Legislature(2001 - 2002)
05/10/2002 05:38 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 287(FIN) "An Act relating to the exemption of commercial fishing entry permits from claims of creditors and execution on an interest in a limited entry permit; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. PAT HARTLEY, staff to Representative Scalzi, testified that this legislation passed the House of Representatives unanimously. She read a statement into the record as follows. Since enactment of the limited entry program 28 years ago, the State always has held that limited entry permits are use privilege, not property, and cannot be seized by creditors. This legal status is an important element of Alaska fisheries management system and a central factor in the State's fight against attempted seizure of permits by the IRS [Internal Revenue Service] and other creditors. If Alaskan fishermen are forced out of the water because creditors take their limited fishing privileges, everyone in Alaska loses and the State could lose some of its control of fishing privileges to the courts. Section 1 of the bill removes permits from the exemption section of Title 9 to delete any inference that they are somehow property, and adds in Section 3 specific language to the Limited Entry Act, spelling out that fishing privileges are exempt from claims of all creditors making exceptions only for loans under the Division of Investments, CFAB [Commercial Fishing and Agriculture Bank], and child support. Section 2 adds language in the limited entry statute to make it absolutely clear that the only time a person may request the transfer of an entry permit due to an execution on that permit, is for the purpose of enforcing a lien recorded with the Commission under the statutes of the Child Support Enforcement Division. Leaving the legal status of permits open in any way to varying interpretation could be detrimental to the interests of the State and of fishermen. Senator Ward asked for an explanation of the protection this legislation would place on the limited entry permits and what parties would be prohibited from seizing the permits. MARY MCDOWELL, Commissioner, Commercial Fisheries Limited Entry Commission, responded that this legislation clarifies in statutes the State's existing position that permits are not property but rather use privileges under the control of the State. She explained that current statutory language could be "misconstrued" and that this legislation eliminates the possibility. Senator Ward asked the number of permits that have actually been seized. Ms. McDowell answered that none have been seized, but emphasized it has been "a constant struggle" particularly with the IRS. Senator Ward asked if this legislation is therefore unnecessary because the efforts to date to prevent seizure have been successful. Ms. McDowell informed of a recent federal bankruptcy case whereby a court ruled that fishing privileges for a vessel are impertinence to the vessel, which could become problematic for Alaskan permits. She noted pending congressional legislation would clarify that the federal government would recognize that fishing privileges have the legal status granted to them by the issuing entities. Therefore, she characterized this legislation as a "window of opportunity" for the State to clarify statutes to take advantage of the future federal law. SFC 02 # 94, Side B 06:25 PM Senator Ward clarified this legislation would ensure that permits could not be used as collateral. Ms. McDowell responded the permits could still be used as collateral against loans from the Division of Investments and the CFAB, but could not be held as collateral against other loans. She noted these restrictions are currently in statute. Senator Leman noted for the record he is a holder of a limited entry permit. Senator Hoffman informed is also such a holder. Senator Wilken "moved to report committee substitute for House Bill 287 Finance from Committee with individual recommendations and attached fiscal notes". There was no objection and HB 287 MOVED from Committee with accompanying zero fiscal notes: #1, dated 3/4/02, from the Department of Fish and Game, and #3, dated 4/26/02, from the Department of Community and Economic Development.