Legislature(2001 - 2002)
04/11/2002 08:48 AM FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ 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
rights.
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
industry.
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
policy.
HB 287 was heard and HELD in Committee for further
consideration.
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