Legislature(2001 - 2002)
05/10/2002 05:38 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 287(FIN)
"An Act relating to the exemption of commercial fishing entry
permits from claims of creditors and execution on an interest
in a limited entry permit; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
PAT HARTLEY, staff to Representative Scalzi, testified that this
legislation passed the House of Representatives unanimously. She
read a statement into the record as follows.
Since enactment of the limited entry program 28 years ago, the
State always has held that limited entry permits are use
privilege, not property, and cannot be seized by creditors.
This legal status is an important element of Alaska fisheries
management system and a central factor in the State's fight
against attempted seizure of permits by the IRS [Internal
Revenue Service] and other creditors. If Alaskan fishermen are
forced out of the water because creditors take their limited
fishing privileges, everyone in Alaska loses and the State
could lose some of its control of fishing privileges to the
courts.
Section 1 of the bill removes permits from the exemption
section of Title 9 to delete any inference that they are
somehow property, and adds in Section 3 specific language to
the Limited Entry Act, spelling out that fishing privileges
are exempt from claims of all creditors making exceptions only
for loans under the Division of Investments, CFAB [Commercial
Fishing and Agriculture Bank], and child support.
Section 2 adds language in the limited entry statute to make
it absolutely clear that the only time a person may request
the transfer of an entry permit due to an execution on that
permit, is for the purpose of enforcing a lien recorded with
the Commission under the statutes of the Child Support
Enforcement Division.
Leaving the legal status of permits open in any way to varying
interpretation could be detrimental to the interests of the
State and of fishermen.
Senator Ward asked for an explanation of the protection this
legislation would place on the limited entry permits and what
parties would be prohibited from seizing the permits.
MARY MCDOWELL, Commissioner, Commercial Fisheries Limited Entry
Commission, responded that this legislation clarifies in statutes
the State's existing position that permits are not property but
rather use privileges under the control of the State. She explained
that current statutory language could be "misconstrued" and that
this legislation eliminates the possibility.
Senator Ward asked the number of permits that have actually been
seized.
Ms. McDowell answered that none have been seized, but emphasized it
has been "a constant struggle" particularly with the IRS.
Senator Ward asked if this legislation is therefore unnecessary
because the efforts to date to prevent seizure have been
successful.
Ms. McDowell informed of a recent federal bankruptcy case whereby a
court ruled that fishing privileges for a vessel are impertinence
to the vessel, which could become problematic for Alaskan permits.
She noted pending congressional legislation would clarify that the
federal government would recognize that fishing privileges have the
legal status granted to them by the issuing entities. Therefore,
she characterized this legislation as a "window of opportunity" for
the State to clarify statutes to take advantage of the future
federal law.
SFC 02 # 94, Side B 06:25 PM
Senator Ward clarified this legislation would ensure that permits
could not be used as collateral.
Ms. McDowell responded the permits could still be used as
collateral against loans from the Division of Investments and the
CFAB, but could not be held as collateral against other loans. She
noted these restrictions are currently in statute.
Senator Leman noted for the record he is a holder of a limited
entry permit.
Senator Hoffman informed is also such a holder.
Senator Wilken "moved to report committee substitute for House Bill
287 Finance from Committee with individual recommendations and
attached fiscal notes".
There was no objection and HB 287 MOVED from Committee with
accompanying zero fiscal notes: #1, dated 3/4/02, from the
Department of Fish and Game, and #3, dated 4/26/02, from the
Department of Community and Economic Development.
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