02/03/2009 10:00 AM House FISHERIES
| Audio | Topic |
|---|---|
| Start | |
| HB20 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 20 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
February 3, 2009
10:03 a.m.
MEMBERS PRESENT
Representative Bryce Edgmon, Chair
Representative Craig Johnson
Representative Wes Keller
Representative Charisse Millett
Representative Cathy Engstrom Munoz
Representative Robert L. "Bob" Buch
Representative Scott Kawasaki
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 20
"An Act relating to commercial fishing loans for energy
efficiency upgrades."
- MOVED CSHB 20(FSH) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 20
SHORT TITLE: FISHERIES LOANS FOR ENERGY EFFICIENCY
SPONSOR(s): REPRESENTATIVE(s) EDGMON, BUCH
01/20/09 (H) PREFILE RELEASED 1/9/09
01/20/09 (H) READ THE FIRST TIME - REFERRALS
01/20/09 (H) FSH, FIN
WITNESS REGISTER
GREG WINEGAR, Director
Division of Investments
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided information and supported HB 20.
MARK VINSEL, Executive Director
United Fishermen of Alaska (UFA)
Juneau, Alaska
POSITION STATEMENT: Testified in support HB 20.
JASON BRUNE, Executive Director
Resource Development Council (RDC)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 20.
ACTION NARRATIVE
10:03:07 AM
CHAIR BRYCE EDGMON called the House Special Committee on
Fisheries meeting to order at 10:03 a.m. Representatives
Edgmon, Johnson, Keller, Millett, Munoz, Kawasaki, and Buch were
present at the call to order.
10:04:01 AM
CHAIR EDGMON noted that the committee will meet every Tuesday
and Thursday and on some Saturdays from 10:00 a.m. to 12:00 p.m.
HB 20-FISHERIES LOANS FOR ENERGY EFFICIENCY
CHAIR EDGMON announced that the only order of business would be
HOUSE BILL NO. 20, "An Act relating to commercial fishing loans
for energy efficiency upgrades."
10:05:02 AM
REPRESENTATIVE MILLETT informed the committee that she may have
a conflict with HB 20 because as a commercial fisherman she may
take advantage of the proposed program.
10:06:48 AM
[Chair Edgmon passed the gavel to Representative Keller.]
10:06:56 AM
REPRESENTATIVE JOHNSON moved to adopt CSHB 20, Version 26-
LS0124\S, Kane, 1/29/09, ("Version S") as the working document.
There being no objection, Version S was before the committee.
10:07:45 AM
CHAIR EDGMON, speaking as the sponsor, said the legislation is
an attempt to provide energy relief to the fishing community.
The legislation expands the existing commercial fishing loan
program so that a larger number of Alaska fishermen can
participate. He said HB 20 renames the "'engine' efficiency
loan" the "'energy' efficiency loan" and explained that the
purpose for renaming it is to allow qualified fishermen to
purchase more efficient engines as well as to make other energy
efficiency improvements to their vessels or gear. Version S
provides a technical fix that removes a prohibition from AS
16.10.310(a)(1)(B) that would allow AS 16.10.310(a)(1)(A)
fishermen to participate in this energy efficiency program.
Version S also raises the total allowable balance for this newly
created energy efficiency loan program from $300,000 to
$400,000. The higher amount is warranted because [Alaska] is a
higher cost environment, he opined.
10:10:49 AM
CHAIR EDGMON explained that the existing Commercial Fishing
Revolving Loan Fund has many components. He said Version S
would allow fishermen participating in the loan fund under AS
16.10.310(a)(1)(A), which provides a maximum loan of $300,000
for the purchase of limited entry permits or existing vessel or
gear upgrades, to also participate in AS 16.10.310(a)(1)(B)
where the engine efficiency loan program currently resides.
Version S would also rename that program the energy efficiency
program. The aforementioned will allow a larger number of
fishermen to take advantage of the loan program in today's low
interest environment. He said there is a fiscal note that would
add one more staff position to address the expected increase in
demand for the loan program. This would not involve any general
fund money, he continued, because it involves program receipt
authority which is money that is derived from the portfolio and
its earnings.
10:13:02 AM
REPRESENTATIVE KAWASAKI inquired as to whether energy efficiency
is defined in the bill or in regulation.
CHAIR EDGMON replied it would likely be defined in regulation,
but deferred the question to Mr. Winegar.
10:13:27 AM
REPRESENTATIVE MUNOZ understood that currently under AS
16.10.310(a)(1)(B), fishermen can apply for $100,000. Would
these fishermen then be able to apply for an additional
$100,000, or is the purpose to expand the borrowing power of AS
16.10.310(a)(1)(A) applicants only, she asked.
CHAIR EDGMON said the bill's intent is to allow AS
16.10.310(a)(1)(A) participants who would not qualify for the AS
16.10.310(a)(1)(B) loan program to be able to qualify for the
energy efficiency loan program. Therefore, it would broaden the
energy efficiency program so that both AS 16.10.310(a)(1)(A) and
AS 16.10.310(a)(1)(B) participants could qualify. It would not
do anything else; the existing requirements of AS
16.10.310(a)(1)(A) and 16.10.310(a)(1)(B) would apply for the
other loan programs that are in place.
10:14:42 AM
GREG WINEGAR, Director, Division of Investments, Department of
Commerce, Community, & Economic Development, noted that the
Division of Investments administers the Commercial Fishing
Revolving Loan Fund. He explained that the primary purpose of
this fund is to promote a predominantly resident fishery and it
does this by providing low interest loans to harvesters in
Alaska. The program began in the early 1970s and has been
successful from both a policy standpoint and a fiscal
standpoint. The fund is totally self-sufficient and spins off
more earnings than are necessary to run the program, so there
would be no general fund impact as a result. The bill allows
people who qualify either for AS 16.10.310(a)(1)(A) or
16.10.310(a)(1)(B) to make energy efficiency improvements to
their vessels. This has a two-fold advantage: it helps
Alaska's fishermen be more competitive and profitable and it
helps the environment by lessening the industry's carbon
footprint. He said the fiscal note is due to an expected
increase in loan demand; the division estimates about $4.2
million the first year. The fund has plenty of reserves to
handle the increased demand. The division put in for one
position in case the increased demand is as substantial as
expected and the position would only be filled if the
expectation does materialize. The position would have no impact
on the general fund because all of the loans as well as the
operating expenses are paid out of the loan fund. He said the
division supports HB 20 as it does a number of positive things
for the fishing industry.
10:17:06 AM
MR. WINEGAR, in response to Representative Munoz, explained that
the limit stays the same, but what the bill does is allow
fishermen to come in under either of these two [subparagraphs].
So, a fisherman could get up to $300,000 under AS
16.10.310(a)(1)(A) and still be eligible to come in under
16.10.310(a)(1)(B) and borrow another $100,000. Right now the
limit is a total of $300,000 between the two sections.
10:17:44 AM
REPRESENTATIVE MUNOZ reiterated her question as to whether
fishermen borrowing $100,000 under AS 16.10.310(a)(1)(B) could
then borrow an additional $100,000.
MR. WINEGAR replied that the limit for [AS 16.10.310(a)(1)(B)]
stays at $100,000. The bill enables a fisherman to get up to
$100,000 under AS 16.10.310(a)(1)(B), as well as up to $300,000
under AS 16.10.310(a)(1)(A). So the limits are not going up on
each section, it is the total limit of the two sections that
goes up to $400,000.
10:18:27 AM
REPRESENTATIVE KAWASAKI reiterated his question regarding where
energy efficiency will be defined.
MR. WINEGAR confirmed that it would be defined by regulation.
If the bill is passed, the division would initiate a regulation
process to further define what types of things are being talked
about. He said the division went through a similar process with
the product quality improvement loans.
10:18:54 AM
REPRESENTATIVE JOHNSON surmised this would be a secured loan
that would involve collateral.
MR. WINEGAR responded correct, all of the loans are
collateralized. In further response to Representative Johnson,
Mr. Winegar offered his understanding of the intent of the
retroactive clause. The division initiated the program for AS
16.10.310(a)(1)(B) in fall [2008] because it already had the
statutory authority to make this type of loan. The division
went through a regulation process that enabled it to
dramatically lower the interest rate to make this a real
incentive program. A number of folks found out about this last
fall and started working on the process, not realizing that this
did not apply to AS 16.10.310(a)(1)(A) borrowers. The division
does not have the statutory authority to do that for AS
16.10.310(a)(1)(A) and that is the purpose of this legislation.
The idea is to let these people also participate in the program.
Mr. Winegar related his belief that it is a small number of
folks and it would mostly be for upgrading to more fuel
efficient engines. He allowed that items not involving an
engine may need to be handled from a policy standpoint or
decisions deferred until the regulations are in place.
10:21:09 AM
REPRESENTATIVE JOHNSON asked whether it would be advantageous to
not include the retroactivity as he has a problem with going
backwards.
MR. WINEGAR said he does not have any issue with that, but would
defer to the sponsor. He noted that there is already a
regulation in place that allows the division to provide
reimbursement for items purchased with cash within the year.
10:22:18 AM
CHAIR EDGMON opined that it's worth at least having the
discussion at the committee level regarding factoring in the
small number of folks who have already repowered their fishing
vessel. Furthermore, the reduction of a few interest points
over a 15-year lifespan could really have an impact on an
Alaskan family. He then said that he is open to discussing
whether to maintain the retroactivity clause.
10:23:45 AM
REPRESENTATIVE JOHNSON clarified that his concern is regarding
writing regulations based on things that have already happened;
regulations should be written based upon the best policies for
the state in the future. He said he didn't want to exclude
anyone and would prefer forward-looking regulations rather than
backward-looking regulations.
10:25:12 AM
REPRESENTATIVE KAWASAKI asked if an immediate effective date
would provide folks knowledge of the program and allow them to
participate in the program this next fishing year.
MR. WINEGAR relayed that the program can be put together as soon
as the legislation passes.
CHAIR EDGMON opined that the fact that there's no knowledge as
to when the legislation will pass and be in effect provides
additional justification for the retroactivity.
MR. WINEGAR highlighted that the interest rates are at an all-
time low, and thus this is a great opportunity to take advantage
of that interest rate environment.
10:27:27 AM
REPRESENTATIVE KAWASAKI recalled testimony that the commercial
fishing loan fund is only available to locals. Therefore, he
presumed that there must be a residency requirement such that
the individual has to live in Alaska for a certain number of
years. He asked if the boat has to be housed in Alaska.
MR. WINEGAR answered that the statute includes a two-year
residency requirement, but there is no specific requirement
regarding the location of the vessel.
10:28:16 AM
REPRESENTATIVE KAWASAKI related his understanding that the folks
who qualify for this loan are folks who don't qualify for bank
loans.
MR. WINEGAR responded that is correct under AS
16.10.310(a)(1)(B), which targets those who can't obtain
financing from banks but that's not the case under AS
16.10.310(a)(1)(A). In further response to Representative
Kawasaki, Mr. Winegar acknowledged that those loans under AS
16.10.310(a)(1)(B) are a bit riskier portfolio and have a bit
higher delinquency rate. However, they do repay their loans.
The rates are low and the fund has performed very well, even
with the AS 16.10.310(a)(1)(B) criteria.
10:29:18 AM
REPRESENTATIVE KELLER inquired as to what programs are available
to commercial sport fishing guides.
MR. WINEGAR informed the committee that there are two loan
programs that the division makes to charter operations, both of
which are small business-related programs. The loans are the
Rural Development Initiative Fund and the Small Business
Economic Development Fund from which the division has made
several loans to charter operators. Mr. Winegar said he didn't
see why an engine upgrade for [commercial sport fishing guides]
wouldn't qualify as well under the aforementioned two loan
programs. In further response to Representative Keller, Mr.
Winegar specified that the terms and interest rates for the
commercial sport fishing loans are different. The Rural
Development Initiative Fund has a statutory floor of 6 percent
and the Small Business Economic Development Fund has federal
funds and has a floor of 4 percent. Under the commercial
fishing loan program, the rate is prime minus two, which amounts
to 2 percent.
10:32:11 AM
MARK VINSEL, Executive Director, United Fishermen of Alaska
(UFA), related support for HB 20. He then opined that without
the success of marketing and differentiating Alaska's fish as
wild and sustainable, it would've been a very tragic season for
the fishing industry. He told the committee that this past
season, a petition was circulated among commercial fishermen in
about 15 communities, and within a few weeks about 18,000
signatures were obtained. With regard to the fuel price
situation, Mr. Vinsel opined that carbon creation or consumption
needs to be reduced no matter the price of fuel. Therefore, the
fleets need to be modernized and this program provides a great
way to do so. The UFA appreciates the administration and the
division moving forward with this program and other energy
saving improvements both of which HB 20 would accomplish.
10:35:01 AM
CHAIR EDGMON requested comment on the retroactivity clause of
the legislation and asked whether there's a good reason to
include the retroactivity clause.
MR. VINSEL recalled that UFA discussed [the engine efficiency
loan program] at its late September board meeting, but the
[retroactivity issue] didn't come up. Although he acknowledged
the existing ability for fishermen to be reimbursed for
purchases within a year, he shared Mr. Winegar's concerns that
[reimbursing individuals] would still need to be addressed
regardless of whether the legislation is passed promptly. One
of the reasons [UFA] supported expanding the program to other
energy improvements is because many fishermen have already paid
for modernization, he said. Those fishermen benefited very well
and the retroactivity doesn't leave out those leading the way
[in seeking energy efficiencies].
10:37:15 AM
JASON BRUNE, Executive Director, Resource Development Council
(RDC), began by relaying support for HB 20. He reminded the
committee that RDC is a statewide, nonprofit, membership funded
organization founded in 1975. The RDC membership is comprised
of individuals and companies from Alaska's oil and gas, mining,
timber, tourism, and fisheries industries as well as Alaska
Native corporations, local communities, organized labor, and
industry support firms. The purpose of RDC is to link the
diverse interests together to encourage a strong diversified
private sector in Alaska and expand the state's economic base
through the responsible development of the state's natural
resources. Throughout the past several years Alaskans have been
struggling with high energy costs. He relayed that fuel cost
and usage have escalated since fishermen have to go further out
for catch due to impacts from endangered species listings,
critical habitat designations, marine protected areas, and fish
movement. Therefore, opportunities to improve energy efficiency
through state loans are important for the fishermen as well as
the environment. Increased efficiency, he opined, will likely
lower costs, and decreased carbon emissions. Mr. Brune
concluded by encouraging the committee to vote in favor of this
legislation.
10:39:01 AM
REPRESENTATIVE KELLER, upon determining no one else wished to
testify, closed public testimony.
10:39:40 AM
REPRESENTATIVE JOHNSON moved to report CSHB 20, Version 26-
LS0124\S, Kane, 1/29/09, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 20(FSH) was reported out of the House Special
Committee on Fisheries.
[Representative Keller returned the gavel to Chair Edgmon.]
10:40:46 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 10:40
a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CommFishLoanOutline--HB20.pdf.pdf |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| AkConsvAllianceHB20Support.PDF |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB20--SponsStAndSectional.pdf |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB20--1.29.09WorkDraft.PDF |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| PSPA Support for HB20.pdf |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| SeaGrantFuelSurvey--HB20.pdf.PDF |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB20HarringtonSupportMssg.PDF |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB20SEAKFSHAllianceSupport.PDF |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB20UFASupport.PDF |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB 20-CED-Investments 2 2 09FiscalNote.pdf |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB20-FJohnsonSupport.pdf |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |
| HB20-RDC Support.pdf |
HFSH 2/3/2009 10:00:00 AM |
HB 20 |