North Dakota Bankers
Extraordinary Leadership for North Dakota Banks

March 27, 2023 - Update

March 27, 2023 - Update

Posted: Mar 27 2023

This Week at the Legislature

The legislature passed the 50-day mark this week. And the sentiment and activity around the capitol is evolving from jam-packed committee hearing schedules, to less committee hearings, more time on the house and senate floors, an emphasis on all things appropriations, and more and more attention being placed on the big, end-of-session topics, which remain to be income and property tax relief, public employee pension reform, and a blueprint for the state’s Legacy Fund. Many policy committees have actually completed the bill hearings, which means that there will be more focus on the work of the appropriations committees. We understand that conference committees—a bona fide sign that the end is near—will likely begin the week of April 3.

Hearings and Other Action Last Week (3.20.23 - 3.24.23)

SB 2210 – UTC and Individual Retirement Accounts
The House Industry, Business and Labor Committee heard SB 2210 Monday afternoon.  Introduced by Senator Jerry Klein, SB 2210 deals with the Uniform Trust Code (UTC) which provides a framework for state trust law to provide uniform treatment of trusts across the country.  Brad Kraft, Ascensus Trust, testified in support of the bill.  He explained that Sen Klein had sponsored the bill on their behalf.  He noted that North Dakota adopted the UTC in 2007 but explained that the legislature had excluded several trusts from the provisions of the UTC, most notably, trusts that are a part of employee benefit arrangements or individual retirement accounts.  The bill removes the retirement plan exclusion for these types of trusts.  Because of the exclusion, the current North Dakota Uniform Trust Code does not provide the clarity that banks and trust companies need regarding employee benefit arrangements and individual retirement accounts.  Kraft referred to NDBA’s Rick Clayburgh testimony in the Senate, explaining that NDBA was part of a working group that proposed to the UTC in 2007 and that there was no particular reason why these types of trusts were excluded.  DIF Commissioner Lise Kruse testified in a neutral position, providing background on trust companies in North Dakota.  There was no opposition, and the committee gave the bill a 13-0-1 Do Pass recommendation and on Wednesday, the full House passed it 92-0.  The bill is headed to the Governor’s office for his consideration.
HB 1487 – Relating to Financial Institutions use of Merchant Codes to Track Firearm Purchases
The Senate Judiciary Committee heard HB 1487 Wednesday morning. Rep. Ben Koppelman introduced the bill. He explained that gun sales can have a unique merchant code (MCC), which is based on an international standard.  He believes the state shouldn’t allow this tracking of individuals and firearm purchases which is an infringement on the 2nd Amendment.  He presented amendments to further amend the legislation as it came over from the House.  The amendments for the most part adopt MCC rules modeled after a recently passed legislation in the state of Mississippi.  The Mississippi rules were developed between the industry and the NRA.  The financial service industry is coalescing around this language in various states that have MCC legislation.  The amendments address Rep. Koppelman’s concerns regarding credit card companies possible ability to track customer purchases from gun retailers with a unique MCC.  The amendments also eliminate financial services industry by adopting more language with other states, and also eliminating a customers private right of action and the requirement that the Attorney General must investigate a claim.  Levi Andrist and Barry Haugen testified in support of amendments.  With the amendments, NDBA and ICBND are neutral on the bill.  The committee adopted the amendments 7-0, gave the bill a 7-0 Do pass recommendation and re-refered it to the Senate Appropriations Committee because of a fiscal note from the Attorney General’s office. 
HB 1082 – UCC Amendments Relating to Digital Assets - Update
As previously reported, the Senate passed HB 1082 by a 34-12-1 margin which sent the bill to the Governor for his signature.  Introduced at the request of the Commission on Uniform State Laws, HB 1082 address transactions largely involving emerging technologies, such as virtual (non-fiat) currencies, distributed ledger technologies, and, to a limited extent, artificial intelligence within the Uniform Commercial Code.  The Governor’s office began receiving calls to veto the bill because of the misunderstood effect of the bill.  Over the week, the Governor read the bill and reached out to several experts and determined the bill does not create a U.S. CBDC nor does it make cryptocurrency illegal as the opponents were claiming.  On Monday evening, the Governor signed the bill, which has now been filed with the Secretary of State.

Member Alert – Contact You House Member

We need your help!
SB 2266, credit union field of membership expansion, will be up for hearing this Wednesday, March 29,  in the House Industry Business and Labor Committee.  It’s time Legislators hear from bankers on our opposition to SB 2266.
Please contact your House Member and ask them to vote “NO” on SB 2266
Here is a link to the Representative contact information:
Talking Points Regarding SB 2266:
North Dakota’s current credit union field of membership law was enacted in 2005 and codified the 75-mile radius that had been adopted by the State Credit Union Board to remove ambiguity and provide clarity. The 2005 legislation established that a credit union could branch only within their field of membership. This provision was enacted to prohibit credit unions from using branching to leapfrog across the state to the detriment of smaller credit unions.
Credit Unions Have Been Growing
According to the state department of financial institutions, state credit union assets, loan activity and numbers of physical locations in North Dakota have grown somewhat more than those of state-chartered banks in recent years.
Current Field of Membership is Clear and Fair
The credit union lobby is arguing that North Dakota’s field of membership is the most restrictive in the country. However, during the committee hearing, the department of financial institutions confirmed current North Dakota law is clear and is not the most restrictive state law.
ND Citizens Already Have Access to Credit Unions
The credit union lobby believes they need expanded membership to ensure citizens’ financial needs are covered. The facts show that North Dakota citizens, border to border, have complete access to have their financial needs served. In every corner of the state, individual citizens have multiple choices to join a credit union. Across North Dakota, there are 19 State Chartered Credit Unions with 111 branches and there are 77 State and National Banks in ND with 392 branches in 175 communities.
Un-Level Playing Field
The credit unions have testified they support SB 2266 because it will allow them grow even bigger and compete better with banks. Credit unions acknowledge their income tax-free status and exclusion from bank regulations are an advantage they want to keep and expand without any leveling of the legal or regulatory playing field.
Bottom Line
  1. Banks are not afraid of competition – they want fair competition.
  2. CRA is one example of a federal law that applies to banks but not credit unions. Since banks must comply with costly regulations like CRA, maybe it is time to have credit unions comply with the same regulations to make sure they are serving their communities.
  3. Credit union income is not subject to either state or federal income taxes. All North Dakota bank income is fully subject to federal and state income taxation.
  4. Credit Unions: once a member, always a member! If a member of a credit union moves out of their credit union’s field of membership, they can still be a member and conduct business with that credit union. 
Please reach out to your House member and ask them to vote NO on SB 2266.  Here is a link to the Representative contact information:

Hearings This Week (3.27.23 - 3.31.23)

03/27/2023 09:00 AM   
HB 1267

Relating to the disposition of proceeds from tax lien foreclosures. 
Senate Finance and Taxation 

03/27/2023 09:30 AM   
HB 1225

Relating to an online tax portal for electronically accessible statewide property information and tax information. 
Senate Appropriations - Education and Environment Division 

03/28/2023 08:00 AM   
SB 2206

Relating to insurance cash value exemptions. 
House Industry, Business and Labor 

03/28/2023 10:00 AM   
HB 1487

Relating to financial entities use of merchant codes to track firearm and ammunition-related purchases; to provide a penalty; and to provide a continuing appropriation. 
NDBA Neutral
Senate Appropriations - Government Operations Division 
NDBA Priority 

03/29/2023 09:00 AM   
SB 2135

Relating to assignment of dental insurance benefits; and to provide for application. 
House Industry, Business and Labor 

03/29/2023 09:00 AM   
SB 2266

Relating to credit union membership. 
NDBA Opposed!
House Industry, Business and Labor 
NDBA Priority 

03/29/2023 10:00 AM   
HB 1360

Relating to the revised uniform unclaimed property act. 
Senate Judiciary 

03/29/2023 10:30 AM   
SB 2295

Relating to the unsatisfied judgment fund and the assigned risk plan; and to repeal chapter 26.1-23 of the North Dakota Century Code, relating to the unsatisfied judgment fund. 
House Industry, Business and Labor 

How to Contact Your Legislators

During a legislative session, a legislator can be reached at the State Capitol through: Otherwise, a legislator can be reached by mail, telephone or email at the address listed in the legislator’s biography, or one of the lists provided below. Individual legislator contact information is listed here:

Over the course of the session, NDBA may ask you to call your Senator or Representative to talk to them about a particular bill or to ask them to support or oppose a particular bill.

Legislator contacts from local bankers are extremely important, so, please, if we ask, contact your legislators!

Also, local legislative forums are great to attend because they inform you about issues beyond banking and let you get to know your legislators at home where they are most responsive to your interests and concerns.

Don’t be a stranger; get to know your representatives in Bismarck!

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