Legislature(2001 - 2002)

04/11/2002 08:48 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 287                                                                                                            
     "An Act relating to the exemption  of commercial fishing                                                                   
     entry  permits from  claims  of creditors,  to loans  to                                                                   
     satisfy past  due federal tax obligations  of commercial                                                                   
     fishing  entry permit holders,  and to loan  origination                                                                   
     charges for  loans made by  the commercial  fishing loan                                                                   
     program  to refinance a  debt obligation; and  providing                                                                   
     for an effective date."                                                                                                    
REPRESENTATIVE DREW SCALZI, SPONSOR,  spoke in support of the                                                                   
legislation.  He  noted  that   recent  developments  in  law                                                                   
require a  clear statement of  the principle embodied  in the                                                                   
original  Limited Entry  Act to  clarify  that limited  entry                                                                   
permits are not property subject  to the claims of creditors.                                                                   
The long-term  crisis facing the  Alaska salmon  industry due                                                                   
to  dramatic increases  in  world salmon  production  coupled                                                                   
with equally dramatic  reductions in salmon  prices make this                                                                   
principle  all the more  important. If  Alaska fishermen  are                                                                   
forced out of the water because  creditors take their limited                                                                   
fishing privileges, everyone in Alaska loses.                                                                                   
Representative  Scalzi observed  that the  bill would  extend                                                                   
the  existing  tax obligation  loan  program  portion of  the                                                                   
commercial  fishing loan  program, now  scheduled to  sunset.                                                                   
The bill also continues the Division  of Investments existing                                                                   
loan  program for  satisfying  past due  tax obligations.  It                                                                   
keeps the same limit of $30,000,  but allows an individual to                                                                   
apply for  a secured  loan under the  program more  than once                                                                   
and removes  the one-half percent  refinancing fee.  The bill                                                                   
does  not alter  any  current  claim exemptions,  but  simply                                                                   
strengthens and clarifies the exemptions.                                                                                       
Representative Scalzi  referred to page 7, section  5(e): "An                                                                   
entry permit is  not property; an entry permit  constitutes a                                                                   
use  privilege  that  may  be  modified  or  revoked  by  the                                                                   
legislature   without    compensation."   He    noted   that,                                                                   
"commercial  fishing privileges  granted under this  chapter,                                                                   
including   entry  permits,   are  exempt   from  claims   of                                                                   
creditors,  including  claims   under  AS  09.38.065  and  AS                                                                   
45.29.408." The provision  in section 7 pertains  only to the                                                                   
Commercial  Fisheries  and  Agricultural  Bank,  Division  of                                                                   
Commercial Fishing Loans and the Child Support Division.                                                                        
In  response to  a question  by  Representative John  Davies,                                                                   
Representative  Scalzi clarified  that  the legislation  does                                                                   
not  change the  status  of  limited entry  permits.  Permits                                                                   
would   still  be   purchased   or  sold.   The   legislation                                                                   
strengthens  the state's  position that  the permits  are not                                                                   
property. Federal  legislation by Senator Stevens  would have                                                                   
the same affect on the federal level if adopted.                                                                                
Representative  John   Davies  questioned  if   the  Internal                                                                   
Revenue Service  would be impressed  by the argument  that it                                                                   
is  not property  if permits  are still  being purchased  and                                                                   
sold.  Representative   Scalzi  noted  that   the  Commercial                                                                   
Fisheries Entry  Commission suggested the language.  He noted                                                                   
that  the  federal  government  has tried  to  seize  Alaskan                                                                   
permits without  success. While the federal  government could                                                                   
seize a  permit they could  not obtain  any value out  of the                                                                   
seizure  since  the  state of  Alaska  retains  the  transfer                                                                   
Vice-Chair  Bunde  maintained  that  the  permits  amount  to                                                                   
property and  maintained that the  state of Alaska  would not                                                                   
take permits without compensation.                                                                                              
Representative Scalzi emphasized  that fishing privileges are                                                                   
harvest rights. It's in the state's  best interest to control                                                                   
the harvest capabilities of the  resource. The state wants to                                                                   
retain  control for  biological management.  If anyone  could                                                                   
seize the permits  it would take away the state's  ability to                                                                   
manage the fisheries.                                                                                                           
LEO S. BROWN, HOMER, testified  via teleconference in support                                                                   
of the  legislation. He spoke  in support of  the refinancing                                                                   
language, which  would allow fisherman  to take  advantage of                                                                   
low   interest   rates   without   refinancing   costs.   The                                                                   
legislation would  be a proactive step to help  people in the                                                                   
SUE ASPELUND,  CORDOVA FISHERMEN  UNITED, CORDOVA,  testified                                                                   
via  teleconference  in  support   of  the  legislation.  She                                                                   
maintained that  the fishing  industry needs the  protections                                                                   
contained in HB 287 in order to  survive in the unprecedented                                                                   
market and resource challenges.  Loss of a commercial fishing                                                                   
permit  strips  away the  permit  holder's primary  means  of                                                                   
making  a  living.  In  some areas  access  to  a  commercial                                                                   
fishery  may  be  the  only access  to  a  livelihood  for  a                                                                   
resident. She  spoke in support  of provisions  regarding the                                                                   
refinancing  fee.  The legislation  is  another  tool in  the                                                                   
fishermen's box to maximize flexibility  in their response to                                                                   
the economic crisis  that faces the industry.  The Commercial                                                                   
Fishing Revolving Loan program is critical to fishermen.                                                                        
KATHY HANSEN,  SOUTHEAST ALASKA FISHERMEN'S  ALLIANCE, JUNEAU                                                                   
noted that the Alliance supports the legislation.                                                                               
Co-Chair  Mulder  provided members  with  proposed  committee                                                                   
substitute, work draft 22-LS1106\O,  Utermohle, 4/10/02 (copy                                                                   
on   file).  He   explained  that   the  proposed   committee                                                                   
substitute  would retain  the exemption  of commercial  entry                                                                   
permits  from claims  and creditors.  The proposed  committee                                                                   
substitute   would  remove  provisions   pertaining   to  the                                                                   
refinance charges  and focus on the Division  of Investments.                                                                   
It would  require the  Division of  Investments to  adopt the                                                                   
same standards  offered  by SEAFAB. There  are currently  two                                                                   
state loan programs: SEAFAB and  the Division of Investments.                                                                   
He maintained  that there should be consistency  within state                                                                   
HB  287  was   heard  and  HELD  in  Committee   for  further                                                                   

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