Legislature(1993 - 1994)
03/30/1993 08:40 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 123 An Act relating to loans for the purchase of individual fishery quota shares. CS HB 123 (FSH) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Commerce and Economic Development dated 3/05/93. HOUSE BILL 123 "An Act relating to loans for the purchase of individual fishery quota shares." REPRESENTATIVE FRAN ULMER introduced a new loan program to help Alaska fishermen living in the coastal communities. The U.S. Secretary of Commerce recently approved individual Fishery Quotas (IFQ's) for the halibut and black cod fisheries in Alaska. If all goes as planned, by mid-1994, these fisheries will no longer be open to all those who want to "wet a line". Instead, a new permit system will reserve catch quotas for individual fishermen who qualify for an IFQ. Gone will be the 24 hour openings, replaced by a season which may last from March through November. The new system is promoted as a solution to dangerous conditions created by derby style fishing. HB 123 provides financing for the purchase of IFQ's. The legislation authorizes loans of up to $300 thousand dollars for IFQ's to Alaska residents who have actively participated in the fishery during three of the last five years. She noted that the State currently finances the purchase of limited entry permits through a revolving loan fund with loans of up to $300 thousand dollars. The new legislation will expand the loan program to include IFQ's. ERIC FORRER, SELF, JUNEAU, ALASKA, spoke in support of HB 3 123. He added that the IFQ program would be good for the Alaskan coastal communities and it would allow Alaskan fishermen to retain the quota share which they were given. PAUL FUHS, COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, spoke in support of the legislation. HB 123 amends the Commercial Fishing Loan Program to allow Alaskan residents to finance the purchase of individual fishery quota shares. In order to be eligible, an applicant must: 1. Have been a two-year resident; 2. Have had a crew member or commercial fishing license for the year immediately preceding the date of application and any other two of the past five years; 3. Have actively participated in the fishery for which the shares are issued during three of the last five years; 4. Qualify as a transferee under applicable law. HB 123 also allows the Department to prequalify applicants for the purchase of fishery quota shares. Under this portion of the program, an applicant can obtain a 60-day commitment to finance fishery quota shares prior to locating the specific shares to be purchased. The bill would establish a $300 thousand dollars ceiling that a borrower can have outstanding at any point used in purchasing fishery quota shares. KELLEY SHARP, LOAN MANAGER, DIVISION OF INVESTMENTS, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, noted that the Division of Investments will be administering the legislation if it is passed. The legislation would represent an expansion of the program to promote a predominately resident fishery. There is a fiscal impact with the legislation. JAY GINTER, U.S. DEPARTMENT OF COMMERCE, NOAA/NMFS, JUNEAU, ALASKA, stated that the National Marine Fishery Service is neutral on the legislation. He noted that the Secretary of Commerce did approve the IFQ program for sable fish and halibut, but added that the IFQ program is complex. Representative Hanley questioned if the quotas would be "lien-able". Mr. Ginter thought they would. JERRY MCCUNE, PRESIDENT, UNITED FISHERMEN OF ALASKA, CORDOVA, ALASKA, pointed out that the United Fishermen of Alaska support the proposed legislation as it will allow 4 Alaskans a chance to be a part of a future with a larger vision fishing program. LINDA, BEHNKEN, E.D., ALASKA LONGLINE FISHERMEN'S ASSOCIATION, SITKA, ALASKA, (testified via teleconference), spoke in support of the legislation. [Attachment #1]. She noted that the legislation would provide opportunities for the entire State. (Tape Change, HFC 93-82, Side 1). Representative Hanley expressed his concern with the State becoming involved in assuming bank interest on the quota shares. In particular, with the concept of the State lending to those persons who can not qualify for a bank loan. Representative Ulmer stressed that the funds will only be lent to the "small guys" who would not have enough collateral to receive a loan from a bank. She added that once the IFQ is purchased, at that time they would then become eligible to qualify for the CDQ program. Representative Parnell questioned the residency requirements to participate in the program. Representative Ulmer stated it would be two years, the same as the existing permits. Representative Therriault strongly urged the State not to become involved in the "banking" business. Representative Ulmer stressed that if the legislation is not passed, the small fishermen in Alaska will become locked out of the fisheries which will be bought out by larger out-of-state groups, particularly in the black cod and halibut fishery. Commissioner Fuhs warned that sixty percent of the current shares will change hands if the legislation does not pass. He emphasized that this fishery will greatly impair the coastal communities in Alaska. The legislation is important as it will lower the price of limited entry. Representative Hanley asked the balance of the loan fund. Commissioner Fuhs stated amount is $5 million dollars. Representative Parnell questioned the anticipated default rate of the proposed loans. Commissioner Fuhs reiterated that these loans will be secured. He was assured that the quotas will be met. Representative Hanley voiced his concern that the Division of Investments has not developed a relationship between the supply and the demand of such proposed legislation. Representative Foster MOVED to report CS HB 123 (FSH) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. 5 CS HB 123 (FSH) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Commerce and Economic Development dated 3/05/93.