Legislature(2001 - 2002)
04/11/2002 08:48 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.