Legislature(2011 - 2012)CAPITOL 120

02/22/2011 05:00 PM FISHERIES


Download Mp3. <- Right click and save file as

Audio Topic
05:06:05 PM Start
05:06:20 PM Overview(s): Industry Overview: Seafood Processing Sector
05:57:22 PM HB121
06:23:34 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Industry Overview: Seafood Processing Sector by TELECONFERENCED
Mary McDowell, Vice President, Pacific Seafood
Processors Association
+= HB 121 LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                       February 22, 2011                                                                                        
                           5:06 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Steve Thompson, Chair                                                                                            
Representative Craig Johnson, Vice Chair                                                                                        
Representative Alan Austerman                                                                                                   
Representative Bob Herron                                                                                                       
Representative Lance Pruitt                                                                                                     
Representative Scott Kawasaki                                                                                                   
Representative Bob Miller                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW(S):  INDUSTRY OVERVIEW:  SEAFOOD PROCESSING SECTOR                                                                     
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
HOUSE BILL  NO. 121, "An Act  establishing the commercial  charter                                                              
fisheries  revolving loan  fund,  the mariculture  revolving  loan                                                              
fund, and  the Alaska microloan  revolving loan fund  and relating                                                              
to those  funds and loans from  those funds; and providing  for an                                                              
effective date."                                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 121                                                                                                                  
SHORT TITLE: LOAN FUNDS: CHARTERS/MARICULTURE/MICROLOAN                                                                         
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/24/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/11       (H)       FSH, RES, FIN                                                                                          
02/08/11       (H)       FSH AT 5:00 PM CAPITOL 120                                                                             
02/08/11       (H)       Heard & Held                                                                                           
02/08/11       (H)       MINUTE(FSH)                                                                                            
02/22/11       (H)       FSH AT 5:00 PM CAPITOL 120                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MARY McDOWELL, Vice President                                                                                                   
Pacific Seafood Processors Association (PSPA)                                                                                   
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Co-presented  the overview  of the  seafood                                                            
processing sector.                                                                                                              
                                                                                                                                
GLENN REED, President                                                                                                           
Pacific Seafood Processors Association (PSPA)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Co-presented  the overview  of the  seafood                                                            
processing sector.                                                                                                              
                                                                                                                                
CURTIS THAYER, Deputy Commissioner                                                                                              
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented the CS for HB 121.                                                                             
                                                                                                                                
WANETTA AYERS, Director                                                                                                         
Economic Development Section                                                                                                    
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Responded  to questions, during  the hearing                                                            
on HB 121.                                                                                                                      
                                                                                                                                
RODGER PAINTER, President                                                                                                       
Alaska Shellfish Growers Association                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 121.                                                                                     
                                                                                                                                
PAUL FUHS, Lobbyist                                                                                                             
PacAlaska                                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 121.                                                                          
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
5:06:05 PM                                                                                                                    
                                                                                                                                
CHAIR  STEVE  THOMPSON  called  the  House  Special  Committee  on                                                            
Fisheries meeting  to order at 5:06  p.m.  Present at  the call to                                                              
order  were  Representatives  Thompson,   Austerman,  and  Miller.                                                              
Representatives  Johnson,  Herron,  Pruitt, and  Kawasaki  arrived                                                              
while the meeting was in order.                                                                                                 
                                                                                                                                
^OVERVIEW(S):  Industry Overview:  Seafood Processing Sector                                                                    
  OVERVIEW(S):  Industry Overview:  Seafood Processing Sector                                                               
                                                                                                                                
5:06:20 PM                                                                                                                    
                                                                                                                                
CHAIR THOMPSON  announced that the  first order of  business would                                                              
be an industry overview from the seafood processing sector.                                                                     
                                                                                                                                
5:07:23 PM                                                                                                                    
                                                                                                                                
MARY  McDOWELL,   Vice  President,   Pacific  Seafood   Processors                                                              
Association  (PSPA),   provided  the   overview  of   the  seafood                                                              
processing  sector,  and  said  that  Pacific  Seafood  Processors                                                              
Association  (PSPA)  is  in partnership  with  Mother  Nature  and                                                              
Providence,  and  that  the  importance  of the  industry  is  not                                                              
always understood  by those not  involved directly.   Ms. McDowell                                                              
said that if  Alaska were a nation,  it would be the  14th largest                                                              
seafood  provider in  the world.   Alaska produces  35 percent  of                                                              
the world's  harvest  of wild salmon,  and the  harvest of  Bering                                                              
Sea Pollock  is among the largest  single fisheries in  the world.                                                              
The  seafood business  requires  investment  for development,  and                                                              
being  over   100  years   old,  in   Alaska,  means   that  those                                                              
investments  have exceeded  the  billion dollar  mark.   She  then                                                              
provided a  series of slides  of processing  operations/structures                                                              
in Dutch  Harbor, Kodiak,  Togiak, Unalaska,  Cordova, Sitka,  and                                                              
Sandpoint,  including pictures  of  the housing  and dining  halls                                                              
required  for the  seasonal  workers.   Salmon  is  marketed in  a                                                              
variety  of  ways  and  its  value  has  only  continued  to  rise                                                              
worldwide.    The  Pollock  industry   is  also  active,  and  she                                                              
described  the  various  products   derived/manufacture  from  the                                                              
fishery,  which include:   serimi,  krab  (imitation crab),  white                                                              
fish meal,  and bio-fuel from  the fish  oil.  Many  other species                                                              
are  harvested  in  large  quantities and  add  diversity  to  the                                                              
industry  including:     crab,  other  shellfish,   halibut,  cod,                                                              
sablefish, and a variety of ground fish species.                                                                                
                                                                                                                                
5:20:17 PM                                                                                                                    
                                                                                                                                
MS.  McDOWELL  indicated  that,  as seafood  is  Alaska's  largest                                                              
export  product,  there  are  a   variety  of  statewide  benefits                                                              
realized  from the seafood  processing industry  and bringing  new                                                              
dollars  into the  state.   The  industry generates  approximately                                                              
$79  million in  state taxes  and  fees annually,  in addition  to                                                              
taxes  paid  to  local  governments;  thousands  of  Alaskans  are                                                              
employed in  the industry.  She  acknowledged that members  of the                                                              
committee  have expressed  interest/concern about  the numbers  of                                                              
non-resident workers  in parts of the seafood  industry, and noted                                                              
that  the  industry  is  constantly   seeking  to  hire  Alaskans.                                                              
Furthermore, benefits  are only realized when the  plants are able                                                              
to fill  their positions  and get Alaska  seafood processed.   She                                                              
said that  besides  importance as  an exporter  and tax payer  the                                                              
industry also supports  the transportation system of  Alaska.  The                                                              
industry transports  thousands of  workers and millions  of pounds                                                              
of supplies into  and around Alaska, as well  as shipping millions                                                              
of  pounds of  seafood out.   Without  seafood  providing a  major                                                              
"back haul"  with shipping  companies, Alaskans  would pay  higher                                                              
shipping  costs  for  northbound  freight.    The  major  shippers                                                              
estimate  that rates  would  be  approximately 10  percent  higher                                                              
across the  state without  the role of  the seafood  industry, and                                                              
services  to  small  communities   would  be  affected.  She  said                                                              
commercial  fisheries  are  often  referred to  as  the  "economic                                                              
engine"  of coastal  Alaska.   The  Seafood  processors provide  a                                                              
market  and the  payday  for fishing  fleets,  and  are often  the                                                              
largest, or  the only significant,  source of local  tax revenues.                                                              
A   processing  plant   represents   a  vital   part  of   Alaskan                                                              
communities,  and,   beyond  what  has  already   been  mentioned,                                                              
provides  additional benefits  which include:   services  to local                                                              
fleets; school  scholarships; and  seafood for local  school lunch                                                              
or senior lunch programs.                                                                                                       
                                                                                                                                
5:25:22 PM                                                                                                                    
                                                                                                                                
MS. McDOWELL indicated  that the state is an  integral partner for                                                              
making the  industry successful.   In  addition to the  investment                                                              
the state  makes in the  overall infrastructure   (transportation,                                                              
etc)  necessary for  all businesses,  the industry  relies on  the                                                              
legislature to  ensure the continuation of  established standards,                                                              
which  include:    funding  scientific  research  to  protect  and                                                              
maintain  viable  fisheries; protection  for  pure  water and  the                                                              
perception  of that  purity  - a  main  point  in selling  Alaskan                                                              
products on the  world market; development of docks,  harbors, and                                                              
seaports;  and a  stable  and  reasonable regulatory  system  with                                                              
enforcement and protection  of the resources.  She  named the acts                                                              
and  programs,  which  the legislature  has  supported  since  the                                                              
1970's that  have helped  strengthen the  industry, which  include                                                              
the  Alaska Salmon  Enhancement  Program  and the  Salmon  Product                                                              
Development Tax Credit.   The continued efforts of  the state will                                                              
keep the  industry thriving as it  continues into the  future, and                                                              
she  recapped  the  important  measures,  which  include:    sound                                                              
management of fisheries  and protection of water,  fish, and fish-                                                              
habitat;  adequate   funding  of   scientific  research   for  the                                                              
Department  of  Fish   and  Wildlife  (ADF&G),  as   well  as  the                                                              
Department  of Environmental  Conservation  (DEC); addressing  the                                                              
issues   of   recruitment/retention   of   well-qualified   staff;                                                              
reliable,  enforceable   laws,  regulations,  and   processes  for                                                              
permitting  and  operating  development projects.    She  stressed                                                              
that Alaska's pure  water and pristine environment,  the purity of                                                              
the seafood, as  well as the perception of that purity,  is key to                                                              
the marketability  of Alaska seafood.   Additionally, she  said it                                                              
is   important  to   the  industry   that   the  state   continue:                                                              
addressing the  high cost  of energy in  rural areas;  support the                                                              
Alaska  Seafood  Marketing Institute  (ASMI),  as  a partner  that                                                              
helps to  ensure Alaskan products  are promoted and  successful in                                                              
the highly competitive  world markets; and work with  PSPA to help                                                              
inform all  legislators, other policy  makers, state  leaders, and                                                              
the public throughout  Alaska about the importance  of the seafood                                                              
industry.   Ms. McDowell concluded  by inviting committee  members                                                              
to visit  the plants  to get  a first-hand,  up-close look  at the                                                              
seafood processing industry.                                                                                                    
                                                                                                                                
5:30:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLER  referred to the Department  of Labor (DOL),                                                              
2009 report,  which  indicates that  a high number  of workers  in                                                              
the industry are not Alaskan residents.                                                                                         
                                                                                                                                
MS.  McDOWELL responded  that  the industry  works  with the  DOL,                                                              
when  hiring.     Recruitment  is  extended  through   the  Native                                                              
corporations, and  the industry hires Alaskans  whenever possible.                                                              
Additionally, a  partnership is  occurring with the  University of                                                              
Alaska (UA)  system to  provide grants  and train skilled  workers                                                              
for the industry.                                                                                                               
                                                                                                                                
GLENN  REED, President,  Pacific  Seafood Processors  Association,                                                              
(PSPA), said  the skilled  jobs in  the industry  can seem  like a                                                              
lofty  goal;  however,  the Peter  Principle  is  followed,  which                                                              
allows someone  without advanced  education to receive  promotions                                                              
based on experience.                                                                                                            
                                                                                                                                
5:35:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLER  questioned  how  any  company  could  have                                                              
reports  indicating  that 88  percent  of  the workforce  is  from                                                              
outside of Alaska.                                                                                                              
                                                                                                                                
MS. McDOWELL  established  that many positions  require people  to                                                              
temporarily locate to  a remote area to work long hours.   It is a                                                              
highly  concentrated  effort for  brief  period of  time.   As  an                                                              
example, she said,  the village of Akutan has a  population of 70,                                                              
but the processing plant hires 800 workers, during the season.                                                                  
                                                                                                                                
MR. REED offered  that many people prefer to remain  in the region                                                              
where they live,  and the remoteness of these jobs  can often make                                                              
them difficult to fill.                                                                                                         
                                                                                                                                
REPRESENTATIVE MILLER  stressed that  the effort to  hire Alaskans                                                              
is important.  Further,  he reported that he was  once employed in                                                              
the industry as a slimmer.                                                                                                      
                                                                                                                                
5:39:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI queried  what steps  the processors  take                                                              
to reduce the  number of non-resident workers  hired; specifically                                                              
the Alyeska and North Pacific companies.                                                                                        
                                                                                                                                
MR.  REED  said  that North  Pacific  has  facilities  in  several                                                              
areas, and has  a high percentage of seasonal  positions.  Alyeska                                                              
has  longer  contract  periods,  and  works  year  around  in  one                                                              
location.   A resident workforce  surrounds the Alyeska  facility,                                                              
reducing  the  number  of  non-residents.   He  pointed  out  that                                                              
recruitment efforts indicate that people prefer not to relocate.                                                                
                                                                                                                                
5:41:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI  referred to the proliferation  of foreign                                                              
labor; Fairbanks has  an influx of J1 visa holders.   He asked how                                                              
PSPA is handling the situation.                                                                                                 
                                                                                                                                
MR. REED  indicated that the seafood  industry does not  employ J1                                                              
visa holders,  but has  seen H2V  visa workers  in the  roe house.                                                              
He  reported that  change is  occurring,  albeit slowly.   At  one                                                              
time there  were not  enough visa  holders to  fill the  positions                                                              
and the state department was engaged to help.                                                                                   
                                                                                                                                
REPRESENTATIVE AUSTERMAN  added that  many foreign workers  are in                                                              
the processing industry.                                                                                                        
                                                                                                                                
MR.   REED  explained   that  when   the  U.S.   -  Soviet   Union                                                              
relationship  changed  in  the  1990's,  there was  an  influx  of                                                              
Russian workers.                                                                                                                
                                                                                                                                
5:45:37 PM                                                                                                                    
                                                                                                                                
CHAIR  THOMPSON  asked  what  percentage   of  Alaska's  catch  is                                                              
processed outside of the state.                                                                                                 
                                                                                                                                
MR.  REED replied  that  the majority  of  the primary  processing                                                              
occurs in  Alaska, secondary processing  is frequently  handled in                                                              
Washington State,  and market ready  processing is  finished close                                                              
to  a  given  market  to minimize  shipping  costs  of  the  final                                                              
product.                                                                                                                        
                                                                                                                                
5:47:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI described  a scalping  agency, which  the                                                              
hospitality industry  uses to recruit foreigner workers  and house                                                              
them for  six months,  during the  season.   He asked whether  the                                                              
seafood industry has a similar service.                                                                                         
                                                                                                                                
MR. REED  said he is not familiar  with any scalping  agencies and                                                              
said  that   each  company   has  an   employment  division   with                                                              
recruiters  who  work intensely  at  a  point of  hire;  primarily                                                              
Seattle.                                                                                                                        
                                                                                                                                
5:48:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI  noted the  comments  made regarding  the                                                              
importance of product  purity, and public perception,  to ask what                                                              
PSPA's  position is  regarding the  proposed Pebble  Mine [in  the                                                              
Bristol Bay region].                                                                                                            
                                                                                                                                
MS.  McDOWELL  offered   to  provide  the  PSPA   position  paper,                                                              
distributed  in  2007, which  expressed  grave concern  about  the                                                              
Pebble  mine; although,  support  was offered  for the  permitting                                                              
process to go forward.                                                                                                          
                                                                                                                                
MR.  REED recalled  that  PSPA has  been  around  since 1914,  and                                                              
there is  no evidence  that a position  has ever  been taken  on a                                                              
mine in  the past.   Projects should  be looked  at and  judged on                                                              
merit.  He stressed  that Bristol Bay is unique  and protection of                                                              
the area is important.                                                                                                          
                                                                                                                                
MS. McDOWELL underscored  that the public perception  of purity is                                                              
important,   and   questions   have   already   risen,   regarding                                                              
development of the Pebble mine.                                                                                                 
                                                                                                                                
The committee took an at-ease from 5:53 p.m. to 5:57 p.m.                                                                       
                                                                                                                                
       HB 121-LOAN FUNDS: CHARTERS/MARICULTURE/MICROLOAN                                                                    
                                                                                                                                
5:57:22 PM                                                                                                                    
                                                                                                                                
CHAIR THOMPSON  announced that the  final order of  business would                                                              
be  HOUSE  BILL  NO. 121,  "An  Act  establishing  the  commercial                                                              
charter fisheries  revolving loan fund, the  mariculture revolving                                                              
loan  fund,  and the  Alaska  microloan  revolving loan  fund  and                                                              
relating  to  those   funds  and  loans  from   those  funds;  and                                                              
providing for an effective date."                                                                                               
                                                                                                                                
5:57:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON moved  to adopt  the committee  substitute                                                              
(CS)  for HB  121,  27-GH1728\I,  Kane,  2/16/11, as  the  working                                                              
draft.  Without objection Version I was before the committee.                                                                   
                                                                                                                                
5:59:19 PM                                                                                                                    
                                                                                                                                
CURTIS  THAYER,  Deputy  Commissioner,   Department  of  Commerce,                                                              
Community  & Economic  Development (DCCED),  paraphrased from  the                                                              
newly added subsection of the CS, page 1, line 8, which read:                                                                   
                                                                                                                                
     (l)  For a  new  loan under  AS 16.10.300  -  16.10.370,                                                                   
     made on  or after  the effective date  of this  Act, the                                                                   
     department  may  provide  a reduction  of  the  interest                                                                   
     rate  of  not more  than  two  percent  if at  least  50                                                                   
     percent of  the loan proceeds  are used by  the borrower                                                                   
     for product  quality improvements  or energy  efficiency                                                                   
     upgrades  if the improvements  or upgrades use  products                                                                   
     manufactured  or  produced  in  the  state.    When  the                                                                   
     department  offers a  reduction  under this  subsection,                                                                   
     the department  shall provide the reduction to  all loan                                                                   
     applicants  who meet  the  criterion  described in  this                                                                   
     subsection.    In  this  subsection,   "manufactured  or                                                                   
     produced"  means processing,  developing,  or making  an                                                                   
     item  into a  new  item with  a distinct  character  and                                                                   
     use.                                                                                                                       
                                                                                                                                
MR.THAYER indicated  that the word  "grant" was also added  to all                                                              
references in the bill which read:                                                                                              
                                                                                                                                
     ... money  appropriated to, transferred to,  or received                                                                   
     by  gift, grant,  devise, bequest,  or  donation to  the                                                                   
     fund;                                                                                                                      
                                                                                                                                
MR. THAYER  continued  on to  page 8,  line 4 and  read the  added                                                              
language:                                                                                                                       
                                                                                                                                
     (c)  A loan  under  AS 16.10.910  may  be  made for  the                                                                   
     purchase of  boats or vessels determined to  be integral                                                                   
     to the operation of the farm.                                                                                              
                                                                                                                                
MR.  THAYER  paraphrased  language   revised  on  request  by  the                                                              
bankers association, revising page 10, line 21, which read:                                                                     
                                                                                                                                
      (3) if the requested loan amount is $35,000 or more,                                                                      
       provide to the department a document from a state                                                                        
     financial institution stating that                                                                                         
                                                                                                                                
        (A) the applicant has been denied a loan for the                                                                        
     same purpose;                                                                                                              
                                                                                                                                
     or                                                                                                                         
                                                                                                                                
          (B) a loan from the financial institution is                                                                          
     contingent on the applicant also receiving a loan from                                                                     
     the fund.                                                                                                                  
                                                                                                                                
MR.  THAYER  pointed  out  that  transition  language  was  deemed                                                              
unnecessary and  removed, from  the final page  of the  bill; only                                                              
one effective date was required.                                                                                                
                                                                                                                                
6:01:16 PM                                                                                                                    
                                                                                                                                
WANETTA   AYERS,    Director,   Economic   Development    Section,                                                              
Department   of  Commerce,   Community   &  Economic   Development                                                              
(DCCED), concurred with the changes.                                                                                            
                                                                                                                                
6:01:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON turned  to page  8, line  16, to note  the                                                              
language which reads:   "Interest on the principal  of a loan made                                                              
under AS 16.10.910  does not accrue during the first  six years of                                                              
the loan,"  and asked whether  the stipulation is  consistent with                                                              
the governor's bill.                                                                                                            
                                                                                                                                
MR.  THAYER replied  yes,  and reminded  the  committee that  some                                                              
mariculture  species  require six  years  of  growing  time to  be                                                              
marketable.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JOHNSON  pointed  out  that  participants  in  the                                                              
charter  fishing  industry  would  have revenue  receipts  in  the                                                              
first  year, and  asked  if the  six  year waiver  still  applies.                                                              
Further,  he  questioned  if  the   governor's  original  bill  is                                                              
reflected in the CS.                                                                                                            
                                                                                                                                
MR.  THAYER clarified  that mariculture  is waived  for the  first                                                              
year, but not the  charter fishing aspect.  He  reiterated that it                                                              
does follow the intent of the governor's bill.                                                                                  
                                                                                                                                
MS. AYERS  affirmed that the  governor's original bill  proposed a                                                              
six  year deferment  for mariculture  only,  and that  is what  is                                                              
held in the CS, also.                                                                                                           
                                                                                                                                
6:03:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  AUSTERMAN   cited  the  applicable   sections,  AS                                                              
16.10.920, and AS 16.10.910.                                                                                                    
                                                                                                                                
6:03:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLER paraphrased from the bill and asked:                                                                      
                                                                                                                                
     'The department may not require repayment of the loan                                                                      
     for six years'; could that apply to a boat.                                                                                
                                                                                                                                
MS. AYERS responded  that the loan officer would  be authorized to                                                              
make repayment determinations.                                                                                                  
                                                                                                                                
REPRESENTATIVE MILLER  asked whether it is difficult  to repossess                                                              
a boat.                                                                                                                         
                                                                                                                                
MS. AYERS  assured the  committee that  the financing  section has                                                              
historically been successful recovering boat loan assets.                                                                       
                                                                                                                                
6:05:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON pondered the  possibility of  allowing the                                                              
interest to  accrue with deferred  payment beginning  in, perhaps,                                                              
year 15.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   PRUITT  interjected   that   some  student   loan                                                              
programs follow an interest deferment model.                                                                                    
                                                                                                                                
MS.  AYERS said  the  division uses  the  technique under  certain                                                              
circumstances;  however,  the  effect of  the  interest  deferment                                                              
requires that  in year  seven, a  higher repayment amount  becomes                                                              
due.                                                                                                                            
                                                                                                                                
6:08:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON asked:                                                                                                   
                                                                                                                                
      How are you amortizing the interest that you're not                                                                       
         charging, or aren't allowed to charge; so that                                                                         
     interest is gone...                                                                                                        
                                                                                                                                
MS. AYERS said yes, that money is not recouped.                                                                                 
                                                                                                                                
6:08:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  AUSTERMAN stated his  understanding that  there is                                                              
no interest accrued on the first six years of the loan.                                                                         
                                                                                                                                
MS. AYERS clarified that the interest is deferred.                                                                              
                                                                                                                                
REPRESENTATIVE AUSTERMAN  said it must be earned before  it can be                                                              
deferred.                                                                                                                       
                                                                                                                                
6:09:22 PM                                                                                                                    
                                                                                                                                
CHAIR  THOMPSON   interjected  that  the  CS  clearly   states  no                                                              
interest will accrue.                                                                                                           
                                                                                                                                
REPRESENTATIVE AUSTERMAN  stated support for a six  year deferment                                                              
but expressed concern for the interest not accruing.                                                                            
                                                                                                                                
MR. THAYER  said the department  would agree to have  the interest                                                              
accrue, and be deferred for payment.                                                                                            
                                                                                                                                
6:10:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON suggested  holding the  bill, pending  new                                                              
language  from the  department  to  reflect interest  accrual  and                                                              
deferment  in  order  to  allay  the  concerns  expressed  by  the                                                              
committee.                                                                                                                      
                                                                                                                                
6:11:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  AUSTERMAN  pondered   whether  removing  the  word                                                              
"not" from page 8, line 17, would be appropriate.                                                                               
                                                                                                                                
CHAIR THOMPSON  agreed and said  that other references  would also                                                              
need to be addressed, however.                                                                                                  
                                                                                                                                
6:12:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  speaking to the  point of policy,  asked if                                                              
the  administration's  intent  is   to  help  make  mariculture  a                                                              
successful  industry,  in  which  case,  he opined,  it  would  be                                                              
appropriate to have the interest accrue, but at a lower rate.                                                                   
                                                                                                                                
[The Chairman allowed a brief, informal discussion to ensue.]                                                                   
                                                                                                                                
6:14:04 PM                                                                                                                    
                                                                                                                                
MR.  THAYER  offered  to  have language  crafted  and  new  fiscal                                                              
considerations brought to another hearing.                                                                                      
                                                                                                                                
REPRESENTATIVE JOHNSON  stated support for the bill,  and said the                                                              
interest should not be prohibitive.                                                                                             
                                                                                                                                
6:14:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLER  referred to the CS, page 4,  line [21], and                                                              
paraphrased from the language, which read:                                                                                      
                                                                                                                                
     (5)  may not  be made  to a person  who has  a past  due                                                                   
     child support  obligation established by court  order or                                                                   
     by   the  child   support  services   agency  under   AS                                                                   
     25.27.160 - 25.27.220 at the time of application.                                                                          
                                                                                                                                
REPRESENTATIVE  MILLER   said  that  this  type   of  program  may                                                              
actually  benefit   someone  who   is  behind  in   child  support                                                              
obligations to become a productive citizen once again.                                                                          
                                                                                                                                
6:16:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE AUSTERMAN  referred to another  area of the  CS and                                                              
indicated  that a person  might not  live in  the state  but still                                                              
maintain a domicile.                                                                                                            
                                                                                                                                
6:16:32 PM                                                                                                                    
                                                                                                                                
CHAIR  THOMPSON  paraphrased the  language  being  referred to  by                                                              
Representative Austerman, page 4, line 4, which read:                                                                           
                                                                                                                                
     (1) shall physically  reside in this state  and maintain                                                                   
     a  domicile  in this  state  during the  24  consecutive                                                                   
     months  preceding  the  date   of  application  for  the                                                                   
     program;                                                                                                                   
                                                                                                                                
REPRESENTATIVE  AUSTERMAN   asked  what  the  definition   is  for                                                              
physically residing in the state.                                                                                               
                                                                                                                                
MS. AYERS  established that  the CS  specifies the consecutive  24                                                              
month period  preceding the date  of application for  the program.                                                              
Anything  that would  disqualify  a  person from  other  residency                                                              
attached  programs,  would  apply,  such  as  the  permanent  fund                                                              
benefit.   To a follow  up, she said  the residency  standard used                                                              
for the permanent  fund would be  applied for the purpose  of this                                                              
program.                                                                                                                        
                                                                                                                                
6:18:14 PM                                                                                                                    
                                                                                                                                
RODGER PAINTER,  President, Alaska Shellfish  Growers Association,                                                              
offered  to  work  cooperatively  with  the  department  regarding                                                              
appropriate financial parameters for HB 121.                                                                                    
                                                                                                                                
6:18:47 PM                                                                                                                    
                                                                                                                                
PAUL FUHS,  PacAlaska, explained that  the terms of the  loan will                                                              
be helpful  to the  mariculture industry and  the front  end money                                                              
is the key.   It is now known  how long it will take  to produce a                                                              
geoduck for  market; six to eight  years.  He said  that deferring                                                              
the interest  of the  loan would  be plausible,  and reviewed  the                                                              
cost  of  spat and  other  start  up expenditures.    He  directed                                                              
attention  to  the committee  handout  titled  "Pacific  Shellfish                                                              
Growers Association  Shellfish  Production on  the West Coast"  to                                                              
indicate  that of  the  total  sales reported,  are  approximately                                                              
$117.4 million,  of which  Alaskan sales  represent $599,232.   He                                                              
opined  that mariculture  is a  strong  rural development  program                                                              
and the bill will help to build the industry.                                                                                   
                                                                                                                                
CHAIR  THOMPSON closed  public testimony  and  announced that  the                                                              
bill would be held.                                                                                                             
                                                                                                                                
6:22:10 PM                                                                                                                    
                                                                                                                                
CHAIR THOMPSON announced the next meeting.                                                                                      
                                                                                                                                
6:23:34 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Special  Committee  on Fisheries  meeting  was adjourned  at  6:24                                                              
p.m.