03/30/1993 08:40 AM House FIN

  HB 123    An  Act  relating  to loans  for  the  purchase of                 
            individual fishery quota shares.                                   
                                                                               
            CS HB 123 (FSH) was reported out of Committee with                 
            a "do pass" recommendation and  with a fiscal note                 
            by  the   Department  of  Commerce   and  Economic                 
            Development dated 3/05/93.                                         
  HOUSE BILL 123                                                               
                                                                               
       "An  Act  relating   to  loans  for  the   purchase  of                 
       individual fishery quota shares."                                       
                                                                               
  REPRESENTATIVE FRAN ULMER  introduced a new loan  program to                 
  help  Alaska fishermen  living in  the coastal  communities.                 
  The U.S. Secretary of Commerce recently approved  individual                 
  Fishery  Quotas  (IFQ's)  for  the  halibut  and  black  cod                 
  fisheries in Alaska.  If all   goes as planned, by mid-1994,                 
  these fisheries will no longer be open to all those who want                 
  to "wet a line".  Instead, a new permit system will  reserve                 
  catch quotas  for individual  fishermen who  qualify for  an                 
  IFQ.   Gone  will be  the 24  hour openings,  replaced  by a                 
  season which may last from March  through November.  The new                 
  system is  promoted as  a solution  to dangerous  conditions                 
  created by derby style fishing.                                              
                                                                               
  HB 123 provides  financing for the  purchase of IFQ's.   The                 
  legislation authorizes loans of up  to $300 thousand dollars                 
  for IFQ's to Alaska residents who have actively participated                 
  in the  fishery during three  of the last  five years.   She                 
  noted  that  the State  currently  finances the  purchase of                 
  limited entry  permits through  a revolving  loan fund  with                 
  loans of up to  $300 thousand dollars.  The  new legislation                 
  will expand the loan program to include IFQ's.                               
                                                                               
  ERIC FORRER, SELF,  JUNEAU, ALASKA, spoke  in support of  HB
                                              
                                                                               
                                                                               
  123.  He  added that the IFQ  program would be good  for the                 
  Alaskan  coastal  communities  and  it  would allow  Alaskan                 
  fishermen to retain the quota share  which they were given.                  
                                                                               
                                                                               
  PAUL FUHS, COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC                 
  DEVELOPMENT, spoke in  support of the  legislation.  HB  123                 
  amends the Commercial Fishing Loan  Program to allow Alaskan                 
  residents to  finance  the purchase  of  individual  fishery                 
  quota shares.  In order to be eligible, an applicant must:                   
                                                                               
       1.   Have been a two-year resident;                                     
                                                                               
       2.   Have  had  a  crew  member or  commercial  fishing                 
            license  for the  year  immediately preceding  the                 
            date of application and any other  two of the past                 
            five years;                                                        
                                                                               
       3.   Have  actively  participated  in  the fishery  for                 
            which the shares  are issued  during three of  the                 
            last five years;                                                   
                                                                               
       4.   Qualify as a transferee under applicable law.                      
                                                                               
  HB 123 also  allows the Department to  prequalify applicants                 
  for the  purchase  of  fishery  quota shares.    Under  this                 
  portion of  the program,  an applicant can  obtain a  60-day                 
  commitment to finance fishery quota shares prior to locating                 
  the  specific  shares  to  be purchased.    The  bill  would                 
  establish a $300  thousand dollars  ceiling that a  borrower                 
  can have outstanding at any point used in purchasing fishery                 
  quota shares.                                                                
                                                                               
  KELLEY  SHARP,  LOAN   MANAGER,  DIVISION  OF   INVESTMENTS,                 
  DEPARTMENT OF COMMERCE AND ECONOMIC  DEVELOPMENT, noted that                 
  the  Division  of  Investments  will  be  administering  the                 
  legislation  if  it  is  passed.     The  legislation  would                 
  represent  an  expansion   of  the  program  to   promote  a                 
  predominately resident fishery.   There  is a fiscal  impact                 
  with the legislation.                                                        
                                                                               
  JAY GINTER, U.S. DEPARTMENT OF  COMMERCE, NOAA/NMFS, JUNEAU,                 
  ALASKA, stated that  the National Marine Fishery  Service is                 
  neutral on the legislation.  He  noted that the Secretary of                 
  Commerce  did approve  the IFQ  program  for sable  fish and                 
  halibut,  but  added  that  the   IFQ  program  is  complex.                 
  Representative  Hanley questioned  if  the  quotas would  be                 
  "lien-able".  Mr. Ginter thought they would.                                 
                                                                               
  JERRY  MCCUNE,   PRESIDENT,  UNITED  FISHERMEN   OF  ALASKA,                 
  CORDOVA, ALASKA, pointed  out that  the United Fishermen  of                 
  Alaska support  the proposed  legislation as  it will  allow                 
                                                                               
                                4                                              
                                                                               
                                                                               
  Alaskans a chance  to be a  part of a  future with a  larger                 
  vision fishing program.                                                      
                                                                               
  LINDA,   BEHNKEN,   E.D.,   ALASKA    LONGLINE   FISHERMEN'S                 
  ASSOCIATION, SITKA, ALASKA, (testified  via teleconference),                 
  spoke in support of the legislation.   [Attachment #1].  She                 
  noted that the  legislation would provide opportunities  for                 
  the entire State.                                                            
                                                                               
  (Tape Change, HFC 93-82, Side 1).                                            
                                                                               
  Representative Hanley  expressed his concern with  the State                 
  becoming involved  in assuming  bank interest  on the  quota                 
  shares.    In  particular, with  the  concept  of  the State                 
  lending to  those persons  who can  not qualify  for a  bank                 
  loan.   Representative Ulmer  stressed that  the funds  will                 
  only be lent  to the "small guys" who would  not have enough                 
  collateral  to receive a  loan from a bank.   She added that                 
  once the  IFQ is  purchased, at  that time  they would  then                 
  become eligible to qualify for the CDQ program.                              
                                                                               
  Representative Parnell questioned the residency requirements                 
  to participate in the program.   Representative Ulmer stated                 
  it would be two years, the same as the existing permits.                     
                                                                               
  Representative Therriault  strongly urged  the State  not to                 
  become involved in  the "banking" business.   Representative                 
  Ulmer stressed that  if the legislation  is not passed,  the                 
  small  fishermen in  Alaska will  become locked  out of  the                 
  fisheries which will  be bought  out by larger  out-of-state                 
  groups, particularly in  the black cod and  halibut fishery.                 
  Commissioner Fuhs warned  that sixty percent of  the current                 
  shares will change  hands if the legislation  does not pass.                 
  He  emphasized  that this  fishery  will greatly  impair the                 
  coastal communities in Alaska.  The legislation is important                 
  as it will lower the price of limited entry.                                 
                                                                               
  Representative Hanley asked  the balance  of the loan  fund.                 
  Commissioner  Fuhs  stated  amount  is  $5  million dollars.                 
  Representative  Parnell  questioned the  anticipated default                 
  rate of the  proposed loans.   Commissioner Fuhs  reiterated                 
  that these loans will  be secured.  He was  assured that the                 
  quotas  will  be  met.    Representative Hanley  voiced  his                 
  concern that the Division of Investments has not developed a                 
  relationship  between  the  supply and  the  demand  of such                 
  proposed legislation.                                                        
                                                                               
  Representative Foster MOVED to report CS HB 123 (FSH) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal  note.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
  CS HB 123  (FSH) was reported  out of  Committee with a  "do                 
  pass"  recommendation  and   with  a  fiscal  note   by  the                 
  Department  of  Commerce   and  Economic  Development  dated                 
  3/05/93.