02/22/2011 05:00 PM House FISHERIES
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Industry Overview: Seafood Processing Sector | |
| HB121 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 121 | TELECONFERENCED | |
| + | 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.