Legislature(1993 - 1994)
04/12/1994 01:55 PM Senate JUD
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* first hearing in first committee of referral
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SENATE JUDICIARY COMMITTEE
April 12, 1994
1:55 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Rick Halford, Vice-Chairman
Senator Dave Donley
Senator Suzanne Little
MEMBERS ABSENT
Senator George Jacko
COMMITTEE CALENDAR
SENATE BILL NO. 306
"An Act relating to an antitrust exemption for persons engaged in
the fishing industry."
PREVIOUS SENATE COMMITTEE ACTION
SB 306 - See Resources minutes dated 3/24/94 and 3/28/94 and
Judiciary minutes dated 4/8/94.
WITNESS REGISTER
Senator Jim Duncan
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Prime Sponsor of SB 306
George Utermohle, Legal Counsel
Division of Legal Services
Legislative Affairs Agency
130 Seward St., Suite 409
Juneau, AK 99801
POSITION STATEMENT: Offered information on proposed CS
Jim Forbes, Assistant Attorney General
Department of Law
1031 W. 4th, Suite 200
Anchorage, AK 99501-1994
Rick Lauber
Pacific Seafood Processors Association
321 Highland Drive
Juneau, AK 99801
POSITION STATEMENT: Testified in support of original SB 306
Kate Troll, Executive Director
Southeast Alaska Seiners
Juneau, AK
POSITION STATEMENT: Testified in support of original SB 306
ACTION NARRATIVE
TAPE 94-36, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:55 p.m., and brought SB 306 (ANTITRUST EXEMPTION FOR
FISHERMEN) before the committee as the only order of business.
SENATOR HALFORD moved that CSSB 306(JUD) (version 8-LS1305\K) be
adopted. SENATOR LITTLE objected.
Number 003
SENATOR JIM DUNCAN, prime sponsor of SB 306, urged that the
committee hear from the interested parties before making a final
decision on adopting a committee substitute. He said what was a
piece of legislation that had unanimous support and could move
forward in a first step has become a piece of legislation that has
got opposition, high fiscal cost and is doomed to failure.
Number 025
GEORGE UTERMOHLE, Legal Counsel, Legislative Affairs Agency,
explained that the first two sections of the committee substitute
contain the entire contents of the original SB 306. Changes to the
committee substitute are contained in Section 3 of the bill.
Mr. Utermohle stated that as a result of the last meeting, he was
given instructions to create a mechanism by which the state could
qualify certain agreements reached between fishermen and fish
processors for the antitrust exemption under federal law. The
intent was to qualify them for the exemption known as the "state
action" exemption. In order to qualify for that exemption, a state
has to articulate a clear and affirmative statement that the state
intends to replace competition with regulation. The second aspect
of that is that the state has to actively supervise the activities
of the private sector. To satisfy the requirement for active
supervision, the state must provide an adequate authority for some
body or agency to conduct that supervision, and then that agency
would have to go forward and actually perform the supervision.
Mr. Utermohle directed attention to Section 3 of the committee
substitute and explained that the first section is the policy
statement, which is intended to be the clear and affirmative
statement that the state intends to replace free competition with
state regulation. This bill gives the authority for the state to
regulate in only two narrow areas: contracts reached between
fishermen and groups of processors. The second exemption is
allowing fishermen and processors, either an individual processor
or groups or processors, to get together and agree on the minimum
price that the processors will accept for their manufactured
product. He said the goal of the bill is to allow fishermen and
processors to agree on two things: the price between themselves
and the price which the processor would ask for his product from
his market.
Sec. 45.50.615 contained in Section 3, sets out the powers and
duties of the commissioner in regard to fish price agreements. It
allows him to review the agreement, actively supervise the conduct
of the parties under the agreement, require fair prices,
investigate the agreement if necessary, and conduct studies,
perform analyses, and receive data and information on the price,
market, and demand for Alaska fish and seafood products.
Sec. 45.50.620 describes the fish price agreements that are subject
to approval by the commissioner. The only fish price agreements
that are subject to approval are (1) those collective agreements
between fishermen and a group of fish processors regarding the
price paid to fishermen for their fish; and (2) those collective
agreements between fishermen and an individual or a group of fish
processors regarding the minimum price that fish processors would
accept for their fish products.
Sec. 45.50.625 sets out the procedures and requirements for
approval of fish price agreements. The core of the section is
contained in subsection (c) which sets out the additions that the
commissioner must find in order approve the agreement.
Secs. 45.50.630 - 45.50.640 authorize the commissioner to hold
hearings, establish hearing procedures, and adopt regulations.
Sec. 45.50.645 sets out the misdemeanor penalty for violation of AS
45.50.610 - 45.50.650. or a regulation or an order adopted under AS
45.50.610 - 45.50.650. The penalty is the same as for violations
of the state antitrust laws.
Sec. 45.50.650 defines the terms: commissioner, fish fishermen,
fish price agreement, and fish processor.
Number 276
SENATOR TAYLOR asked if a group of fishermen organize a strike and
hold themselves out for a specific price with a group of
processors, are they in violation of antitrust laws. JIM FORBES of
the Department of Law in Anchorage responded that those fishermen
are exempt under federal law, but it is less clear that they are
completely exempt under state law. Currently, the state law allows
the fishermen to get together for the purpose of bargaining their
product, but it doesn't necessarily give the absolute right to get
together for the purpose of establishing a price. He added that
that language has never been tested in court, and he does not know
what a state court judge would say. He directed attention to
Section 1 in the committee substitute and the original bill, and he
said that change in state law would make it very clear that those
fishermen are exempt under state law, bringing it in line with the
federal exemption.
Number 303
SENATOR TAYLOR asked if the processor is exempt from state law or
federal law. JIM FORBES answered that as things stand today, as
long as there is only one processor on the other side of the table,
there is no problem. The problem arises when two or more
processors get together in any way, shape, or form. Then there is
a problem under both state and federal law. Senator Duncan's
original bill gets rid of the problem under state law, but the
processors would still have a problem under federal law. He said
the bigger issue is how do the processors get a good price from the
people that they sell to.
SENATOR TAYLOR observed that the fishing community has always
assumed that the processors had a great deal of power and influence
over the price at which they sold. However, the processors are
routinely dealing with people who are exempt from any of our laws
because they are Japanese buyers or European buyers, and there is
no law that prevents them from setting or fixing a price that they
as a cartel or group, or even individually, will offer to American
processors. JIM FORBES agreed that, in practice, that is exactly
right. SENATOR TAYLOR voiced his concern that we should take both
steps and provide some relief for processors too. MR. FORBES said
it is a very long and difficult process coming up with an antitrust
exemption under state law, but if the U.S. Congress were to address
this issue, they could provide an antitrust exemption for the
processors with language no more complicated than what is in
Section 1 of the bill.
Number 362
SENATOR LITTLE asked her understanding was correct that even the
latest version of the bill doesn't help out with the federal
issues. MR. FORBES responded that in his opinion, the current
version of the bill doesn't go as far as it needs to go. The
biggest problem in going to the state action group for providing
federal antitrust immunities, is that you have got to accomplish
the goal of at least establishing a minimum price that Alaska
salmon or other seafood products would come in on the international
market. Unless there is a mechanism in place, it enforces a
minimum price across the board so that not even one processor can
sell their products for less than that price, and it will defeat
the purpose.
Number 394
SENATOR DUNCAN asked Mr. Forbes if he felt it was worthwhile to go
back to the original bill that grants the state antitrust exemption
and then allows the opportunity to work with our Congressional
delegation to see if federal language can be adopted, or the
opportunity to work with the various interest groups and the
Administration to put together a well thought-out agency. MR.
FORBES answered that he was a little bit uncomfortable commenting
on policy issues, but, from a antitrust enforcement point of view,
it doesn't hurt anybody to pass the original bill even though it
doesn't confer full federal antitrust immunity. He added that from
a legal prospective, he can't see any reason not to take that first
step.
Number 442
SENATOR TAYLOR asked Mr. Forbes if was saying that the mechanism
being provided in the committee substitute wouldn't work. MR.
FORBES commended Mr. Utermohle's efforts in putting together the
draft committee substitute, but he said he thinks it is just so far
to go with this particular approach and he doesn't see how the
Legislature could accomplish it in the time remaining.
Number 488
RICK LAUBER, representing Pacific Seafood Processors Association,
said he believes the original bill is a good first step and it
should be pursued. There is some problem with the current
restrictions placed on the processors and fishermen in negotiating.
However, he does not support the committee substitute.
Mr. Lauber said there are a number of things in the committee
substitute that if they have do this in order to get the exemption,
then the exemption is not worth it. He believes the system would
be better if there were some relaxation of the antitrust laws to
merely allow two or more processors to negotiate with fishermen in
the same room at the same time.
Mr. Lauber said there is a lot of talk about the control of the
market by foreign buyers and of the investment and ownership by
Japanese companies in the seafood business operating in Alaska.
However, the largest company operating in Alaska is a company named
Trident and it is 100 percent solely owned by Americans, and it is
also the largest buyer and processor of salmon in Bristol Bay.
Icecycle Seafoods is the second largest buyer and processor in
Alaska and it is not only 100 percent owned by Americans, but it is
largely owned by Alaskans. Nelbro Packing Company, which is large
buyer in Bristol Bay, is a Canadian packing company. Ward Cove
Packing Company, another large processor and buyer in Bristol Bay,
is 100 percent owned by Americans. Ocean Beauty is another large
salmon processor in Alaska and it, likewise, has no Japanese
ownership in it. There are a couple of relatively large companies
that are Japanese ownership, but the vast majority of salmon is
purchased and processed by companies that are not owned or
controlled by Japanese.
Mr. Lauber stated that we don't have the market with the Japanese
that we would like to have with them; they are very good
businessmen and they are tough to deal with. However, the way it
works in business, the buyer wants to buy low and we want to sell
high, and we don't always get our way, he further stated.
Mr. Lauber said times have changed, and Alaska no longer controls
the salmon market; it happens to be dominated now by places like
Norway and Chili. He said this is not the time to be coming around
with some type of utopian concept, and he reiterated that the
original bill is a good first step.
TAPE 94-36, SIDE B
Number 012
KATE TROLL, Executive Director of Southeast Alaska Seiners and a
member of the executive committee for United Fishermen of Alaska,
voiced her concerns with the committee substitute. She said the
intent originally was to relax the atmosphere and to allow them to
enter into long-term contract negotiations with their processors,
but in looking over the committee substitute, she feels like they
would be doing just the opposite. She said in looking at the
original SB 306, she recognizes that to accomplish the objective it
would still necessitate going to the federal government to get that
type of exemption, but that seems to be the preferred approach as
opposed to the concept in the committee substitute.
Number 100
SENATOR TAYLOR said the original bill only addresses half of the
problem because it relates to exempting only the fishermen, and he
questioned if it shouldn't be requesting Congress to exempt the
processors as well. MS. TROLL answered what they are trying to
avoid is price fixing; they want to encourage price negotiations,
and she thinks there would be concerns about trying to get into
price fixing and monopoly if there was an exemption to allow
processors to agree among themselves and set the price.
Number 150
SENATOR DUNCAN said the second step is that if we can get the
federal exemption as a result of this bill, then the processors can
get together and talk with the fisherman. He stated passing SB 306
sends the message.
Number 167
GEORGE UTERMOHLE clarified that there were two things that the
committee substitute was trying to do. One was to allow groups of
fishermen to talk to groups of processors about the prices that
they'll exchange between themselves. The second was to increase
the bargaining power of the producers and the manufacturers in the
fishing industry in the state by allowing them to get together and
put a combined front together to the people they market their
product to in the national and international markets. RICK LAUBER
said he believes processors can do that now on international
markets, but not on domestic markets. JIM FORBES interjected that
he was not aware of any specific exemption under U.S. federal law
for that.
Number 195
SENATOR HALFORD withdrew his motion to adopt the draft committee
substitute and then moved to pass SB 306 out of committee with
individual recommendations. Hearing no objection, it was so
ordered.
There being no further business to come before the committee, the
meeting was adjourned at 3:00 p.m.
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