00 Enrolled SB 124 01 Relating to requirements to obtain and maintain a fisheries business license; relating to 02 security required of fish processors and primary fish buyers; and providing for an effective 03 date. 04 _______________ 05 * Section 1. AS 43.75.011 is amended by adding a new subsection to read: 06 (c) Proceedings to suspend or revoke a license under AS 43.75.020(b)(3)(B) 07 are governed by AS 44.62. 08 * Sec. 2. AS 43.75.020 is amended to read: 09 Sec. 43.75.020. Application for license. (a) Application for a license shall 10 be filed with the department and accompanied by an annual fee of $25. A separate 11 annual fee is required for each plant specified in the application covered by the 12 license. The application must contain the name of the applicant, the line of business to 13 be licensed, place of business, and other facts that the department prescribes. The 14 applicant shall state that the applicant, as a condition of obtaining and maintaining 01 the license, agrees to pay 02 (1) the taxes levied under this title [TAX IMPOSED BY 03 AS 43.75.015 OR 43.75.100], and that the applicant will make a return and pay 04 the taxes [TAX] at the time provided by law; 05 (2) any seafood marketing assessment levied under AS 16.51; 06 (3) contributions imposed under AS 23.20 (Alaska Employment 07 Security Act); 08 (4) any administrative penalties assessed under AS 18.60.093 for a 09 violation of a provision of AS 18.60.010 - 18.60.105; and 10 (5) any applicable fishery sales, use, or severance taxes imposed by 11 a municipality in the state. 12 (b) Upon receipt of an [THE] application in proper form under (a) or (c) of 13 this section, accompanied by the annual fee, the department shall issue the license if 14 the 15 (1) applicant has paid in full, including interest and penalties, the 16 following: 17 (A) taxes levied under this title; and 18 (B) any assessments under AS 16.51; 19 (2) department has not received notification from the Department 20 of Labor and Workforce Development that the applicant has failed to pay in full 21 (A) an assessment of delinquent contributions that is final 22 under AS 23.20.205(c) or 23.20.220(c); or 23 (B) an administrative penalty that is final under 24 AS 18.60.093 or 18.60.097; and 25 (3) department has not received a copy of 26 (A) a final judgment obtained against the applicant for 27 unpaid fishery sales, use, or severance taxes imposed by a municipality in 28 the state; or 29 (B) a final administrative determination against the 30 applicant from a municipality in the state for unpaid fishery sales, use, or 31 severance taxes imposed by the municipality; the administrative 01 determination must be accompanied by a certification by the municipality 02 that the municipal administrative process is consistent with constitutional 03 requirements of due process and that the applicant has exhausted all 04 administrative remedies under the applicable municipal administrative 05 process. 06 (c) Instead of a license issued under (a) of this section, the department may 07 issue a direct marketing fisheries business license to a licensed commercial fisherman 08 who processes fishery resources caught using a vessel that does not exceed 65 feet in 09 overall length and is owned or leased by the commercial fisherman. The licensee may 10 place into commerce in the state and outside of the state processed or unprocessed 11 fishery resources caught using the vessel described in the license. Fishery resources 12 that are caught using the vessel and owned by the licensee from the time of harvest 13 through sale, as defined by the department by regulation, may be processed by the 14 licensee on the vessel, at a shore-based facility, or by means of custom processing 15 services obtained by the licensee. An application for a direct marketing fisheries 16 business license shall be filed with the department and accompanied by an annual fee 17 of $25. A separate direct marketing fisheries business license and annual license fee 18 are required for each vessel on which processing is performed. The application must 19 state the name and address of the applicant, the fishery resources for which the 20 applicant holds a commercial fishing entry permit or interim-use permit or quota 21 share, a description of the vessel and each shore-based facility where the applicant will 22 process fishery resources, and other information that the department prescribes by 23 regulation. The application must state that the applicant, as a condition of obtaining 24 and maintaining the license, agrees to pay the taxes, assessment, employment 25 security contributions, and penalties as set out in (a)(1) - (5) of this section [TAX 26 IMPOSED BY AS 43.75.015(d) OR 43.75.100, AND THAT THE APPLICANT 27 WILL MAKE A RETURN AND PAY THE TAX AT THE TIME PROVIDED BY 28 LAW]. A person who holds a direct marketing fisheries business license may not 29 under that license (1) purchase fishery resources for resale or processing for sale; or 30 (2) process fishery resources for another licensed commercial fisherman or for a 31 fisheries business licensed under this chapter. In this subsection, "licensed 01 commercial fisherman" means a natural person who holds a commercial fishing entry 02 permit or interim-use permit issued under AS 16.43 or a quota share issued under 03 federal law. 04 * Sec. 3. AS 43.75.055 is amended by adding a new subsection to read: 05 (g) Real property, a surety bond, or other security being used to secure 06 payment of the tax for the year preceding the application year may also be used to 07 secure payment of the estimated tax for the application year if the security is 08 acceptable to the department and the applicant has not failed to pay a tax under this 09 chapter in a timely manner during any of the three years preceding the application 10 year. 11 * Sec. 4. AS 44.25.040 is repealed and reenacted to read: 12 Sec. 44.25.040. Security for certain obligations. (a) A person applying for a 13 license as a fish processor or primary fish buyer shall file with the commissioner of 14 revenue a performance bond, conditioned upon the promise to pay the following: 15 (1) wages owing to all persons employed by the fish processor or 16 primary fish buyer, including contractual employee benefits; 17 (2) independent registered commercial fishermen for the price of the 18 raw fishery resource purchased from them; 19 (3) fees owing for the service of transporting raw fish; 20 (4) contributions imposed under AS 23.20 (Alaska Employment 21 Security Act). 22 (b) A fish processor or primary fish buyer that processes more than 30,000 23 pounds of fish a year or purchases more than $30,000 of fish a year shall file a 24 performance bond with the commissioner in the amount specified in this subsection. 25 The amount of the bond is $10,000 unless, during the five years preceding the 26 application, one of the following has occurred: 27 (1) a final judgment in excess of $10,000 was awarded against the 28 bond required under this section; if the final judgment against the bond was in excess 29 of $10,000 but less than $50,000, the amount of the bond is increased to a total of 30 $50,000; if the final judgment against the bond was $50,000 or more, the amount of 31 the bond is increased to a total of $100,000; 01 (2) the commissioner has determined that the fish processor has 02 engaged in the business of fish processor in the state or the primary fish buyer has 03 engaged in the business of primary fish buyer in the state while not in compliance with 04 this section and has not yet satisfied a final judgment entered against the fish processor 05 or primary fish buyer for payment for labor furnished to, raw fishery resources 06 purchased by, or raw fish transportation services provided to the fish processor or 07 primary fish buyer; if the fish processor has engaged in the business of a fish processor 08 or the primary fish buyer has engaged in the business of primary fish buyer while not 09 in compliance with this section and has not yet satisfied a final judgment for payment 10 for labor furnished to, raw fishery resources purchased by, or raw fish transportation 11 services provided to the fish processor or primary fish buyer, the amount of the bond 12 is increased to a total of $100,000; or 13 (3) the commissioner has determined under (j) of this section that a 14 claim against the bond filed by the Department of Labor and Workforce Development 15 under (i) of this section met the requirements in (i) of this section; if the amount of the 16 claim was in excess of $10,000 but was less than $50,000, the amount of the bond is 17 increased to a total of $50,000; if the amount of the claim was $50,000 or more, the 18 amount of the bond is increased to a total of $100,000; an increase in bond amount 19 under this paragraph may not be imposed until 45 days after the commissioner 20 determines under (j) of this section that the claim of the Department of Labor and 21 Workforce Development met the requirements in (i) of this section. 22 (c) A fish processor or primary fish buyer that processes 30,000 pounds or less 23 of fish a year and purchases $30,000 or less of fish a year shall file a performance 24 bond with the commissioner in the amount specified in this subsection. The amount of 25 the bond is $2,000 unless, during the preceding five years, one of the following has 26 occurred: 27 (1) a final judgment in excess of $2,000 was awarded against the bond 28 required under this section; if the final judgment against the bond was in excess of 29 $2,000 but less than $10,000, the amount of the bond is increased to a total of 30 $10,000; if the final judgment against the bond was $10,000 or more, the amount of 31 the bond is increased to a total of $20,000; 01 (2) the commissioner has determined that the fish processor has 02 engaged in the business of fish processor in the state or that the primary fish buyer has 03 engaged in the business of primary fish buyer in the state while not in compliance with 04 this section and has not yet satisfied a final judgment entered against the fish processor 05 or primary fish buyer for payment for labor furnished to, raw fishery resources 06 purchased by, or raw fish transportation services provided to the fish processor or 07 primary fish buyer; if the fish processor has engaged in the business of fish processor 08 or primary fish buyer has engaged in the business of primary fish buyer while not in 09 compliance with this section and has not yet satisfied a final judgment for payment for 10 labor furnished to, raw fishery resources purchased by, or raw fish transportation 11 services provided to the fish processor or primary fish buyer, the amount of the bond 12 is increased to a total of $20,000; or 13 (3) the commissioner has determined under (j) of this section that a 14 claim against the bond filed by the Department of Labor and Workforce Development 15 under (i) of this section met the requirements in (i) of this section; if the amount of the 16 claim was in excess of $2,000 but was less than $10,000, the amount of the bond is 17 increased to a total of $10,000; if the amount of the claim was $10,000 or more, the 18 amount of the bond is increased to a total of $20,000; an increase in bond amount 19 under this paragraph may not be imposed until 45 days after the commissioner 20 determines under (j) of this section that the claim of the Department of Labor and 21 Workforce Development met the requirements in (i) of this section. 22 (d) If a fish processor who has filed a performance bond under (c) of this 23 section processes more than 30,000 pounds of fish in a year or purchases more than 24 $30,000 of fish in a year, the fish processor shall, within seven days after the day on 25 which the 30,000 pound threshold or the $30,000 threshold is exceeded, notify the 26 commissioner and comply with (b) of this section. If a fish processor who has filed a 27 performance bond under (c) of this section processes more than 30,000 pounds of fish 28 in a year or purchases more than $30,000 of fish in a year, and does not comply with 29 (b) of this section within seven days after the date on which the 30,000 pound 30 threshold or the $30,000 threshold is exceeded, the fish processor shall suspend 31 processing fish until a bond has been filed under (b) of this section. 01 (e) If a primary fish buyer who has filed a performance bond under (c) of this 02 section purchases more than $30,000 of fish in a year, the primary fish buyer shall, 03 within seven days after the day on which the $30,000 threshold is exceeded, notify the 04 commissioner and comply with (b) of this section. If a primary fish buyer who has 05 filed a performance bond under (c) of this section purchases more than $30,000 of fish 06 in a year, and does not comply with (b) of this section within seven days after the date 07 on which the $30,000 threshold is exceeded, the primary fish buyer shall suspend 08 purchases of fish until a bond has been filed under (b) of this section. 09 (f) A fish processor or primary fish buyer may use only a surety bond, cash 10 deposit, or other negotiable security as a performance bond under this section. The 11 surety must be satisfactory in the determination of the commissioner. The use of other 12 negotiable security as a performance bond must be in a form acceptable to the 13 commissioner. The commissioner shall waive the filing of a performance bond under 14 this section if 15 (1) the fish processor or primary fish buyer has more than $10,000 in 16 lienable real property located in the state and provides proof of the property in a form 17 satisfactory to the commissioner; 18 (2) the fish processor or primary fish buyer is not required under (b) or 19 (c) of this section to post a bond in excess of $10,000; and 20 (3) within the five years preceding the application under AS 43.75.020, 21 an employee, fisherman, or contracted raw fish transporter has not obtained a final 22 judgment against the fish processor's or primary fish buyer's bond under this section. 23 (g) If an applicant for a license as a fish processor or primary fish buyer has 24 complied with this section, the Department of Revenue may issue that applicant a 25 license to engage in the business of fish processor or primary fish buyer. 26 (h) A claim against a fish processor or primary fish buyer for failing to pay an 27 employee for wages or contractual benefits owed, for failing to pay an independent 28 registered fisherman for the price of raw fishery resource purchased from the 29 fisherman, or for failing to pay an independent contractor for the transportation of raw 30 fish may be brought upon the bond filed under this section in the superior court of the 31 judicial district in which the work was done or in any judicial district in the state in 01 which jurisdiction may be obtained. If an action is brought upon the bond, a copy of 02 the complaint shall be served by registered or certified mail upon the commissioner at 03 the time the suit is filed. The commissioner shall transmit a copy of the complaint and 04 any judgment to the surety or holder of the negotiable security. If a judgment is 05 entered against cash deposited with the commissioner, the commissioner, upon receipt 06 of a certified copy of a final judgment, shall pay the judgment from the amount of the 07 deposit. The commissioner shall maintain a record, available for public inspection, of 08 all suits commenced under this subsection. 09 (i) A claim against a fish processor or primary fish buyer for failing to pay 10 contributions imposed under AS 23.20 may be brought by the Department of Labor 11 and Workforce Development against the bond filed under this section by filing a claim 12 against the bond with the commissioner, along with proof, satisfactory to the 13 commissioner, that the fish processor or primary fish buyer 14 (1) received a notice of assessment under AS 23.20.205; 15 (2) did not pay the amount specified in the notice of assessment within 16 30 days after receiving the notice of assessment or, if the assessment was contested 17 under AS 23.20.220, within 30 days after receiving the department's final decision 18 under AS 23.20.220(c); and 19 (3) did not file an appeal of the assessment under AS 23.20.220 or 20 filed an appeal but did not initiate a proceeding for judicial review under 21 AS 23.20.445 within 30 days after the department's final decision under 22 AS 23.20.220(c). 23 (j) If the commissioner determines that the Department of Labor and 24 Workforce Development has met the claim requirements in (i) of this section, the 25 commissioner shall forward the claim and supporting documents to the surety or 26 holder of the negotiable security. If the fish processor or primary fish buyer has 27 deposited cash with the commissioner, the commissioner shall pay the claim of the 28 Department of Labor and Workforce Development from the amount of the deposit. If 29 the commissioner determines that the Department of Labor and Workforce 30 Development has not met the claim requirements in (i) of this section, the 31 commissioner shall provide the Department of Labor and Workforce Development 01 with written notice of the deficiency of its claim. 02 (k) If a performance bond is insufficient to satisfy all claims filed against it 03 under this section, claims brought against the bond under (h) of this section have 04 priority over a claim filed against the bond under (i) of this section. The Department 05 of Labor and Workforce Development shall return to the commissioner money 06 received from a claim filed against a fish processor's or primary fish buyer's 07 performance bond under (i) of this section if an employee, fisherman, or contracted 08 raw fish transporter obtains a final judgment under (h) of this section against that fish 09 processor's or primary fish buyer's bond and the 10 (1) fish processor or primary fish buyer has not replenished the bond 11 after it was used to cover the claim filed under (i) of this section; or 12 (2) final judgment obtained by the employee, fisherman, or contracted 13 raw fish transporter is more than the amount of the bond available under (b) or (c) of 14 this section. 15 (l) The term of a performance bond expires two years after the fish processor 16 or primary fish buyer is no longer licensed in this state, except that if, during that two- 17 year period, a claim has been asserted against the bond, the term of the bond is five 18 years. If the surety on the bond wishes to cancel the bond, the surety may do so by 19 giving the commissioner written notice of intention to cancel. The cancellation is 20 effective 30 days after the notice is delivered to the commissioner. 21 * Sec. 5. AS 44.25.042 is amended by adding a new subsection to read: 22 (h) If the commissioner determines under AS 44.25.040(j) that a claim filed 23 under AS 44.25.040(i) is sufficient to allow collection against the performance bond 24 filed under AS 44.25.040, the fish processor's or primary fish buyer's license shall be 25 suspended until the amount of the claim under AS 44.25.040(i) is paid in full and the 26 performance bond is replenished. 27 * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).