Legislature(2017 - 2018)GRUENBERG 120

03/28/2017 10:00 AM FISHERIES

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Audio Topic
10:02:53 AM Start
10:03:46 AM Confirmation Hearings(s):|| Fishermen's Fund & Appeals Council
10:09:06 AM Alaska Board of Fisheries (bof)
11:25:55 AM HCR8
11:34:06 AM HB76
12:10:05 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+ Confirmation Hearings: TELECONFERENCED
- Board of Fisheries
- Fishermen's Fund Advisory Panel
*+ HCR 8 KODIAK SEAFOOD & MARINE SCIENCE CENTER TELECONFERENCED
Moved HCR 8 Out of Committee
-- Public Testimony --
+= HB 76 MARICULTURE REVOLVING LOAN FUND TELECONFERENCED
Moved CSHB 76(FSH) Out of Committee
+= HB 128 SHELLFISH ENHANCE. PROJECTS; HATCHERIES TELECONFERENCED
Scheduled but Not Heard
*+ HJR 9 CANADIAN MINES ON TRANSBOUNDARY RIVERS TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
             HB 76-MARICULTURE REVOLVING LOAN FUND                                                                          
                                                                                                                                
11:34:06 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES announced  that the next order of  business would be                                                               
HOUSE BILL NO. 76, "An  Act relating to the mariculture revolving                                                               
loan  fund  and  loans  from  the  fund;  and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
11:34:37 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FANSLER moved  to  adopt  the proposed  committee                                                               
substitute  (CS)   for  HB  76,  Version   30-ls0343\T,  Bullard,                                                               
3/14/17, as the working document.                                                                                               
                                                                                                                                
11:34:51 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES objected for discussion.                                                                                           
                                                                                                                                
11:35:06 AM                                                                                                                   
                                                                                                                                
ELIZABETH BOLLING, Staff, Representative  Dan Ortiz, Alaska State                                                               
Legislature, said there  are five changes proposed  in Version T.                                                               
Referring to the committee  packet document labeled, "Explanation                                                               
of  Changes  from  HB0076  to HB0076  CS,"  she  paraphrased  the                                                               
changes,  which read  as follows  [original punctuation  provided                                                               
with slight modification]:                                                                                                      
                                                                                                                                
     Section 3                                                                                                                
                                                                                                                                
       AS 16.10.900(d) divides the fund into two critical                                                                       
     purposes, and ensures the revolving nature of one side                                                                     
     does not depend or detract from the other over time.                                                                       
                                                                                                                                
     Section 4                                                                                                                
                                                                                                                                
      AS 16.10.905 limits grants as one-time grants to non-                                                                     
     profit organizations.                                                                                                      
                                                                                                                                
     Section 5                                                                                                                
                                                                                                                                
      AS 16.10.905(b) caps the total amount available for                                                                       
     grants at [$500,000].                                                                                                      
                                                                                                                                
     Section 8                                                                                                                
                                                                                                                                
      AS 16.10915(4) allows the department to secure loans                                                                      
     by a first priority lien on collateral.                                                                                    
                                                                                                                                
     Section 13                                                                                                               
                                                                                                                                
       AS 16.10.920 will ensure individual farmers accrue                                                                       
     interest.                                                                                                                  
                                                                                                                                
11:36:27 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES  removed her objection.   Without further objection,                                                               
Version T was before the committee.                                                                                             
                                                                                                                                
11:36:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  noted that the proposed  change in Section                                                               
3,  allows the  entire fund  balance  to be  available for  loans                                                               
versus a percentage of the balance.                                                                                             
                                                                                                                                
MS.  BOLLING responded  that the  change adds  a new  subsection,                                                               
(d), and  said, "The  fund was not  previously split  60/40, this                                                               
bill splits it 60/40."                                                                                                          
                                                                                                                                
REPRESENTATIVE NEUMAN stated his  understanding that the fund has                                                               
been described as  allowing 40 percent, of  the $500,000 balance,                                                               
to be loaned.                                                                                                                   
                                                                                                                                
11:38:39 AM                                                                                                                   
                                                                                                                                
BRITTENY   CIONI-HAYWOOD,   Director,    Division   of   Economic                                                               
Development,  Department   of  Commerce,  Community   &  Economic                                                               
Development (DCCED), explained  that the fund, up  to this point,                                                               
has  been  fully  available for  use  by  individual  mariculture                                                               
farmers.    The  bill  seeks  to make  40  percent  of  the  fund                                                               
available  for hatchery  and salmon  enhancement  projects.   The                                                               
remaining  60   percent  will  remain  available   to  individual                                                               
farmers.                                                                                                                        
                                                                                                                                
REPRESENTATIVE NEUMAN referred to  the previously adopted Version                                                               
R, Section 10, and paraphrased the language, which read:                                                                        
                                                                                                                                
     (e)  The total  balances outstanding  on loans  made to                                                                    
     borrowers under  AS 16.10.910(a)(2)  may not  exceed 40                                                                    
     percent of  the principal of the  mariculture revolving                                                                    
     loan fund.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  NEUMAN noted  that in  the previous  bill hearing                                                               
the loan totals and balances  available were discussed.  He said,                                                               
"If I remember right, there was  $5 million out, there was a loan                                                               
out  for $500,000,  left  $450;  60 percent  of  it  would be  $2                                                               
million   available,   [leaving]   one   half   million   dollars                                                               
available."                                                                                                                     
                                                                                                                                
MS.  CIONI-HAYWOOD  offered  that  the percentage  split  in  the                                                               
previous  version was  for making  loans to  hatcheries; however,                                                               
concerns  were  expressed and  the  percentages  were changed  to                                                               
accommodate individual  farmers.  She clarified  that the grants,                                                               
"which is the  'up to $500,000' piece" will be  coming out of the                                                               
$400,000 and  the remaining of  the 40  percent can then  be used                                                               
for loans  to hatcheries.  The  remaining 60 percent is  then set                                                               
aside for use by individual farmers.                                                                                            
                                                                                                                                
REPRESENTATIVE NEUMAN  asked whether  loan defaults  would affect                                                               
the fund.                                                                                                                       
                                                                                                                                
MS.  CIONI-HAYWOOD answered  that a  small  amount is  held in  a                                                               
foreclosure reserve, currently $50,000.   As additional loans are                                                               
made,  she  said the  amount  could  be increased  appropriately.                                                               
However,  60  percent of  the  fund  would remain  available  for                                                               
loans.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  NEUMAN questioned  whether  there  is a  standard                                                               
practice to loan out the entire corpus of the revolving fund.                                                                   
                                                                                                                                
MS.  CIONI-HAYWOOD  said  that  such a  situation  has  not  been                                                               
encountered, in her experience.                                                                                                 
                                                                                                                                
11:43:00 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FANSLER  referred to Version  D, Sec. 7,  pages 3,                                                               
line 31, continuing to page 4, lines 1 and 2, which read:                                                                       
                                                                                                                                
     (e) The total of balances  outstanding on loans made to                                                                    
     borrowers under  AS 16.10.910(a)(2)  may not  exceed 40                                                                    
     percent of  the principal of the  mariculture revolving                                                                    
     loan fund.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  FANSLER asked  whether this  subparagraph can  be                                                               
tracked in Version T.                                                                                                           
                                                                                                                                
MS. CIONI-HAYWOOD  said that as  the loan fund is  currently only                                                               
available  to  mariculture farmers,  the  bill  seeks to  support                                                               
hatcheries,  as  well.   The  language  of  the 40/60  split  has                                                               
vacillated between bill versions.   However, Version T stipulates                                                               
that 60 percent of the fund  will be available to farmers, and 40                                                               
percent to hatcheries.                                                                                                          
                                                                                                                                
REPRESENTATIVE  FANSLER  suggested  the  loan  figures  might  be                                                               
better established  in "bright line" numbers  versus a percentage                                                               
split,  and  asked  if  there  is a  prevailing  reason  for  the                                                               
approach being proposed.                                                                                                        
                                                                                                                                
MS. BOLLING responded that legal  consultation suggested it would                                                               
be more reliable, and offer  protection to individual farmers, to                                                               
"simply  split the  fund,  in time,  from one  date."   She  said                                                               
that's what is proposed in the CS.                                                                                              
                                                                                                                                
11:46:36 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN  asked what  is the longest  deferral time                                                               
allowed prior to repayment beginning.                                                                                           
                                                                                                                                
MS. CIONI-HAYWOOD answered that  individual farmers are currently                                                               
allowed  a six  year deferment,  which  remains the  same in  the                                                               
proposed CS.                                                                                                                    
                                                                                                                                
11:47:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  CHENAULT pointed  out  that  loan recipients  are                                                               
intended to be  Alaskans.  He asked whether all  of the fishermen                                                               
that  receive a  loan from  the program  will be  required to  be                                                               
Alaskan [residents].                                                                                                            
                                                                                                                                
MS. CIONI-HAYWOOD answered yes.                                                                                                 
                                                                                                                                
11:48:02 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN   asked  the   director  to   clarify  her                                                               
statement.   He said, "I  believe I heard  you say that  it's not                                                               
standard procedure to  take 100 percent of  these revolving loans                                                               
and have them available for loans."                                                                                             
                                                                                                                                
MS.  CIONI-HAYWOOD  explained  that  the fiduciary  duty  of  the                                                               
division  is to  maintain  the revolving  fund;  however, if  the                                                               
entire available amount were loaned,  the fund would be shut down                                                               
until payments  were received for recapitalization  and provide a                                                               
loanable cash balance.                                                                                                          
                                                                                                                                
REPRESENTATIVE  NEUMAN expressed  concern for  the fund  becoming                                                               
bankrupt.  He asked, "Standard  policy for revolving loans; is it                                                               
standard policy  to take 100  percent of  the amount of  the loan                                                               
and allow  that all out  for the  other revolving loans  that the                                                               
state handles."                                                                                                                 
                                                                                                                                
11:50:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE DAN ORTIZ, Alaska  State Legislature, offered that                                                               
the intent  of the bill  is to jump-start a  mariculture resource                                                               
that is projected to evolve into a $1 billion industry.                                                                         
                                                                                                                                
REPRESENTATIVE NEUMAN asked  if 100 percent of the  corpus of the                                                               
fund could be loaned out.                                                                                                       
                                                                                                                                
MS.  CIONI-HAYWOOD  restated  how  the  corpus  could  be  loaned                                                               
against.                                                                                                                        
                                                                                                                                
The committee took an at-ease from 11:53 a.m. to 11:54 a.m.                                                                     
                                                                                                                                
11:54:26 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN referred  to Version T, page  5, lines 26-                                                               
28, and read:                                                                                                                   
                                                                                                                                
     The department may defer principal of and interest on                                                                      
      a loan made under AS 16.10.910(a)(2) for a period of                                                                      
     up to 11 years after the loan is made.                                                                                     
                                                                                                                                
REPRESENTATIVE EASTMAN  noted that the addition  of this proposed                                                               
language will allow non-payment of a loan for 11 years.                                                                         
                                                                                                                                
MS. CIONI-HAYWOOD  replied that the hatcheries  are extended this                                                               
deferral period; however, the farmers are not.                                                                                  
                                                                                                                                
11:55:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN stated  his  understanding  that the  loan                                                               
fund  has $5  million  available and  hatcheries  are allowed  to                                                               
borrow up to $1 million.                                                                                                        
                                                                                                                                
MS. CIONI-HAYWOOD affirmed the member's understanding.                                                                          
                                                                                                                                
REPRESENTATIVE  NEUMAN   asked  how  many  applicants   might  be                                                               
anticipated.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ORTIZ  said  the  industry is  in  the  fledgling                                                               
state, making it difficult to  determine how many applicants will                                                               
come forward  should the bill  become law. He offered  that, from                                                               
anecdotal conversations,  two groups are currently  in a position                                                               
to make application.                                                                                                            
                                                                                                                                
REPRESENTATIVE NEUMAN  expressed concern  for the ability  of the                                                               
fund to be maintained if 60 percent is on loan.                                                                                 
                                                                                                                                
11:57:52 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN referred  to Version T, page  4, lines 12-                                                               
13, and paraphrased the language, which reads:                                                                                  
                                                                                                                                
        (B) $1,000,000 a year for an applicant under AS                                                                         
     16.10.910(a)(2);                                                                                                           
                                                                                                                                
REPRESENTATIVE   EASTMAN  asked   for  an   explanation  of   the                                                               
significance regarding the $1 million per year stipulation.                                                                     
                                                                                                                                
MS.  CIONI-HAYWOOD  said  the "per  year"  language  was  brought                                                               
forward from  the previous bill  version, and offered  to provide                                                               
further information on the significance.                                                                                        
                                                                                                                                
11:59:22 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN stated  concern  for the  number of  loans                                                               
that could be made available,  and asked what the long-range plan                                                               
is for continuing the funding corpus.                                                                                           
                                                                                                                                
REPRESENTATIVE ORTIZ  replied that the  intent is to  optimize an                                                               
underutilized,   available  fund,   and  jumpstart   the  budding                                                               
mariculture  industry.     He  expressed  appreciation   for  the                                                               
member's concerns  regarding the  solvency of the  fund; however,                                                               
it has an  excellent record of good,  solid management practices,                                                               
and has  grown over the years.   The concerns are  unmerited when                                                               
considering this solidly managed fund, he opined.                                                                               
                                                                                                                                
REPRESENTATIVE NEUMAN maintained  his concern regarding solvency,                                                               
stating,  "I've seen  a lot  of these  revolving loan  funds fail                                                               
because ... they've been overextended."                                                                                         
                                                                                                                                
REPRESENTATIVE  ORTIZ  responded,  "Not in  this  department  you                                                               
haven't."                                                                                                                       
                                                                                                                                
REPRESENTATIVE NEUMAN referred to Version  T, page 3, lines 8-10,                                                               
which read:                                                                                                                     
                                                                                                                                
     (9)  make   one-time  grants  for   organizational  and                                                                    
     planning purposes  to nonprofit  organizations eligible                                                                    
     for  loans  under  AS 16.10.190(a)(2)  in  amounts  not                                                                    
     exceeding $100,000.                                                                                                        
                                                                                                                                
REPRESENTATIVE NEUMAN  noted that  the authority falls  under the                                                               
purview of the  DEC commissioner, and asked what  the purpose and                                                               
parameters are for approving this type of loan.                                                                                 
                                                                                                                                
MS. CIONI-HAYWOOD  explained that  the language  reflects similar                                                               
allowances, similar  to what reside in  the fisheries enhancement                                                               
revolving  loan  fund, where  grants  were  extended to  regional                                                               
hatcheries for planning purposes.                                                                                               
                                                                                                                                
12:04:03 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EASTMAN stated  his understanding  that the  term                                                               
grant signifies  money that will not  be paid back and  asked how                                                               
grants might impact the 60-40 percentage split.                                                                                 
                                                                                                                                
MS. CIONI-HAYWOOD responded  that the grant amount  was capped at                                                               
$250,000 and is a draw from the 40 percent hatchery share.                                                                      
                                                                                                                                
12:04:55 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FANSLER commented  that, should  the fund  become                                                               
overextended,  the   legislature  could  choose   to  appropriate                                                               
additional funding, if mariculture proves to be successful.                                                                     
                                                                                                                                
MS.  CIONI-HAYWOOD agreed,  and said  the fisheries  enhancement,                                                               
revolving loan fund, was capitalized on numerous occasions.                                                                     
                                                                                                                                
12:05:38 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN  said he  had  further  questions for  the                                                               
director, and sought permission to proceed.                                                                                     
                                                                                                                                
CHAIR  STUTES  approved  the  member's   request,  based  on  the                                                               
questions being "new."                                                                                                          
                                                                                                                                
12:06:34 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN   inquired  about   the  balance   of  the                                                               
fisheries  enhancement revolving  loan  fund,  noting that  funds                                                               
with grant authority generally have a larger corpus.                                                                            
                                                                                                                                
MS.  CIONI-HAYWOOD  responded   that  the  fisheries  enhancement                                                               
revolving fund has about $100 million, as a balance.                                                                            
                                                                                                                                
REPRESENTATIVE NEUMAN said that  is a substantial amount compared                                                               
to the  $5 million  proposed for  the mariculture  revolving loan                                                               
fund balance.                                                                                                                   
                                                                                                                                
12:08:19 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EASTMAN  commented  that  using  a  general  fund                                                               
appropriation to  address a shortfall  in the fund  balance could                                                               
present a budgetary problem.                                                                                                    
                                                                                                                                
12:08:45 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FANSLER  moved to  report the  proposed CS  for HB                                                               
76, Version  30-LS0343\T, Bullard,  3/14/17, from  committee with                                                               
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN objected.                                                                                                
                                                                                                                                
12:10:05 PM                                                                                                                   
                                                                                                                                
A roll  call vote  was taken.   Representatives  Fansler, Neuman,                                                               
Kreiss-Tomkins, Tarr, and Stutes voted  in favor of the motion to                                                               
move HB 76 from committee.   Representatives Eastman and Chenault                                                               
voted against  it.  Therefore,  CSHB 76(FSH) was reported  out of                                                               
the House Special Committee on Fisheries by a vote of 5-2.                                                                      

Document Name Date/Time Subjects
Resume - Clay Bezenek.pdf HFSH 3/28/2017 10:00:00 AM
Fishermens Fund Appointment
Resume - John Jensen.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
Resume - Frederick (Fritz) Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
Resume - Reed Morisky.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
ASA Support - Jensen Morisky Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
Icicle Support - Jensen Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
Bristol Bay Borough Support - Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
KRSA Support - Jensen Morisky Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
CDFU Support - Jensen.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
SAFA Support - Bezenek.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries Appointment
KPFA Support - Jensen Morisky Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries
Unalaska Mayor Support - Jensen Morisky Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries
HCR008A Sponsor Statement 3.10.17.PDF HFSH 3/28/2017 10:00:00 AM
HCR 8
HCR008 ver A 3.1.17.pdf HFSH 3/28/2017 10:00:00 AM
HCR 8
HCR008 Fiscal Note LEG-SESS 3.13.17.pdf HFSH 3/28/2017 10:00:00 AM
HCR 8
HCR008 Fiscal Note LEG-SESS-03-10-17.pdf HFSH 3/28/2017 10:00:00 AM
HCR 8
HCR008A Supporting Document- Leg Research FITC 12.2.16.pdf HFSH 3/28/2017 10:00:00 AM
HCR 8
HCR008A Supporting Document - KSMSC Budget.PDF HFSH 3/28/2017 10:00:00 AM
HCR 8
HCR008A Supporting Document - APICDA 12.10.15.pdf HFSH 3/28/2017 10:00:00 AM
HCR 8
HCR008A Supporting Document - AML 11.5.15.pdf HFSH 3/28/2017 10:00:00 AM
HCR 8
HB128 Supporting Document-Ketchikan Gateway Borough.pdf HFSH 3/28/2017 10:00:00 AM
HB 128
HB128 Supporting Document - Adkinson Comments.pdf HFSH 3/28/2017 10:00:00 AM
HB 128
HB128 Supporting Document-Ketchikan Gateway Borough.pdf HFSH 3/28/2017 10:00:00 AM
HB 128
HB128 Supporting Document - Adkinson Comments.pdf HFSH 3/28/2017 10:00:00 AM
HB 128
ATA Support - Jensen.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries
KPFA Support - Jensen Morisky Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries
Unalaska Mayor Support - Jensen Morisky Johnson.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries
USAG Support - Jensen.pdf HFSH 3/28/2017 10:00:00 AM
Board of Fisheries
UFA support Jensen and Johnson for BOF 032817.pdf HFSH 3/28/2017 10:00:00 AM
Bristol Bay Native Assoc Comments BOF.pdf HFSH 3/28/2017 10:00:00 AM