Raymond. Prior to retiring, six years ago, I served for nine years as a deputy attorney general for the state of Hawaii. I'm also a member of Indivisible Windward, but now I speak only as a concerned citizen in my personal capacity.

I speak in strong support of Senate Bill 2471 which seeks to mitigate the havoc wreaked on our election process by the 2010 US Supreme Court ruling in Citizens United. That ruling opened the floodgates of big dark money in our elections. I'm not speaking to persuade you of the legal merits of this bill's novel solution to the corruption of our election system. I will say that I am disappointed, but not surprised, that our own attorney general has taken a dim view of the bill and cautions against the risk that it may not survive the challenges sure to follow. But even so, I urge you to pass this bill because you, along with the overwhelming majority of your constituents, know that the big dark money flowing into our election process through the floodgates of Citizens United must be challenged.

You should know that Hawaii is not alone in this fight. As you've, we've already heard from Tom Moore of the Center for American Progress, CAP. He recently testified before this committee's counterpart in the Hawaii senate. Quote, "The framework is advancing in multiple states, including a ballot initiative moving toward Montana's 2026 election."

"Bills have also been introduced in New York, Vermont, and Virginia with additional measures expected shortly in California and Colorado. Sponsors also have draft bills in hand in several other states.", end quote. Tom Moore also notes that, "To our drafters credit, SB 2471 is among the strongest and most carefully constructed versions introduced anywhere.", end quote. It isn't enough to just vote for this bill. In the Senate, it was passed 25 to 0, which that's great.

But you have to fight and fight hard to convince your colleagues and the governor and his AG that We The People have had enough of bought elections. Your constituents are fighting mad, and an increasing number will only support candidates who swear off accepting big dark money and who continue to fight hard to end it. I ask you to represent the power of the people. Join your sister states in the fight to save democracy and pass this bill, not because it is risk free. Our AG is solidly behind it.

It is not risk free, and she is not solidly behind it. I ask you to pass this bill and start writing a legacy. Your descendants will learn about your role in the fight to save our democracy. Thank you. I remain available for questions.

Thank you. Josh Frost, individual in support.

Good afternoon, Chair, Vice Chair, Committee Members. Josh Frost, I'm here today in my individual capacity. I'm not representing the ACLU or any other organization. This is an issue that's been near and dear to my heart since the decision was passed in 2010. I just wanted to highlight a couple things.

One, if, I know you may not have time before decision making today, but I really encourage you to read the article that Tom attached to his testimony. It's, it's very well argued. It's very well sourced and cited, and I've learned a lot about the issue from reading it and from from having conversations with him. A couple things is, is as it relates to foreign corporations, you know, the, the, the state has, as I understand it, I'm not an attorney, regulates corporations that operate within the bounds of the state of Hawaii. This includes corporations that are chartered elsewhere.

Including the language for foreign corporations in the bill simply says if they're chartered elsewhere over operating within the state of Hawaii, as they operate here, they would not be able to do, would not be able to have, spend politically. Right? So they would be on equal footing with corporations that are chartered here. In order to make the bill strong and and provide the best defense, against challenges, it also includes nonprofits. It includes labor unions, just as Citizens United did. So we once again level the playing field, for every chartered corporation, all having to follow the same rules.

Similarly, for, for BREG, right, they simply register corporations. They're not regulatory now, and I don't and, again, I'm not an attorney, but as I read the bill, it wouldn't require them to regulate any more than they do now. So, you know, I, I urge you just move the bill along as is, and thank you for your time.

Anyone else in person or on Zoom would like to testify on this measure?

Yes, Vice Chair.

Yes. Go ahead.

Yes. I, I can't have my. My video doesn't seem to want to turn on. In any case, my name is Marlene Tom. I apologize. I had intended to testify in person, but I lost my transportation. On behalf of Indivisible Hawaii, I am testifying in strong support of SB 2471 for many of the reasons that others have already mentioned.

And I stand by my written testimony. But I just wanted to mention a couple additional things. We welcome the change in SD 2 that restores the language, including, that was originally included when the measure was introduced, but deleted in SD 1 that subjects, foreign entities, that is entities, chartered in other states, not necessarily just other countries, but other states. If they're doing business in Hawaii, they're subject to the same prohibitions of not spending, politically. Also, I just learned today, somewhat belatedly that the California assembly has introduced, bill aptly named 1984 introducing the same, prohibitions about artificial persons.

And that bill has, been advanced, as of March 2 to the committees on banking and finance and judiciary. So not that we have to follow California's, model or Montana's model. But, you know, the saying as "California goes, so goes the country." We strongly urge this, this committee to announce, SB 2471. Thank you very much.

Thank you. Any other testifiers on SB 2471 SD 2? We also have 33 individuals submit testimony in support. Members, any questions?

I have a question for the HS Office. And, please read my. I'm not that familiar with this area of law and so, but my question is, can foreign corporations, foreign meaning a corp.

Out of state.

Out of. Not just out of state, actually. A foreign government. Let's say China. Can China openly put money into elections here in Hawaii? Is that legal political speech? I don't know.

That's another kind of word. For for incorporation, what he was talking about

Yes. I understand.

Corporation outside of-

No. I, I understand that. Thank you. I'm. I do understand that foreign corporation, but I'm just saying more broadly, would we, because it is another entity that may have restricted speech, is, is my point. There are, there are entities and money sources that are prohibited from participating in political speech here in Hawaii.

So, short answer is, I don't know because I'm not that familiar with the election laws, but election, you know, campaign financing laws. But I would think just as a matter of first inclination. First of all, you're moving money from a foreign country here. There's restrictions on that. And, typically, as I understand it, for foreign actors to act, you know, they would try to set up multiple LLCs and steps along the way to ease their way in, so to speak.

Right? So are you. I guess, is your response saying that there may already be foreign money coming in through potential corporations and, and that's. Through. l, l. And that was my point actually. Was that there, there could be foreign money coming in through structured LLCs where it's just so many LLCs layered into each other that there's foreign money. Some of the corporations may be owned by foreign governments. I mean, some of these corporations that are incorporated outside of Hawaii may be owned by. The shares may be owned by different governments.

So my point is, it feels like there's already a recognition that we treat sources of. That there is already an ability to distinguish between who has the right to participate in political speech. So.

It's certainly a possibility. I don't have personal knowledge of any such specific entities that are doing that. But, you know, the unfortunate reality is it seems that the rich and powerful seem to constantly try to leverage their wealth to find different ways around the system.

Right. And that's, and that would be my argument to, I guess, put forth to you. If people are pushing the envelope, trying things that may seem impossible, shouldn't the people of Hawaii also be able to have access to the same kind of, you know, tweaks to our statutes, tweaks to the system so that it does create a more even playing field?

Oh, my response to that would be I respectfully don't, we respectfully don't think this is the way. This is an incredibly raw sweep of power where you're just snapping and just basically going all non natural persons now can no longer engage in political speech. Which is thus raising our concerns about the risk of adverse allegation.

Can I ask a question? I was just wondering if you could, if you've reviewed the Center for American Progress's testimony and if you could maybe respond directly to that argument. I. I mean, as somebody who's entire, you know, the politics of my whole adult life have been shaped by Citizens United. I do appreciate the creativity and novel approach of this bill, and I found it compelling, but I'm not an attorney. So I'm just curious if you could respond directly to some of the arguments they made.

Sure. I did review the report and his testimony, but I do wanna preface this isn't the department's official position on his report or testimony. This is just my this would just be my analysis.

So, yeah, I think the concern is that he, the report, the idea is missing the forest for the trees. When these kinda cases go in front of the court, the first thing they ask isn't where does the source of authority come from? The first thing in it. First thing the court is gonna look at is what does the bill do or what should it do. And from that approach, if I were to analogize this, it doesn't matter if the glass is half empty or half full. The point is there's still water in the glass that you can drink out of it.

And just like that, it doesn't matter if you classify the ability to engage in political speech as a power that is granted by the state or a right that a corporation has. The point is that activity, that ability is something that freedom is something that's protected closely by the court. The other concern that I'm having is this theory, practically speaking, if you guys pass this law, we're gonna get sued. We'll probably go back to the US Supreme Court, you know, the very body that passed Citizens United and started this whole problem. So this theory seems to be resting on the assumption that if someone comes up with a theory novel enough, then perhaps even the Supreme Court will recognize it, throw up their hands, and go, you win.

The state can do what it wants. But you've seen how this current iteration of the Supreme Court operates. They're quite bold in being creative, for lack of better word, in achieving what they want. So I think the question for you guys is, do you really wanna keep this issue back in their hands?

Do you wanna ask a question, Greg, before I ask him? Okay. I, I, I know you guys are a little frustrated over this.

It is. It seems cut and dry-ish from the federal level, unfortunately. And I think we all agree that it's a pretty crap decision by US Supreme Court, but, you know, kinda stuck with it until the court turns over at the federal level. That being said, I mean, I did wanna explore a little bit the concept with you on whether we can direct or restrict corporations to make certain expenditures or not. It's my understanding that and I might be wrong, because I don't have the practice in this area either. But that we can require corporations to make certain expenditures like market comp insurance or coverage do-doing certain required expenditures for insurance or or otherwise, maybe certain safety procedures or equipment that they would need to buy for certain areas that they manufacture in or operate in.

Would that be akin to us here in allowing or not allowing them to expend money or directing them to spend money on a certain thing?

That's a loaded question. And I think, you know, ultimately, it would kinda depend on where you're going. I take it you're hinting at limiting political expenditures by artificial persons? Or?

I don't think so. I mean, I'm wondering if, if we have the ability to restrict or require expenditures by artificial persons in one sense, can we do it in this sense as well? I mean, is, is there an analogous, is that an analogous situation, I guess?

I'm worried because political speech is always entitled to strict scrutiny under the First Amendment, so that may be difficult. I don't have a. I don't have a definitive answer on that.

And it would kinda depend on the details of what you have in mind.

It's, it's.

I mean, to me, when I think of an analogy for this, we're creating corporation, and we can think of it maybe as a car, and we decide to give the car a certain kind of engine, certain kind of tires, certain kind of headlights, whatnot. If we decide to not give it windshield wipers, but still allow the car to have all its other functions, we as the state can just not put in windshield wipers and then have a car without windshield wipers. In the same way, I'm thinking that when we as a state create a corporate entity, can we bestow on it certain aspects of powers, what it can do, can we not just withhold a certain aspect of that corporation? So it's not like they have windshield wipers and we're saying you cannot use windshield wipers. They just don't have windshield wipers.

I think that's kind of the, the point of this bill, which to me, I mean, do we, do. Do we need to give it windshield wipers? You know, I don't think that's a constitutionally protected thing to bestow upon a corporation, the power to spend money however. It feels like it's, you know, we, we don't. Right? They. They can't. Anyway, so I, I, I guess that's the. That's sort of where my, my thinking is going, but I'd love your thoughts on it.

Oh, two things come to mind. One is the Citizens United decision or another decision, but it raised the scenario of what if, for example, someone wants to create a nonprofit that solely engages in political speech. Yeah. Are we just barring that? Are we barring because there's different types of business entities and corporations.

What if someone wants someone wants to do something just purely political? Then you're just prevent, preventing them from being able to exist in the first place. The

Yep.

The other is. Sorry, I lost my train of thought.

If someone wants to create a corporation solely for the purposes of gambling, which is illegal here, we wouldn't allow that either. Right? So, I mean.

Right. But that's illegal. So.

Right. So if we make this illegal, I think.

Right. But that would require making political speech illegal, which is in itself unconstitutional.

Good point. This is good. Yeah. Process of it. Yeah. It's I mean, it again, it's kinda natural person. You know, when, when a natural person is born, you know, they get all the rights that they're, they're due. When we're creating, like, a more of a machine, which is what I consider a corporation, then feel like we can choose not to give it certain aspects.

Yeah. But, you know, a corporation is at least in Citizens United. It was talking about how it's treated as an association of persons. So, you know, I think there is a certain degree of concern that how much, how many of, how much of an individual's rights do you wanna let it carry over into? Let scotus chime in on that.

Yeah. That makes sense. Okay. Thank you. Just Yeah. Well Go ahead.

Can you. I, I feel like since I've come into office, we've been sued by the Federal Government many times. And even just, we're earlier talking about the climate lawsuit, which the DOJ sued us to try to prevent us from filing that. So, can you explain, for my own education and for the public, like, maybe some of the calculus that goes into deciding when we're willing to take that risk and when we're not.

Well, I think a starting point would be making sure that we're comfortable that a law is constitutional or a valid cause of action if we're going on the offense that exists, we are, we do take our physical responsibility very seriously. So if we don't think it's gonna work, you know, then we're just wasting taxpayer funds.

Okay. You mentioned that it would be hard to make political speeches illegal, but can we just make my opponent's political speeches illegal?

Please don't.

Your points are pretty valid. Thank you.

Is there a question? Okay.

I have one more question about, a, like, volume of speech, for instance. And I'm wondering if because Hawaii has a privacy clause, which, you know, we can extend greater. Right? So the state can extend greater protections to residents than the, than what the US constitution offers. So if we were to say something about, for instance, if two people are out on the sidewalk, both protesting different sides of an issue, and one person can purchase a, a sound system that goes really beyond what's allowed by the Department of Health.

For instance, just because it is political speech doesn't mean that they get to take up all the space in the airwaves. There would be a cap. There would be some kind of state imposed regulation about the decibels that they can reach, that we would enforce. And then also so that's one example of when two people are both trying to get a, a message across on a sidewalk, but we would defend the Department of Health saying you're violating the decibel requirements. Right?

So just because it's political speech, that doesn't mean it has carpalnton going in any direction. And I wonder if, similarly, if it's a newspaper ad, for instance, and, you know, one person can only afford, like, a little piece of of the paper, another person could afford to go 36 font and take up all of the paper, leaving just one piece. I'm just wondering if part of privacy and incorporated with first amendment rights, if there's any way that we could see making sure that there's equal access, equitability to be heard. Because what is the point of speech unless you're heard and if you're drowned out by somebody's giant PA system, you're not gonna be heard. So in fact, it would seem like the state should protect the fact that everyone's voices are heard and not let the biggest boombox in the room silence, basically drown out the other, you know, perspectives in political speech.

I don't know. Is there anything there that the AG would step in on to say, yeah. That's not okay.

Unfortunately, with the way Citizens United is written, you know, federal courts do seem to favor corporations and individuals with more. So the underlying tone of that decision seems to be don't, you know, don't step down on this bridge me just because they have one.

But our supreme. Our State Supreme Court could say privacy extends to the distinguished distinguishing between a human person and something else. Could our Supreme Court get to that if they wanted to?

I think that goes back to your original point about how the state can grant more rights, but not less rights than The US constitution. So in that instance, you know, if we're playing placing restrictions on someone that is potentially diminishing someone else's rights, if that makes sense. So, you know, there's different tracks to this. Right? Because under the first amendment, there's content based discrimination, which is subject to strict scrutiny, and then you have you don't have due time, place, and manner restrictions.

As long as it's content neutral, it's subject to a lesser scrutiny. But, yeah, there are still safe parts. The first amendment juris, prudence is kind of a primary and also a mind field at the same time. So I, I'm not trying to say outright no, but, you know, because I think, ultimately, I think the deal just depends on how the legislation and the policy is written. But there are, I think what I'm just trying to point out, is that there are pitfalls.

I have one more question. Sorry. We heard from CAB that there were several there are several other states considering, like, similar legislation. If those states were to pass this and it became more of a movement across the country and we had sort of the weight of other states and other AGs thrown behind an approach like this, would that change how you think of their-

Possibly. You know, I think that's our biggest concern. This is untested. Traditionally, it's at least in my, from my experience, it seems that the state takes a more conservative legal approach and that we let the bigger states with more resources to fight out these unexplored issues, and then we follow suit just so that we can conserve our resources. So it, it was a bit just alarming to see this bill go so far compared to other states when no one's spread this before.

Thank you.

Is there any other questions? We have recess. Recess.

Alright. Reconvening for decision-making. First up on our agenda is SD 1166 SD2 relating to insurance. Chair's recommendation is to, we got a lot of a lot of stuff here. Alright. Buckle up. First, we're gonna adopt DCCA's proposed amendment to remove language on page 22, lines eight to 2-11 to avoid statutory duplication.

On the blank on page 11, line six, we're gonna add the year 1950. In the committee reports, through the discussion through, this committee hearing, I don't want to necessarily touch HRS 663- 10 yet. But in the committee report, we are gonna be adding some analysis on whether we need to adjust that statute in order to better allow subrogation claims by insurance companies. We'll be deleting the individual's private right of action and restricting this bill to just insurance companies per the AG's testimony. It's just inconsistent with the bill title, and I don't wanna get an institutional challenge based on that.

Redefecting the dates. Okay. So I, I wanna add a provision to for the purposes of this bill, define damages as insurance company payouts for climate-related damages to their insured to give them standing for these damages. I'm not really convinced that they, they can have standing to do this under this bill because the damages are someone else's. So we'll be putting language in for that too.

Hopefully, that will hopefully, the next committee will get good testimony on that as well to see if it'll stand. Members, any comments? K. Vice chair for the vote.

Aye.

Representative Ichiyama?

Aye.

Aye.

Aye.

Representative Iwamoto?

Aye.

Representative Ilagan?

Okay. Moving on SB 1166, SB 2. Chair's recommendation is to pass with amendments. Chair and vice chair chair and vice chair vote aye. Representative Chun?

Aye.

Representative Kong?

Representative Lowen?

Representative Tam?

Aye.

Representative Marten?

Aye.

No.

Representative Pierick?

No. Okay. Chair, your recommendation is adopted.

Thank you, members. Moving on to SB 888 SD 2 relating to consumer protection. Chair's recommendation is to add language similar to the Illinois law, send it to an OCP's testimony for law enforcement abuse involving clear and present danger of imminent death or great bodily harm. We may need to tweak the language slightly just for terms of art, but that's the general concept. On page two, lines four through six, we'll be deleting language regarding the UDAAP claims.

It's unnecessary. It's already in the UDAAP section. Page two, lines seven through 14 for the penalty provisions, again, deleting to allow only recovery under UDAAP. Page two, subsection E, I wanna make it clear that a consumer may not bring an action. UDAAP allows consumers to as well, but this is not meant for that. And redefining the date. Members, any comments? The vice chair for the vote.

Voting on SB 888 SD 2, Chair's recommendation is to pass with amendments. Are there any reservations? Any no's? Chair your recommendation is adopted.

Moving on to SB 2387 SD one relating to digital financial asset transaction kiosks. Chair's recommendation is to add a provision for first time customers, which are in the first seven days that they cannot purchase any crypto during the seven day period. We're gonna add a provision for wallet pinning, which is allowing only one digital wallet per customer. So someone who goes to that kiosk cannot transfer money to someone else's wallet, which is a big fraud thing. I do wanna adopt the State Council on Developmental Disabilities proposed amendment.

Redefect the date, and I want to put a provision in this bill to have a total ban on purchasing crypto through these kiosks by the year 2030. Members, any comments?

I'll comment. No. I respect the, you know, the chair's decision and value perspectives of the numbers of this committee, but I think when we start banning the transaction of cryptocurrency of $2,000 per day, or not transactions, but taking the money out of ATM or putting it in, I don't know if that's a good idea.

So just to be clear, this bill does not ban purchasing a crypto. It's just the use of these kiosks these crypto kiosks.

So, like, you can't deposit or take out?

You can take out as much as you want. It's just the purchasing of so deposit is a funny word. It's not really a a deposit. It's it's a purchase of crypto through these these kiosks. Sure. Yep. Sorry. Did you have something?

Were you done Rep.

Oh, was that? So did you complete your comments? I'm done. Okay. Thank you.

Thank you. I just wanted to disclose a potential personal substantial direct financial conflict of interest because I do own shares in a Bitcoin ETF.

Okay. It's a general class, so shares really is that there is no conflict here. And that's also it doesn't have anything to do really with crypto. It's more of the kiosk thing.

Sure. Yep.

Wasn't the whole intention of this was seniors were misinformed and they were trying to do some abuses with seniors where they were purchasing a bunch of crypto. So what this does is it limits the amount that you can purchase. So it gives the seniors the ability to pause their investment so they're not putting their whole savings into crypto, but gives them a a delay because of that limitation to think about what they're really investing into. Wasn't that the intention?

So there is gonna be a a delay. That's the first time user seven day window. There's also a refund, as the testifiers pointed out of ninety days if they decide if they realize they've been defrauded, they can call the crypto ATM, get a full refund, not just with the fees, but also of the transaction amount. And then a daily limit as set forth in the bill as well. So they can't just put a million dollars in there.

They're gonna be counted as well. Any other comments, members? Okay. Vice chair for the vote.

Thank you.

Voting on SB 2387 SD one. Chair's recommendation is to pass with amendments. Any reservations? Any no's? Chair, your recommendation is adopted. Okay.

Thank you, members. Moving on to our favorite bill, SB 2471 SD 2 relating to the power of artificial persons. I think we had a really good, robust discussion on this bill. I am leaning towards passing it, but because it's a double referral, I want to give it a little more thought. So we'll be deferring this measure. We'll be taking it up on a subsequent agenda, though. We've got a little bit of time for this. So, deferring this for now. Alright. Thank you, members.

We are adjourned.