Legislature(1993 - 1994)

03/15/1993 08:00 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HB 123:  LOANS FOR IFQ'S                                                     
                                                                               
  Number 035                                                                   
                                                                               
  REPRESENTATIVE FRAN ULMER, PRIME SPONSOR OF HB 123,                          
  described the bill as a simple step to make loans available                  
  for Alaskans to participate in the Individual Fisheries                      
  Quota (IFQ) program through the purchase of quota shares.                    
  She noted the program would work in a way similar to the                     
  limited entry permits, and remarked that although many                       
  Alaskans were opposed to IFQs, the program is now law and HB
  123 would allow more Alaskans to participate.  She also                      
  noted the bill was sponsored in response to a suggestion by                  
  Juneau halibut fisherman, Eric Forrer.                                       
                                                                               
  Number 079                                                                   
                                                                               
  VICE CHAIR BILL HUDSON questioned whether the IFQ program                    
  was still before the U.S. Secretary of Commerce.  He                         
  understood the program had not been formally adopted by the                  
  secretary.                                                                   
                                                                               
  REPRESENTATIVE ULMER understood the IFQ program had been                     
  adopted approximately six weeks ago.  She said Rick Lauber,                  
  a member of the North Pacific Fisheries Management Council,                  
  could explain the status of the IFQ program to the                           
  committee.                                                                   
                                                                               
  Number 104                                                                   
                                                                               
  GREG WINEGAR, LOAN MANAGER, ALASKA DEPARTMENT OF COMMERCE                    
  AND ECONOMIC DEVELOPMENT (DCED), expressed the DCED's                        
  support of the legislation and described HB 123 as an                        
  extension of the DCED's existing loan program.  He said the                  
  IFQ loans would help promote a predominantly resident                        
  fishery.  The fiscal note submitted by the DCED, he said,                    
  was based on an anticipated starting date in March, 1994.                    
  Although the number of loans to be made is not known, he                     
  said the DCED expected a lot of activity.  Funding was                       
  requested for three positions: a loan examiner in Juneau,                    
  one in Anchorage, and a loan closer to handle documentation,                 
  he advised.                                                                  
                                                                               
  Number 134                                                                   
                                                                               
  REPRESENTATIVE CON BUNDE asked whether additional general                    
  funds would be required, or if the program would be self-                    
  sustaining.                                                                  
                                                                               
  MR. WINEGAR replied that the DCED anticipated a surplus of                   
  approximately $5 million in the commercial fishing loan                      
  fund.  Historically, he explained, more money has come into                  
  the fund than has gone out.  Normally, the funds are                         
  reappropriated back to the general fund, but the $5 million                  
  will have to be amended so it would not go to the general                    
  fund.  The net effect, he said, would be zero in terms of                    
  new funds.                                                                   
                                                                               
  Number 154                                                                   
                                                                               
  REPRESENTATIVE BUNDE asked whether the reappropriation had                   
  already been calculated into the present budget.                             
                                                                               
  MR. WINEGAR confirmed the reappropriation was in the budget                  
  bill.                                                                        
                                                                               
  REPRESENTATIVE BUNDE commented that it would look as if $5                   
  million were being taken from the general fund, even though                  
  it came from the commercial fishing loan fund to begin with.                 
                                                                               
  REPRESENTATIVE ULMER interjected that it would show as a                     
  reduction in revenues, not as an expenditure.                                
                                                                               
  Number 180                                                                   
                                                                               
  CHAIRMAN WILLIAMS announced the committee would begin to                     
  hear testimony from the teleconference sites.                                
                                                                               
  Number 184                                                                   
                                                                               
  KRIS NOROSZ, DIRECTOR OF THE PETERSBURG VESSEL OWNERS                        
  ASSOCIATION, testified from Petersburg by teleconference in                  
  support of HB 123.  She told the committee now that the IFQ                  
  program has been adopted for the sablefish and halibut long-                 
  line fisheries, the association believes it is in the                        
  state's best interest to assist fishers in obtaining quota                   
  shares.  She referred to the present state loan system for                   
  the purchase of limited entry permits, and called it a                       
  tremendous way to allow Alaskans to participate in the                       
  fishery.  Expanding the loan system to include loans for the                 
  purchase of quota shares, she added, is a logical step for                   
  the state to take.                                                           
                                                                               
  Number 200                                                                   
                                                                               
  CHAIRMAN WILLIAMS noted Representative Jeannette James                       
  joined the meeting at 8:16, and Representative Eldon Mulder                  
  arrived at 8:22 a.m.                                                         
                                                                               
  GERON BRUCE, SPECIAL ASSISTANT TO THE COMMISSIONER OF THE                    
  ALASKA DEPARTMENT OF FISH AND GAME (ADF&G), told the                         
  committee the ADF&G supports HB 123.  He said the                            
  legislation would help ensure maximum participation in the                   
  IFQ program, and noted 80% of existing limited entry permits                 
  are held by Alaskans.  He explained that the state's loan                    
  program has been important in keeping the percentage high.                   
                                                                               
  Number 220                                                                   
                                                                               
  LINDA BEHNKEN, ALASKA LONGLINE FISHERMEN'S ASSOCIATION,                      
  testified by teleconference from Sitka in support of HB 123.                 
  She urged the legislation be moved forward quickly.  She                     
  commented that the loan program would allow Alaskans to                      
  participate in the IFQ program to the maximum extent                         
  possible, and would ensure that Alaskan fishermen remain                     
  competitive in the market, as well as help ensure coastal                    
  communities continue to receive the product they depend                      
  upon.  Participation in the IFQ will provide revenues both                   
  to the communities and to the state, she added.  Since                       
  recipients could begin to receive notification of their                      
  allocations as early as 1994, and the program could be                       
  implemented as early as 1995, she again urged the state to                   
  move forward with HB 123 as quickly as possible.                             
                                                                               
  MS. BEHNKEN noted a high level of transfers could be                         
  expected in the early stage of the program, so it would be                   
  important to have a quota share financing program in place                   
  by then.  She also added her organization's support for the                  
  state's effort to organize a meeting of fisheries, economic                  
  and mining experts to better define the loan program.  She                   
  understood there is a move in that direction that Paul Fuhs                  
  has been working on to organize a program which would be                     
  followed by workshops in the different communities.  Ms.                     
  Behnken said this would be beneficial to the state and the                   
  initial participants in the loan program.                                    
                                                                               
  Number 273                                                                   
                                                                               
  REPRESENTATIVE BUNDE asked Ms. Behnken to speculate on the                   
  demand once the IFQ shares are available for transfer, and                   
  an estimate on what prices might run.                                        
                                                                               
  MS. BEHNKEN responded that she has reviewed quota share                      
  programs in other countries and other areas where they have                  
  been implemented.  It seems the price often ran                              
  approximately one to three times the ex-vessel price on a                    
  per pound basis.  She expected initially there would be some                 
  inflation of prices as people scramble to grab whatever                      
  quota share they can find, followed by a lowering of prices                  
  as the program settles into place.                                           
                                                                               
  Number 287                                                                   
                                                                               
  REPRESENTATIVE BUNDE asked whether having a loan program in                  
  place such as the one proposed in HB 123 might encourage the                 
  inflation of prices.                                                         
                                                                               
  Number 290                                                                   
                                                                               
  MS. BEHNKEN had heard similar concerns from people who had                   
  been involved in the limited entry loan program.  It seemed                  
  to her that prices might be limited by the ceiling the state                 
  puts on the amount it will lend for shares.  She speculated                  
  banks or loan programs in other areas, particularly                          
  Washington and Oregon, will make loans available to                          
  residents of those states to participate in the quota                        
  system.                                                                      
                                                                               
  VICE CHAIR HUDSON asked Ms. Behnken whether she agreed that                  
  economic and social impact studies should be done to look at                 
  the effects of the IFQs, particularly in areas like Kodiak                   
  and Cook Inlet.                                                              
                                                                               
  Number 325                                                                   
                                                                               
  MS. BEHNKEN responded that the IFQ program had been approved                 
  by the Secretary of Commerce, but the funding had not yet                    
  been appropriated, and the final rules were not signed off                   
  on by the Office of Management and Budget.  The program as a                 
  whole was adopted, and she cited economic studies on the                     
  distribution of initial quota share allocations.  She said                   
  the state seems to be calling for a more predictive study of                 
  who is likely to buy, to sell, and where the quota shares                    
  might go.  She believed that kind of study would be                          
  difficult to do.  Her suggestion for directing who might buy                 
  and where the shares might go, was through a loan program as                 
  proposed in HB 123.  She cautioned that conducting another                   
  study might slow down progress in preparation for the                        
  implementation of the IFQ program.                                           
                                                                               
  Number 351                                                                   
                                                                               
  CHAIRMAN WILLIAMS announced the committee would next hear                    
  testimony in Juneau.                                                         
                                                                               
  ERIC FORRER testified in support of HB 123, and said as an                   
  independent halibut fisherman, he believes it is absolutely                  
  necessary for Alaskans to participate in the IFQ program,                    
  which he characterized as a response to problems in the                      
  fisheries, not the cause of them.   He referred to his                       
  experience in the early 1960's as a fisherman on the lower                   
  Yukon River, which he said taught him the importance of                      
  connections between local resource-based industry and                        
  communities.                                                                 
                                                                               
  MR. FORRER cautioned that unless financing was available to                  
  local fishermen, the quota would end up in the hands of                      
  others.  He noted the critical point would be whether the                    
  halibut fishery could support the debt service incurred to                   
  get into the fishery.  Better financed outside fishermen                     
  will be able to afford a longer pay-off term if the halibut                  
  fishery itself does not have to support the quota share.  A                  
  state loan program, he said, is probably the only                            
  alternative for fishermen who do not have the financing                      
  options of larger fishing interests.                                         
                                                                               
  MR. FORRER added economists have made the point that the IFQ                 
  program is an opportunity for the state only if the state                    
  and communities make financing available that will let local                 
  fishermen participate in the program.                                        
                                                                               
  Number 415                                                                   
                                                                               
  REPRESENTATIVE JOE GREEN asked whether, under the current                    
  state loan system, there were no other loans available for                   
  the purchase of IFQ shares.                                                  
                                                                               
  MR. FORRER understood individuals could not currently borrow                 
  for the purpose of purchasing halibut shares.                                
                                                                               
  CHRIS MOSS testified by teleconference from Homer in support                 
  of HB 123.  He noted the loan program would provide equal                    
  access to the shares to Alaskans who might not qualify for                   
  other types of loans.                                                        
                                                                               
  Number 457                                                                   
                                                                               
  RICK LAUBER, MEMBER OF THE NORTH PACIFIC SEAFOOD PROCESSORS                  
  ASSOCIATION, AND CHAIRMAN, NORTH PACIFIC FISHERIES                           
  MANAGEMENT COUNCIL, referred to Representative Hudson's                      
  question regarding the status of the IFQ program's approval                  
  by the U.S. Secretary of Commerce.  He confirmed the program                 
  was approved, but delays in implementation were due to the                   
  pending nature of funding.  Mr. Lauber did not argue with                    
  the possibility of implementation as early as 1995.  He                      
  agreed the state legislature should move ahead with HB 123,                  
  and suggested the program could use more funding.                            
                                                                               
  MR. LAUBER referred to Ms. Behnken's estimate of the sale                    
  price of quota shares, and speculated the price will                         
  actually be higher.  He agreed the initial price will be                     
  inflated, and stressed the importance of this.  The initial                  
  go-round, he said, would be crucial to Alaskans, and whether                 
  they would be able to buy shares while a large number of                     
  them are available.                                                          
                                                                               
  MR. LAUBER called the proposed loan program in HB 123 a "no-                 
  lose" situation because the permits would be so valuable.                    
  He expressed concern with the implications of the North                      
  American Free Trade Act, and the possibility for Canadian or                 
  Mexican sham companies purchasing shares and getting into                    
  the fishery "through the back door."                                         
                                                                               
  Number 510                                                                   
                                                                               
  REPRESENTATIVE GREEN asked Mr. Lauber to clarify whether 80%                 
  of the catch under the program would be allocated to Alaskan                 
  fishermen.                                                                   
                                                                               
  MR. LAUBER did not have the figures, and said the                            
  allocations differed between the black cod and halibut                       
  fisheries.  In neither scenario, he said, would Alaska get                   
  anywhere near 100%.  He tentatively estimated closer to a                    
  70% allocation for Alaskans in the halibut fishery, and 50%                  
  in the black cod fishery.  He added a number of people will                  
  qualify for quota shares who are not now in the fishery.                     
                                                                               
  REPRESENTATIVE GREEN asked if Mr. Lauber could forecast what                 
  might prohibit the IFQ shares allocated among Alaskans now                   
  from being sold to outside interests in the future.                          
                                                                               
  MR. LAUBER replied there was no residency restriction on the                 
  sale of the shares, and it would be illegal to do so.                        
                                                                               
  Number 552                                                                   
                                                                               
  REPRESENTATIVE GREEN asked whether such a provision could be                 
  put on the program.                                                          
                                                                               
  MR. LAUBER clarified the IFQ program, as a federal law,                      
  cannot have provisions attached by states.                                   
                                                                               
  Number 570                                                                   
                                                                               
  REPRESENTATIVE BUNDE referred to Mr. Lauber's suggestion                     
  that more money be put into the loan program.  He asked                      
  specifically whether Mr. Lauber meant more money overall, or                 
  a larger loan per individual, than the current $300,000                      
  amount.                                                                      
                                                                               
  MR. LAUBER answered that the quota shares will initially be                  
  worth between three and ten times the value of the sale of                   
  fish.  With the $300,000 amount, crew members who are                        
  otherwise qualified for the IFQ share system, would be able                  
  to obtain funds to participate.  He said more funding should                 
  be concentrated on the total amount available in the loan                    
  program.                                                                     
                                                                               
  Number 587                                                                   
                                                                               
  REPRESENTATIVE BUNDE commented that with the way the market                  
  works, the price tends to become equal to the amount of                      
  money available for loans.  He referred to a letter from                     
  Jerry Murray which quoted Clem Tillion as saying that he                     
  would not want to loan money on the IFQ shares because the                   
  borrowers would never be able to repay the loans.  He                        
  qualified his comments by saying he could not verify the                     
  accuracy of the quote, or what the context was.                              
                                                                               
  Number 597                                                                   
                                                                               
  MR. LAUBER responded by saying he had been constantly                        
  mystified by Mr. Tillion's statement.  If what Mr. Tillion                   
  was reputed to say was true, Mr. Lauber said, no one would                   
  ever sell quota shares unless it was for cash.  He agreed if                 
  fishing was bad, it might be difficult for some to pay back                  
  their loans.  He discussed prudent banking practices and                     
  noted shares will not be financed at 100%.                                   
                                                                               
  Number 610                                                                   
                                                                               
  REPRESENTATIVE ULMER remarked that the alleged quote does                    
  not match the response she had in conversations with Mr.                     
  Tillion, whom she said was in support of HB 123.                             
                                                                               
  VICE CHAIR HUDSON asked for Mr. Lauber's comment on the                      
  situation with the Internal Revenue Service (IRS) seizing                    
  limited entry permits for tax debts, and asked whether                       
  anything could be done to protect the IFQ shares from the                    
  IRS.                                                                         
                                                                               
  Number 628                                                                   
                                                                               
  MR. LAUBER referred to legislative attempts to protect                       
  salmon permits in the early 1970's, and commented that a                     
  problem to prepare for with the program proposed in HB 123                   
  is whether the taxes are assessed at the time of sale, or                    
  immediately when the shares are first given out.  If the IRS                 
  came after the money immediately after shares are                            
  distributed, it would end up owning a lot of permits.  He                    
  did not know of any way to insulate the shares from the IRS,                 
  and suggested in jest that if the IRS did seize the permits,                 
  it should be required to fish them.                                          
                                                                               
  Number 650                                                                   
                                                                               
  REPRESENTATIVE MULDER referred to page two, section C (4) of                 
  HB 123, regarding eligibility for the IFQ share loans, and                   
  asked Mr. Lauber to comment on whether the legislature would                 
  be creating a high-risk program that might not be self-                      
  sustaining.  Specifically, he asked what type of people                      
  would be eligible for the program.                                           
                                                                               
  MR. LAUBER said one of the advantages of the program is that                 
  it would allow crew members to purchase IFQ shares.  In                      
  those cases, he explained, other factors would be considered                 
  besides how much money the borrower could put up.                            
                                                                               
  REPRESENTATIVE ULMER also responded to Representative                        
  Mulder's question, and explained that the language he                        
  referred to had been added in the Fisheries Committee                        
  Substitute to HB 123.  The intention, she said, was to help                  
  smaller fishing enterprises participate.  The bigger                         
  fishermen would not need the state program, she said,                        
  because they would have the collateral to find other                         
  financing.  She clarified the program in HB 123 did not                      
  propose lending to people who were bad credit risks.                         
                                                                               
  Number 685                                                                   
                                                                               
  REPRESENTATIVE MULDER commented on the high default rates of                 
  other state loan programs, and wanted to hear from the DCED                  
  on the lending practices that would be instituted with this                  
  program.                                                                     
                                                                               
  Number 694                                                                   
                                                                               
  VICE CHAIR HUDSON expressed concern that some parts of the                   
  state which might have smaller quotas, will be hit harder.                   
  He asked whether criteria could be put in place that would                   
  give an advantage to certain areas.  He referred to the                      
  Community Development Quota (CDQ) program, and its move to                   
  benefit Northwest Alaskan communities.                                       
                                                                               
  TAPE 93-30, SIDE B                                                           
  Number 000                                                                   
                                                                               
  VICE CHAIR HUDSON asked Mr. Lauber to comment on whether the                 
  IFQ program could incorporate provisions for communities to                  
  purchase IFQ shares, or in some other way encourage                          
  participation in areas where people need it the most.                        
                                                                               
  Number 040                                                                   
                                                                               
  MR. LAUBER replied that opponents of the IFQ program had                     
  raised concerns about its effect on individuals.  He said                    
  the council did not discuss any mechanism for financing,                     
  although there is a community development portion of the                     
  program.  There would be no permanent IFQs going to any                      
  communities, he explained, but would give a short-term boost                 
  to people in communities that had not had access to                          
  fisheries in the past.  He did not believe HB 123 could be                   
  amended to accomplish what Representative Hudson had                         
  suggested.                                                                   
                                                                               
  VICE CHAIR HUDSON asked whether Mr. Lauber could recommend                   
  some other way to accomplish the goal, such as amending the                  
  CDQ program into the IFQ area.                                               
                                                                               
  Number 090                                                                   
                                                                               
  MR. LAUBER explained the CDQ program was designed to provide                 
  funds for communities to get individuals into the fisheries.                 
  He said there would be nothing to prevent a community from                   
  making arrangements through their own loan programs or loan                  
  guarantees to allow individuals or groups to purchase                        
  vessels or even to purchase IFQ shares.                                      
                                                                               
  REPRESENTATIVE PAT CARNEY referred to the question about                     
  high risk loans, and suggested it is a good idea to provide                  
  low-interest loans to Alaskans for resource development.                     
                                                                               
  Number 128                                                                   
                                                                               
  REPRESENTATIVE GREEN expressed concern about the loan                        
  criteria that might be used in making loans from the loan                    
  program proposed in HB 123.  He asked whether the state                      
  would be willing to accept that there will be more                           
  foreclosures if loans are available to people who cannot pay                 
  back their loans.  As a related issue, he asked whether the                  
  IFQ shares would revert back to the state if loans were                      
  defaulted on.                                                                
                                                                               
  REPRESENTATIVE ULMER responded that Mr. Winegar of the DCED                  
  could address that issue.  She noted the limited entry                       
  permit loan program has a very high success rate with few                    
  loans in default.  She explained that mechanisms were in                     
  place to make wise decisions about who gets loans.                           
                                                                               
  Number 170                                                                   
                                                                               
  MR. WINEGAR responded to the issue of the language on other                  
  financing programs available.  He explained that this                        
  language parallels section B of the existing commercial                      
  fishing loan program.  Section B, he said, is targeted at                    
  rural Alaska with the idea that individuals who could not                    
  get loans from a bank could go through that program.  He                     
  noted the program has had a low default rate.  The lender                    
  works with borrowers having difficulty making payments, he                   
  explained.  He then referred to the criteria for making                      
  loans, and said they look at credit, past experience, and                    
  debt service.  The statute requires 90% of the loan to value                 
  collateral, he explained.                                                    
                                                                               
  MR. WINEGAR, addressing Representative Green's question                      
  about the IFQ share reverting back to the state in the event                 
  of default, replied that the shares would come back to the                   
  state, which would then have to sell it to recover loan                      
  funds.                                                                       
                                                                               
  REPRESENTATIVE JOHN DAVIES asked Mr. Winegar to respond to                   
  the IRS question.                                                            
                                                                               
  MR. WINEGAR was not aware of anything the legislature could                  
  put into HB 123 to prevent the IRS from having the                           
  opportunity to seize the asset of permits or shares.                         
                                                                               
  VICE CHAIR HUDSON asked about the process whereby permits or                 
  shares come back to the state, and if they came back to the                  
  state with IRS-implicated loans.  He asked if the state                      
  could control the re-sale of the permits.                                    
                                                                               
  MR. WINEGAR said in the case of an IRS problem, it would                     
  depend on who had priority.  If the IRS had priority, he                     
  explained, it would be difficult for the state to sell that                  
  permit.  If the state's lien had priority over the IRS, the                  
  state would be able to resell it.                                            
                                                                               
  Number 238                                                                   
                                                                               
  VICE CHAIR HUDSON asked whether the state could do anything                  
  to maintain control, such as a "super-lien" that would                       
  establish state priority and help prevent the IRS from                       
  selling permits low.                                                         
                                                                               
  MR. WINEGAR was not aware of any legal way to do that                        
  because federal statutes take precedence.                                    
                                                                               
  Number 258                                                                   
                                                                               
  REPRESENTATIVE ULMER confirmed the IRS supercedes anyone                     
  else's authority.                                                            
                                                                               
  Number 270                                                                   
                                                                               
  REPRESENTATIVE DAVIES commented that he could foresee                        
  circumstances where the IRS debt would be very small                         
  compared to the value of the IFQ share, and the state might                  
  be better off either paying off the tax liability or loaning                 
  an additional amount for that purpose to prevent the IRS                     
  from selling seized permit shares at a low price and                         
  depressing the market.                                                       
                                                                               
  REPRESENTATIVE GREEN remarked that as an individual, if he                   
  loaned someone money, he could put in a condition that prior                 
  to becoming involved in a tax delinquency, the borrower                      
  would have to come back and let the lender buy back the                      
  asset.                                                                       
                                                                               
  Number 293                                                                   
                                                                               
  MR. WINEGAR explained that the DCED has the ability in the                   
  foreclosure process to expend funds in order to protect                      
  assets.                                                                      
                                                                               
  VICE CHAIR HUDSON referred to the limited entry program and                  
  asked Mr. Winegar if that program included a buy-back                        
  provision.  He asked whether the state had ever bought back                  
  permits.                                                                     
                                                                               
  Number 300                                                                   
                                                                               
  MR. WINEGAR said there was a provision whereby the                           
  Commercial Fisheries Entry Commission (CFEC) could re-                       
  purchase those permits.                                                      
                                                                               
  VICE CHAIR HUDSON asked whether the IFQ shares would fall                    
  into that category.                                                          
                                                                               
  MR. WINEGAR replied there was no buy-back provision for the                  
  IFQ shares that he was aware of.                                             
                                                                               
  Number 319                                                                   
                                                                               
  REPRESENTATIVE CARNEY referred to the foreclosure issue, and                 
  asked whether the state had a method for assuring that                       
  Alaskans could buy back IFQ shares.                                          
                                                                               
  MR. WINEGAR replied there was a legal problem with requiring                 
  sales to Alaskans.  He noted the rate of limited entry                       
  permit re-sales to residents was high.                                       
                                                                               
  Number 337                                                                   
                                                                               
  JERRY MCCUNE, UNITED FISHERMEN OF ALASKA (UFA), testified in                 
  support of HB 123, although he noted the organization is not                 
  completely in agreement with the IFQ program itself.  He                     
  said the UFA is concerned that small boat owners and small                   
  communities should have the opportunity to participate in                    
  the program.  Regarding the question of risk involved in                     
  making the loans to a segment of borrowers that might not                    
  qualify for conventional loans, Mr. McCune explained it was                  
  his understanding the division of loans would look at the                    
  backgrounds of crew members applying for loans.                              
                                                                               
  MR. MCCUNE stressed the importance of ensuring the loan                      
  program proposed in HB 123 is adequately funded and the                      
  rates are reasonable.  He urged the state to ensure small                    
  boat owners will not lose shares to big boat owners.                         
  Referring to the IRS problem, he commented that in most                      
  cases the IRS is willing to work out payment plans.  He said                 
  he would object if the IRS proceeds to take permits at                       
  random in spite of good faith efforts by the fishermen to                    
  meet their tax obligations.                                                  
                                                                               
  Number 397                                                                   
                                                                               
  DREW SCALZI testified from Homer in support of HB 123.  He                   
  said the initial response to the IFQ program he has observed                 
  has been that everyone wants to buy quota shares.  He noted                  
  the focus of the loan program is on the concept and not the                  
  criteria.  He referred to the IFQ share as a tangible access                 
  to the resource.  He addressed Mr. Lauber's earlier                          
  statement regarding the price of IFQ shares in Canada being                  
  between $8 -$10 per pound, and said that was accurate for                    
  the time, but noted in Canada, the average price for halibut                 
  in 1992 was $2.85 per pound, which equates to three times                    
  the ex-vessel value.                                                         
                                                                               
  Number 437                                                                   
                                                                               
  RICK WILLIAMS testified in opposition to HB 123 by                           
  teleconference from Petersburg.  He has fished for twenty                    
  years in Alaska, and objected to the IFQ program because it                  
  would take jobs out of Alaska.  He cautioned that the large                  
  debts incurred by fishermen to acquire IFQ shares will make                  
  it difficult for them to pay off the loans, and may force                    
  fishermen to cut corners in ways like operating with a                       
  shorter crew.                                                                
                                                                               
  Number 460                                                                   
                                                                               
  VICE CHAIR HUDSON asked Mr. Williams to expand on his                        
  comment that the loan program shows Alaska's endorsement of                  
  the IFQ program.                                                             
                                                                               
  MR. WILLIAMS expanded on his thoughts that the state should                  
  not jump in and pass a bill that appears to endorse a                        
  controversial issue.  He suggested there will be extensive                   
  litigation relating to the IFQ program.                                      
                                                                               
  CHAIRMAN WILLIAMS asked whether any one else wished to                       
  testify.  There being no further public testimony, he moved                  
  to committee discussion.                                                     
                                                                               
  REPRESENTATIVE MULDER asked Representative Ulmer what the                    
  cost might be of forestalling action of HB 123 and delaying                  
  the implementation of a loan program.  He also asked her to                  
  comment on Mr. Williams' testimony that the loan program                     
  appeared to be tacit support for the IFQ program.                            
                                                                               
  REPRESENTATIVE ULMER commented that although she had not                     
  been directly involved with the development of the IFQ                       
  program, it was her understanding that the program has been                  
  approved by the Secretary of Commerce and will be                            
  implemented.  She said the situation was analogous to a                      
  freight train coming down the tracks, and the only question                  
  is whether you want to get on board, let it go by, or get                    
  run over.  Delaying HB 123, she said, meant that in the                      
  initial sale of IFQ shares, Alaskans would not be at the                     
  table.                                                                       
                                                                               
  REPRESENTATIVE ULMER agreed there may be lawsuits resulting                  
  from the IFQ program, and those lawsuits may well derail the                 
  program.  She cautioned, however, that it does not hurt the                  
  state of Alaska to be prepared, and HB 123 is not an                         
  endorsement of the IFQ program.  She suggested the bill                      
  could be passed with a letter of intent that would express                   
  the committee's concerns with the IFQ program.                               
                                                                               
  Number 522                                                                   
                                                                               
  VICE CHAIR HUDSON reiterated his concern that more social                    
  and economic impact studies be done in preparation for the                   
  IFQ program.  He said he would support HB 123, but would                     
  still push for further study and possible modification of                    
  the IFQ program itself.                                                      
                                                                               
  Number 535                                                                   
                                                                               
  REPRESENTATIVE CARNEY MOVED and asked unanimous consent that                 
  the committee ADOPT CSHB 123 (FSH) and the letter of intent.                 
                                                                               
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion, and hearing none, the MOTION PASSED.                                 
                                                                               
  REPRESENTATIVE MULDER made a MOTION to MOVE with individual                  
  recommendations CSHB 123 (FSH) with the attached letter of                   
  intent and fiscal notes, and asked unanimous consent.                        
                                                                               
  CHAIRMAN WILLIAMS asked if there were objections to the                      
  motion, hearing none, the MOTION PASSED.                                     
                                                                               
  ANNOUNCEMENTS                                                                
                                                                               
  CHAIRMAN WILLIAMS announced the next meeting of the House                    
  Resources Committee would be on Wednesday, March 17, at 8:00                 
  a.m., at which time public testimony would be taken on the                   
  confirmations of Boards of Fisheries and Game appointees.                    
  He referred to the legal question regarding Jack                             
  Didrickson's appointment to the Board of Game, and asked                     
  committee members to be prepared to discuss that issue.                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  There being no further business to come before the House                     
  Resources Committee, Chairman Williams adjourned the meeting                 
  at 9:35 a.m.                                                                 

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