Legislature(2003 - 2004)
05/06/2004 09:15 AM House CRA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 387-COMMERCIAL FISHING LOANS FOR QUOTA SHARES VICE CHAIR WOLF announced that the final order of business would be SENATE BILL NO. 387 am, "An Act authorizing the making of certain commercial fishing loans to eligible community quota entities for the purchase of certain fishing quota shares; and providing for an effective date." Number 1608 GREG WINEGAR, Director, Division of Investments, Department of Community & Economic Development (DCED), explained that SB 387 am makes a small change to the existing commercial fishing revolving loan fund, which has been around since the early 1970s. This legislation would allow loans to be made to a new type of borrower, community quota entities (CQEs), that is being created. The National Marine Fisheries Service (NMFS) is creating this new borrower. He explained that the North Pacific Council was concerned with regard to the loss of quota shares out of a number of Alaska's coastal communities, and therefore the North Pacific Council recommended the change. He pointed out that the committee packet should have documentation with regard to the communities that NMFS determined to be eligible. This legislation allows communities to form nonprofit corporations that can go out into the marketplace to purchase quota shares and lease them back to residents of the particular community. The goal is to improve the economic viability of these communities by allowing local ownership of fishing privileges, he said. MR. WINEGAR informed the committee that since this quota share program was created back in 1995, many communities have lost a number of their shares. Therefore, the North Pacific Council wanted to address the problem. The federal rule isn't scheduled to take effect until June 1st. Section 3 of the legislation has an effective date clause tying the effective date of the legislation to the effective date of the federal rule change. Mr. Winegar pointed out that these type of loans can already be made to individuals, and therefore much of the loan criteria will be the same for CQEs as it is for individuals. With regard to funding, Mr. Winegar stated that the department has adequate funding to handle loan demand. He related that the loan is self-sufficient, and therefore there are no general funds involved in this. Furthermore, existing staff will handle the loan requests, which resulted in the department submitting a zero fiscal note. He related his belief that the Alaska Department of Fish & Game supports the legislation and has submitted a zero fiscal note as well. Several other organizations support this legislation, such as the Gulf of Alaska Coastal Communities Coalition, and Tlingit and Haida Central Council. Mr. Winegar urged the committee's support because it will bring the commercial fishing revolving loan program in sync with the changes NMFS is making in the quota share program. Furthermore, it's consistent with the mission of the program. Most importantly, the legislation provides these communities with a tool to generate some economic activity in these communities. VICE CHAIR WOLF noted that the committee packet has neither letters of support nor the list of communities impacted by this legislation. MR. WINEGAR provided the committee with a list of the impacted communities. REPRESENTATIVE ANDERSON asked if the United Fishermen of Alaska (UFA) support SB 387 am. Number 1840 MR. WINEGAR said he didn't believe UFA has issued a formal opinion, and he didn't believe that UFA has any problems with the legislation. In response to Vice Chair Wolf, Mr. Winegar said that there are letters of support for the legislation and he would take care of getting those to the committee. VICE CHAIR WOLF asked if anyone wished to testify. There was no response. MR. WINEGAR informed the committee that the Gulf of Alaska coalition is visiting the small rural communities in order to explain the rule changes being made by NMFS. VICE CHAIR WOLF expressed concern that this legislation goes backwards. The legislation seems to return to a time when individual communities or an organization purchased quotas such that the situation would return to a time of fish traps and processors owning large portions of the catch. MR. WINEGAR noted that he didn't take part in the actual discussions that have been going on with the council for the past couple of years. However, he said he understood that the initial concern is that many of these shares have left the communities and this legislation would provide a tool to help get those shares back. VICE CHAIR WOLF highlighted that one of the state's larger seafood processors just purchased another seafood processor. Therefore, he said he was concerned with regard to conglomerates acquiring the quotas and returning the fishing industry back to the 1950s. Number 2000 REPRESENTATIVE KOOKESH suggested reviewing the rules for buying quotas. For instance, the only way an individual can purchase a halibut quota is if that individual originally participated in the fishery. Under the limited entry permit in Alaska, a processor can't own a limited entry permit, only individuals can. Representative Kookesh highlighted that SB 387 is sponsored by the governor and is economic development for rural Alaska. He said he wanted to be sure that this legislation isn't opposed just because it may benefit some of the Native communities in Alaska. VICE CHAIR WOLF commented that he is looking at the couple of communities in the Kenai Peninsula that will be impacted by this legislation. He further commented that he is trying to satisfy his own concerns. Vice Chair Wolf then inquired as to the wishes of the committee. REPRESENTATIVE ANDERSON said that he would move the legislation, when people have concluded any questions they may have. Representative Anderson noted that he concurred with Representative Kookesh with regard to the view of this legislation as economic development. REPRESENTATIVE KOOKESH pointed out that this isn't the only funding source these communities have available, rather this is just another funding source. The NMFS program will continue whether the state does anything with this legislation or not. VICE CHAIR WOLF clarified that when he hears the terminology "quota shares" he gets nervous. REPRESENTATIVE KOOKESH highlighted that the legislation includes some protections to ensure that harvesters "don't get their foot in the door." He noted his agreement with Vice Chair Wolf that he didn't want harvesters to end up owning all the quotas. Number 2169 REPRESENTATIVE SAMUELS moved to report SB 387 am out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SB 387 am was reported from the House Community and Regional Affairs Standing Committee.
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