Legislature(2009 - 2010)BARNES 124
04/11/2010 12:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB305 | |
| HB365 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 301 | TELECONFERENCED | |
| += | HB 365 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 305 | TELECONFERENCED | |
HB 365-FISH PROCESSOR FEES, LICENSES, RECORDS
2:35:33 PM
CO-CHAIR JOHNSON announced that the next order of business would
be HOUSE BILL NO. 365, "An Act relating to sharing records
regarding fish purchased by fish processors with certain federal
agencies, to requirements to obtain and maintain a fisheries
business license, and to payment of industry fees required of
fish processors; and providing for an effective date."
2:35:49 PM
REPRESENTATIVE CHARISSE MILLETT, Alaska State Legislature,
presented HB 365 as sponsor. She described HB 365 as "a
completion of a bill that was started in 2002" regarding
fisheries permit buybacks. She explained that the intent of
allowing buybacks of fisheries permits is to stabilize and
sustain the fishery. The bill would allow a fishery to buy back
a permit with the agreement of two-thirds of its permit holders,
and would give the fishery access to $21 million through the
federal marine fisheries program. She noted that the Southeast
Alaska Purse Seine fishery is the first to have elected to
pursue the buyback. She related that fisheries that want to buy
back a fishery must agree to a self-assessed tax of 3 percent on
each sale of fish they catch to cover the costs of the program.
Furthermore, the program is voluntary; only those fishermen who
choose to sell their permits may do so. She reported that
currently over half of the permits in the Southeast Alaska Purse
Seine fishery are not being used. She remarked upon the unusual
occurrence of a large group of fishermen coming to agreement on
any issue.
2:38:15 PM
REPRESENTATIVE KAWASAKI said HB 365 was previously heard by the
House Special Committee on Fisheries, but he did not recall
there being a letter of intent, which he observed has been
added. He questioned the reason for the addition of the letter
of intent, and asked if the focus of the bill is being limited
to Southeast Alaska.
REPRESENTATIVE MILLETT responded that the Southeast Alaska Purse
Seine fishery is "the only group of fishermen that [has] decided
to go forward with the fisheries buyback," although the buyback
is open to all of Alaska's fisheries. Regarding the letter of
intent, she noted that people in "the processor group" were
concerned about "the ability of the $21 million to buy back a
portion of permits that exceeded what they thought they needed
to keep their processors full." She indicated a connection
between the letter of intent and the processors being
comfortable with the legislation. In response to a follow-up
question, she clarified that the letter of intent is specific to
"this buyback program"; however, the bill itself does not limit
participation to Southeast fisheries.
2:40:04 PM
REPRESENTATIVE P. WILSON noted that in the committee packet is a
memorandum of understanding between the producers and fishermen.
2:40:47 PM
REPRESENTATIVE SEATON directed attention to language in Section
2, on page 3, and he asked the bill sponsor to confirm that
"department" is the Department of Revenue and "annual fee" is a
business license fee.
REPRESENTATIVE MILLETT answered that is correct.
REPRESENTATIVE SEATON noted that there are other buyback
programs, such as the Bering Sea Crab fishery program, which
could fall under HB 365. He said there is a situation in the
bill in which the Department of Revenue would be offering a
business license and denying it based on federal provisions. He
said the federal government has the ability to "search and seek"
its own remedies. He opined that it is problematic for the
state to deny a business the ability to operate in state waters
because of a federal obligation, and he relayed that he would be
offering an amendment to address this issue.
2:42:35 PM
REPRESENTATIVE MILLETT, in response to Co-Chair Johnson,
confirmed that the buyback program has a federal funding
mechanism. She said Representative Seaton's concern relates to
an agreement between the Southeast Alaska Purse Seiner fishery
and National Marine Fisheries Service (NMFS) to ensure that the
fish tickets collected by processors make it to NMFS so it can
not only collect the tax but also administer the program. She
said this is the main focus of the bill, and Representative
Seaton's amendment would gut that. She said that without the
fish tickets there would be no ability to assess the tax. In
response to Co-Chair Johnson, she indicated that the Department
of Revenue was also involved in the agreement.
2:44:16 PM
REPRESENTATIVE SEATON clarified that Section 1 addresses the
issue of fish tickets, but that he is concerned about language
in Section 2, which proposes not allowing the Department of
Revenue to issue a license to a processor. He said Sections 2
and 3 are about the fees and not about the data.
2:45:15 PM
REPRESENTATIVE JOHNSON said he would like the amendment
mentioned by Representative Seaton to be offered in order to
hear the testimony related to it.
2:45:40 PM
REPRESENTATIVE SEATON moved to adopt Amendment 1, labeled 26-
LS1514\A.3, Kane, 4/1/10, which read as follows:
Page 1, lines 2 - 3:
Delete ", to requirements to obtain and maintain
a fisheries business license, and to payment of
industry fees required of fish processors"
Page 3, line 19, through page 5, line 6:
Delete all material.
Renumber the following bill section accordingly.
REPRESENTATIVE P. WILSON objected for discussion purposes.
2:46:04 PM
REPRESENTATIVE SEATON offered his understanding that the
committee packet contains information regarding public law, the
buyback, and the Reduction Act, and that payments and
collections shall be in accordance with requirements of U.S.C.
1801 - not just a negotiation between Alaska authorities and
NMFS, but a requirement under federal law to ensure payments are
collected. He noted that the Internal Revenue Service (IRS) is
a part of this, as well. He indicated that there is nothing
under the federal law that requires it to also be under state
law.
2:47:37 PM
CO-CHAIR JOHNSON reminded the committee of his intent to hear
testimony and come back to the proposed Amendment 1, which he
opined is germane to the entire bill.
2:48:09 PM
REPRESENTATIVE MILLETT asked the committee to remember that the
program through which the Southeast Alaska Purse Seiners have
worked to attain money is a federal one. Taking the business
license portion of the bill out, she warned, will leave no
mechanism for enforcement for the Southeast Alaska Purse Seiners
to receive the money or pay it back. She said she cannot
imagine that any processor would not "comply with this."
2:49:39 PM
BOB THORSTENSON JR., Executive Director, Southeast Alaska
Seiners Association, testified that when the association began
work on the buyback program in 2002, it was part of the Alaska
State Legislature Salmon Task Force. He said the association
already has total congressional authorization and has received
$3 million in the form of a grant from the federal government,
and it has purchased 35 permits with that money. He said
approximately one-quarter of the entire program has already been
paid for by "you" and the federal government. He noted that at
first, the processors had some concerns, but the association
worked through those with a memorandum of understanding (MOU)
and a letter of intent.
MR. THORSTENSON stated that the proposed Amendment 1 would "kill
this and send us back into the dark ages." He said he
appreciates the concern held by some people. He stated, "We
didn't enter into this attempting to lead Alaskans into some
type of a new relationship with the federal government where
they could somehow shut down our processors and then we'd all be
stuck not fishing." He said the association has spoken with all
the major processors involved, and he offered his understanding
that Trident Seafoods, for example, has said it pays taxes to
the State of Alaska and has no intention of ever not doing so,
"so, in that sense, this won't ever apply to us." He noted that
the Department of Law, "CVC," and the Department of Revenue all
had people at the table working on this issue; the issue was
extremely vetted with the administration, and the purpose of his
coming before the legislature today is to ensure that the issue
is vetted with the legislature, as well. He reiterated that the
association is opposed to the proposed Amendment 1, but
emphasized the association's support of the bill, with the MOU
and the letter of intent, and he urged the committee to support
it.
2:52:49 PM
CO-CHAIR JOHNSON related that Mr. Thorstenson had said he had
moved to Juneau "as a result of this bill."
2:52:59 PM
REPRESENTATIVE SEATON asked if the major processors to which Mr.
Thorstenson had referred buy fish from federal waters.
MR. THORSTENSON estimated that nearly every one of the major
Southeast Alaska purse seine and salmon processors "also buys
fish in federal waters"; and nearly every one of them has had
its attorneys and/or CEOs, CFOs, and lobbyists look at this
legislation.
REPRESENTATIVE SEATON concluded that in purchasing fish from
federal waters, those entities would be required to hold an NMFS
permit.
MR. THORSTENSON said he presumes so, but related that he
personally does not purchase fish from or fish in federal
waters.
CO-CHAIR JOHNSON questioned if the proposed Amendment 1 would
"violate the agreements of the agreement."
2:53:51 PM
THOMAS LENHART, Assistant Attorney General, Natural Resources
Section, Civil Division (Juneau), Department of Law, responded,
"It is my opinion that the National Marine Fisheries Service
would not go through with this program without it." He related
that he has had the opportunity to work with council from NMFS,
as well as "some of the program people" for the last three
years, and he said the biggest sticking point in [NMFS] doing
this program has always been a mechanism for them to have
assurance that they will get repaid. He said this is different
from other buybacks [NMFS] has done, because he indicated others
have been in federal waters and done through federal programs
where mechanisms are already in place. But in this program,
[NMFS] would be funding a buyback in a fishery that is entirely
state run.
MR. LENHART explained that NMFS has some cumbersome and
uncertain mechanisms for collecting debt; it basically has to
rely on a civil action, bringing in the U.S. Department of
Justice to try to collect a debt. The entity has made it clear
from the start that it needs "a little bit of a safe assistance
here with the mechanism that would do two things." He said the
first part of the bill would require the state to share with
NMFS the information on fish tickets that would be confidential
otherwise, so that NMFS would have some documentation of what
has actually been caught and what is due. Mr. Lenhart stated
that [NMFS] remains concerned about an appropriate mechanism to
guarantee that money is collected by the processors and turned
over to the federal government. He stated, "This was the one
mechanism that people were able to agree upon." He offered his
understanding, based on his conversation with NMFS over the
years, that the future of the whole program is "very much in
doubt if this amendment goes through."
2:56:36 PM
REPRESENTATIVE SEATON, regarding the processors collecting money
and the sharing of confidential information, asked, "How big of
a hook is it for them to put a hold on a federal fisheries
permit and [prevent] those folks from buying any fish from
federal waters ...?"
2:57:14 PM
MR. LENHART said he has never had that discussion and cannot
speak for NMFS. Notwithstanding that, he imparted that NMFS's
council was "not comfortable with that" and "did not feel that
was adequate."
2:57:39 PM
REPRESENTATIVE SEATON asked Mr. Lenhart to clarify if he is
saying that it was not adequate or that "it wasn't proposed that
they put a hold on the fisheries permits that the National
Marine Fisheries Service issues, instead of requiring the state
to put a hold on the licenses it issues."
MR. LENHART replied that based on his conversations with [NMFS]
over the years, that entity does not feel it has "an adequate
remedy." He reiterated that he did not specifically discuss
what Representative Seaton is suggesting; however, he stated
that [NMFS] was seeking any mechanism that it felt would be
effective, and it concluded that it does not have one.
2:58:31 PM
ROB ZUANICH, Manager, Southeast Revitalization Association,
stated, "This bill is essential to the implementation of our
consolidation buyback program." He said that four years after
the Alaska State Legislature passed a bill allowing salmon
permit holders to form nonprofit associations to reduce or buy
back permits in the fishery, the U.S. Congress amended the
Magnusson Stevens Act, which made SRA eligible for a federal
loan to finance the program. He noted that this would be the
first time this program would be used in state water fisheries.
He relayed that the loan would be administered by the fishery
service and repaid by an assessment on the catch of fishermen
remaining in the fishery. The loan will be funded, he said, and
fishery services need assurances that it can "timely audit
repayment of the loan," and that there is a mechanism to ensure
collection of the assessment. Mr. Zuanich stated that [HB 365]
would provide that assurance. He said the bill language
carefully balances the need of the fishery service and the buyer
or processor of the salmon who is responsible for the collection
and remittance of the assessment.
MR. ZUANICH said the proposed Amendment 1 not only would be
fatal to the program, but also is misguided and fails to
recognize that it is state fishermen and state processors that
want this mechanism. He stated, "We could see nothing more
detrimental than to have a recalcitrant buyer of salmon withhold
the tax and then not remit it to the federal government to repay
the loan we must repay." Equally troubling, he opined, would be
processors or buyers that did not withhold the tax and had an
unfair advantage over those processors who wanted to play the
game fairly. He said the mechanism is not only required by the
fishery service, but is also urgently needed by fishermen and
processors who want this to be a fair, equitable, and fully-
funded program.
3:01:44 PM
JOE PLESHA, Chief Legal Officer, Trident Seafoods Corporation,
Testifying in support of HB 365, noted that Trident Seafoods
Corporation has salmon processing facilities in Southeast
Alaska, at Ketchikan, Petersburg, and Wrangell. He related that
early on in this process, Trident had concerns that the
magnitude of the buyback may be too great, because since at
least 2002, processors have invested heavily in value-added and
increased production of pink salmon, so that now "we are all
searching for more boats to fish for our plants." Mr. Plesha
expressed appreciation for the work of Mr. Thorstenson and the
Southeast Alaska Purse Seiners fishery, with whom he indicated
Trident was able to negotiate "a floor below which they've
committed not to buy back permits," which allows Trident to
support the proposed legislation, along with the letter of
intent from the legislature acknowledging that the floor exists.
MR. PLESHA stated that while he appreciates the purpose for
which Representative Seaton has offered Amendment 1, Trident has
an accounting staff dedicated to ensure that the corporation
correctly pays its taxes and meets all its requirements, and he
expressed confidence that "we'll be able to do that without a
great deal of extra burden." He clarified that Trident Seafoods
Corporation does not believe that the proposed Amendment 1 is
necessary.
3:03:30 PM
FRANK M. HOMAN, Chairman/Commissioner, Commercial Fisheries
Entry Commission (CFEC), Alaska Department of Fish & Game
(ADF&G), stated that CFEC has worked for a number of years with
the Southeast Alaska Purse Seiners fishery, and it is taking
direction from state statute that was passed by the legislature
in 2002 that authorized these programs. He said CFEC's role is
to facilitate the wishes of the legislature. He said the
procedures resulted from discussions during [the Alaska Joint
Legislative Salmon Industry Task Force], which was attended by
fishermen and processors. He characterized [HB 365] as the last
phase of a series of legislative initiatives spanning the last
8-10 years.
MR. HOMAN, regarding the proposed Amendment 1, drew attention to
language in Section 3, which states that NMFS would not be owed
to arbitrarily seek to withhold a business license, but would
have to exhaust all legal administrative remedies. Where this
could occur, he said, is with "some maverick processor who's not
following the rules"; however, he noted that the committee had
just heard from one of the major processors that it does
accounting and knows the procedures. He said he thinks it is
unlikely that any processor would not comply with the federal
requirements.
3:06:34 PM
REPRESENTATIVE SEATON said he was on the aforementioned task
force and supported the program; however, he recollected that
there never was a discussion of withholding state business
licenses. He asked if that issue was a private negotiation.
3:07:08 PM
MR. HOMAN responded that the program in general was discussed
[by the task force]; however, he offered his understanding that
the specifics of HB 365 were not even on the table at that time.
He said, "This came about in the last several years with
negotiations with the National Marine Fisheries."
3:07:31 PM
JEREMY JENSEN testified on behalf of himself in support of HB
365. He related that he is a lifetime resident of Petersburg
and has worked as a commercial salmon seiner for the past 10
years. He stated opposition to the proposed Amendment 1.
3:08:18 PM
MITCH EIDE testified on behalf of himself in support of HB 365.
He related that he is a lifelong resident of Petersburg, and
said he has operated a seiner in Southeast Alaska for 25 years.
He said there are fishermen who support this legislation who
have been trying for eight years to get this program started.
He expressed his wish that his five-year-old will be able to
take his place some day. He urged the committee to support the
bill without the proposed Amendment 1.
3:09:02 PM
TROY THOMASSON testified on behalf of himself in support of HB
365. He said he is a lifelong resident of Petersburg, and he
has been an owner/operator of a seiner for the last 10 years.
3:09:32 PM
CO-CHAIR JOHNSON, after ascertaining that no one else wished to
testify, closed public testimony on HB 365.
3:09:43 PM
REPRESENTATIVE SEATON, referring back to Amendment 1, said the
committee has heard in testimony that the processors have
federal fisheries permits and obligations, and NMFS has full
applicability to withhold licenses, as well as its own ways of
enforcing this program. He said there have been instances where
federal government has "come down with REAL ID" to enforce
certain things, and the state has consistently said it does not
want to tie its hands with the requirements of the federal
government when those requirements are not appropriate. He
noted that listed on page 3, [line 26, through page 4, line 6],
there are "a number of conditions where we can withhold a
business license"; however, he said nowhere in the language does
it say that "we're going to withhold these for ... federal
government obligations." He said he understands that it is
convenient for people to negotiate and say "we" will withhold
our Alaska business licenses based on a desire by a federal
agency - "not to exert their control through their own licenses"
- but he said he thinks this is a matter of state's rights, and
he opined that it is important to "make the requirements in the
states and the political subdivisions of the state - not the
federal government."
3:12:01 PM
REPRESENTATIVE P. WILSON maintained her objection to Amendment
1.
A roll call vote was taken. Representatives Seaton and Kawasaki
voted in favor of Amendment 1. Representatives Tuck, P. Wilson,
Olson, Edgmon, and Johnson voted against it. Therefore,
Amendment 1 failed by a vote of 2-5.
3:13:09 PM
REPRESENTATIVE EDGMON moved to report HB 365 out of committee
with individual recommendations, accompanying fiscal notes, and
letter of intent. There being no objection, HB 365, with
attached letter of intent, was reported from the House Resources
Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 305 REV Qualifying For the AGIA Tax Inducement - Final.pdf |
HRES 4/11/2010 12:00:00 PM |
SB 305 |
| SB 305 LogsdonAssociates HRES 4.09.10.pdf |
HRES 4/11/2010 12:00:00 PM |
SB 305 |
| SB 305 REV Modeling Runs - Back-Up - Final.pdf |
HRES 4/11/2010 12:00:00 PM |
SB 305 |
| SB 305 REV How the AGIA Gas tax Inducement Works - final.pdf |
HRES 4/11/2010 12:00:00 PM |
SB 305 |
| SB 305 REV Cost Allocation Methodology - final.pdf |
HRES 4/11/2010 12:00:00 PM |
SB 305 |