Legislature(2001 - 2002)

05/10/2002 05:38 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                               
                                                                                                                                

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