Legislature(2003 - 2004)

05/06/2004 09:15 AM House CRA

Audio Topic
* first hearing in first committee of referral
+ 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                                                               
MR. WINEGAR  provided the committee  with a list of  the impacted                                                               
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                                                               
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                                                               

Document Name Date/Time Subjects