Legislature(2005 - 2006)CAPITOL 124
03/09/2005 08:30 AM House FISHERIES
| Audio | Topic |
|---|---|
| Start | |
| HJR15 | |
| HB192 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 15 | TELECONFERENCED | |
| *+ | HB 192 | TELECONFERENCED | |
| *+ | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
March 9, 2005
8:38 a.m.
MEMBERS PRESENT
Representative Gabrielle LeDoux, Co-Chair
Representative Bill Thomas, Co-Chair
Representative John Harris
Representative Peggy Wilson
Representative Woodie Salmon
MEMBERS ABSENT
Representative Jim Elkins
Representative Mary Kapsner
OTHER LEGISLATORS PRESENT
Representative Paul Seaton
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 15
Relating to open ocean aquaculture in the federal exclusive
economic zone.
- MOVED CSHJR 15(FSH) OUT OF COMMITTEE
HOUSE BILL NO. 192
"An Act relating to requirements to obtain and maintain a
fisheries business license; relating to security required of
fish processors and primary fish buyers; and providing for an
effective date."
- HEARD AND HELD
"An Act relating to cost recovery fisheries for private
nonprofit hatchery facilities."
- NOT INTRODUCED
PREVIOUS COMMITTEE ACTION
BILL: HJR 15
SHORT TITLE: OPEN OCEAN AQUACULTURE
SPONSOR(s): FISHERIES
03/01/05 (H) READ THE FIRST TIME - REFERRALS
03/01/05 (H) FSH, RES
03/09/05 (H) FSH AT 8:30 AM CAPITOL 124
BILL: HB 192
SHORT TITLE: FISHERIES BUSINESS LICENSE; BOND
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/02/05 (H) READ THE FIRST TIME - REFERRALS
03/02/05 (H) FSH, L&C, FIN
03/09/05 (H) FSH AT 8:30 AM CAPITOL 124
WITNESS REGISTER
IAN FISK, Staff
to Representative Bill Thomas
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HJR 15 on behalf of the House
Special Committee on Fisheries, sponsor by request, which is co-
chaired by Representative Thomas
REPRESENTATIVE PAUL SEATON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Posed questions to the committee regarding
HJR 15.
ERIC JORDAN
Sitka, Alaska
POSITION STATEMENT: Testified in support of HJR 15.
HERMAN FANDEL
Kenai, Alaska
POSITION STATEMENT: Testified in support of fish farming.
IRENE FANDEL
Kenai, Alaska
POSITION STATEMENT: Testified in support of fish farming.
JERRY McCUNE, Lobbyist
for United Fisherman of Alaska (UFA)
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HJR 15.
PAULA TERREL
Alaska Marine Conservation Council
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HJR 15.
CHUCK HARLAMERT, Juneau Section Chief
Tax Division
Alaska Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Presented HB 192 and answered questions
regarding the bill.
GREY MITCHELL, Director
Division of Labor Standards and Safety
Alaska Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 192.
ACTION NARRATIVE
CO-CHAIR BILL THOMAS called the House Special Committee on
Fisheries meeting to order at 8:38:53 AM. Representatives
Thomas, LeDoux, Harris, Salmon, and Wilson were present at the
call to order. Representative Harris arrived as the meeting was
in progress.
HJR 15-OPEN OCEAN AQUACULTURE
8:39:13 AM
CO-CHAIR THOMAS announced that the first order of business would
be HOUSE JOINT RESOLUTION NO. 15, "Relating to open ocean
aquaculture in the federal exclusive economic zone."
8:39:49 AM
REPRESENTATIVE WILSON moved to adopt the proposed committee
substitute for HJR 15, labeled 24-LS0631\F, Utermohle, 3/8/05,
as the working document. There being no objection, Version F
was before the committee.
8:40:08 AM
IAN FISK, Staff to Representative Bill Thomas, Alaska State
Legislature, speaking as the committee aide for the House
Special Committee on Fisheries, presented HJR 15 and the
proposed CS. He pointed out that the CS has a few additional
lines on page 1, lines 15-16, regarding genetically modified
fish that read:
WHEREAS there are patents pending to cultivate and
introduce genetically modified fish into open waters
which will pose a direct threat to wild stock
fisheries
MR. FISK also noted that the CS has an additional resolve on
page 2, lines 27-20:
FURTHER REOLVED that the Alaska State Legislature
respectfully urges Congress to prohibit the issuance
of any license to permit an aquaculture facility that
imports, exports, possesses, cultivates, sells or
otherwise handles genetically modified fish in the
federal exclusive economic zone or has access to open
waters
8:41:17 AM
MR. FISK explained that HJR 15 is in reference to legislation
that is being developed by the U.S. Department of Commerce
National Marine Fisheries Service (NMFS). He commented:
Alaskans have many legitimate concerns about this
concept, especially in light of our experience with
farmed salmon and what that has done to our economy
and communities.... Some of these concerns are
environmental in nature, for instance: disease-
transmission; damage to the environment due to anoxic
conditions that are created by overfeeding in salmon
farms; concern about the health ramifications to those
... consumers who choose to eat farmed fish; and, of
course, escape into the natural environment of
nonnative species like Atlantic salmon. To address
these concerns, this resolution asks Congress to
require an Environmental Impact Statement for any
proposal to license an open ocean aquaculture
operation.
8:42:19 AM
MR. FISK pointed out that there are healthy existing fisheries
in the exclusive economic zone that have been developed over
decades such as the halibut and sablefish industries, which have
been soundly managed for biological and economic sustainability.
"People are very concerned that the advent of open ocean
aquaculture is going to change the nature of the seafood
business, and we need to know how this is going to affect our
communities and their economies," he said, "so this resolution
expresses the legislature's commitment that open ocean
aquaculture do no harm to our environment and to our
communities."
MR. FISK reminded the committee that the state legislature
enacted a prohibition on finfish farming in 1990, and now the
state fishing industry is starting to see the benefits of that
because "we've differentiated ourselves in the market; Alaska's
name is associated with natural, wild products." He opined that
if fish were being farmed offshore of Alaska, it would confuse
the market place and damage some of the recent industry
progress.
8:44:01 AM
MR. FISK continued:
Rumor has it that this draft legislation from [the
U.S.] Department of Commerce is not going to include
the [North Pacific Fishery Management Council] in the
process of approving permits.... It's important that
we make a statement that the council be involved since
they manage all the other fisheries in the Gulf of
Alaska that are important to us.
8:45:01 AM
CO-CHAIR THOMAS noted that United Fisherman of Alaska had
submitted a letter of support for HJR 15.
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, asked if
the language on page 2, lines 27-30, referred to live fish.
MR. FISK responded that it refers to genetically modified fish.
REPRESENTATIVE SEATON clarified, "I want to make sure that what
we're talking about is live fish or live animals, and we're not
getting too much into the import/export business, ... [or]
something that's being used for feed."
REPRESENTATIVE WILSON pointed out the language on page 1, lines
15-16, regarding genetically modified fish.
MR. FISK stated, "The language about import and export is in
reference to the idea of people bringing in a genetically
modified organism and introducing it for the purpose of
cultivating it in the waters of the exclusive economic zone."
8:48:29 AM
REPRESENTATIVE HARRIS asked Mr. Fisk what kind of escapement is
coming from fish farms in Washington and British Columbia
(B.C.).
MR. FISK replied that he did not have any numbers, but he noted
that salmon have escaped from farms in B.C. and have been found
in Alaska streams as far west as the Alaska Peninsula. He
remarked that in the case of open ocean aquaculture, no one
knows what different species might be proposed to be developed
in local waters.
8:49:30 AM
REPRESENTATIVE HARRIS asked if there was any evidence of
diseases introducing into Alaska by the fish farms.
MR. FISK replied that he was not aware of any diseases
transmitted from farmed fish into Alaska wild salmon stocks.
However, he said, there have been documented cases where the
infectious hematopoietic neocrosis (IHN) virus and sea lice have
been transmitted to wild fish stocks on the B.C. coast.
REPRESENTATIVE WILSON commented that her neighbor, a fisherman,
caught [an escaped farm fish] that was very unhealthy and
covered with sea lice. She remarked that it could devastate the
entire fishing industry if [the farmed fish infected the wild
stocks].
8:51:54 AM
ERIC JORDAN stated that he is a lifelong Southeast Alaska
resident and a salmon troller. He mentioned that he has also
been involved with the Alaska Marine Conservation Council as an
outreach coordinator regarding salmon farming and its potential
effect on ecosystems. He stated:
It's my opinion that open ocean aquaculture ...
presents a real threat to the health of our fishing
industry in Alaska because we are seeing increasing
problems with ... the fish farming industry around the
world associated with disease, environmental
pollution, escapes, and effects on our wild resources.
My position is ... that the Alaska legislature should
notify the U.S. Congress and others of our grave
concern about opening up federal waters to aquaculture
development, especially finfish aquaculture off the
coast of Alaska.
MR. JORDAN noted that he and two other men were in Juneau to
meet with legislators on behalf of the Alaska Trollers
Association. He expressed appreciation to the legislature for
the work it does for the fishing industry.
8:55:22 AM
REPRESENTATIVE SEATON asked Mr. Jordan if he was also testifying
on shellfish, such as oysters and clams.
MR. JORDAN replied that he was not testifying on shellfish. He
commented that there are successful oyster farms in Alaska and
he had not heard of any big environmental problems associated
with those. He mentioned that his friend runs a successful
scallop and oyster farm in Port Althorp. He clarified that his
testimony specifically in opposition to finfish farming.
8:56:46 AM
HERMAN FANDEL testified that due to the increasing global
population, it will become necessary to farm the oceans "just
like we farm the lands of the world today." He opined:
Today more fish are needed for commercial fishing
industry, sport fishing industry, tourism,
subsistance, and so on. We need more fish to feed the
world and the open ocean aquaculture program certainly
will give us more fish. It seems to me that we'd look
very foolish today if our forefathers decided not to
farm the fertile farmlands in our country. And we may
look more foolish in the future if we decide today to
not farm the endless oceans. It is important that we
get started now so that the rest of the world doesn't
leave us behind. Open ocean aquaculture, I feel, is
the "wave of the future." To oppose open ocean
aquaculture is like some people ... opposing drilling
for oil in [the Arctic National Wildlife Refuge
(ANWR)]. We should not let fear stop progress.
Alaska's wild stocks cannot feed the world, and we
should not expect that a shortage of fish will make
the prices of fish go up. Somewhere along the way
we're going to have to have more fish, and we've got
some big fields out there that we can farm and get a
lot more fish. It's coming; we might as well adjust
our thinking to it and join in with it. I think it's
to our advantage to start; the sooner, the better.
8:59:09 AM
IRENE FANDEL pointed out that NMFS was promoting legislation to
permit open ocean aquaculture in federal waters. She commented:
Global marketing is consistantly increasing and
demanding seafood products. Opening aquaculture in
federal waters could and would increase [the
economies] of Alaska coastal communities and subsidize
their fishing season. ... A five-year moratorium on
all permitting, leasing, or development of ocean pen-
raised shellfish and finfish in the federal waters off
of Alaska will just set Alaska fisherman further
behind in the development of ocean aquaculture. The
social and economic well-being of Alaska coastal
communities could get a boost by engaging in open
ocean aquaculture. If there are problems in the
present process of aquaculture fisheries, I urge you
to gather and work to solve these problems rather than
to try to stop it. Again, the population of our earth
is such that we need to find ways of feeding our
people without depleting the fish stock in our
wonderful oceans.
9:01:09 AM
CO-CHAIR THOMAS closed public testimony.
9:01:17 AM
REPRESENTATIVE HARRIS moved to report CSHJR 15, labeled 24-
LS0631\F, Utermohle, 3/8/05, out of committee with individual
recommendations and the accompanying zero fiscal notes.
REPRESENTATIVE WILSON objected for discussion purposes.
REPRESENTATIVE SEATON pointed out that the resolution refers to
aquaculture, which includes filter-feeding shellfish such as
oysters and mussels. He commented that he agreed with the
concept of not farming predatory shellfish such as lobsters and
crab, but "I'm not sure that the same conditions apply to
oysters, clams, and mussels."
9:03:19 AM
JERRY McCUNE, Lobbyist for United Fisherman of Alaska (UFA),
explained that the NMFS legislation lumps everything together as
"aquaculture", whether it's shellfish or not. He commented that
the federal legislation will be better understood once it is
completely drafted, and that if the North Pacific Fishery
Management Council is involved, then there would be room for
[limited shellfish farming]. He said, "We're not opposing
shellfish, but we're not saying right now openly until we get
something that we can really get our hands around and really
tackle."
9:05:12 AM
PAULA TERREL, Alaska Marine Conservation Council, agreed with
Mr. McCune, and she noted that farming shrimp, which are also
considered shellfish, could have a big impact on the Alaska
shrimp fishermen. She commented that some states are very
concerned about shrimp farming because of what has happened to
their markets. She said of the resolution, "It's broad because
the legislation is broad. In other places they use aquaculture
in a totally different way than we do here."
MR. McCUNE opined that each state should have some say over what
happens off its shores.
9:06:41 AM
REPRESENTATIVE SEATON commented that he had wanted to get a feel
for how the committee felt about including shellfish in the
resolution.
REPRESENTATIVE WILSON removed her objection.
MS. TERREL emphasized the need to keep the resolution broad for
now.
9:07:37 AM
There being no objection, CSHJR 15(FSH) was moved from the House
Special Committee on Fisheries.
HB 192-FISHERIES BUSINESS LICENSE; BOND
9:07:54 AM
CO-CHAIR THOMAS announced that the next order of business would
be HOUSE BILL NO. 192, "An Act relating to requirements to
obtain and maintain a fisheries business license; relating to
security required of fish processors and primary fish buyers;
and providing for an effective date."
9:08:58 AM
CHUCK HARLAMERT, Juneau Section Chief, Tax Division, Alaska
Department of Revenue presented HB 192 to the committee. He
explained:
The bill has two primary goals, the first of which is
to increase the accountability required of processors
operating in the state for the payment of state
obligations that support the industry. And so the
bill adds to the existing list of obligations that
must be paid to be licensed: the Unemployment Security
contributions, ... [Occupational Safety and Health
Association (OSHA)] fines, and the seafood marketing
assessment that funds [Alaska Seafood Marketing
Institute (ASMI)]. The second objective of the bill
is to improve the protections that we give fishermen
and employees, who either work for or sell fish to
processors, under our assurity bonding provisions.
Those changes are contained in Section 2 of the bill.
They do this in a couple of different ways. First of
all, the bill ... attempts to make the bonding
requirement more responsive to processor behavior
without impacting processors who ... don't have a
problem paying employees or fishermen or their
[Employment Security Contributions (ESC)]. And so it
eases the conditions on which a bond ... requirement
can be increased. Second, it restricts the use of
real property. Current law allows real property in
lieu of a bond. If you have real property in the
state at least equal to what your required bond level
would be, you don't need to post a bond. That is
difficult to go against and obtain satifaction from,
and so, if a processor has demonstrated ... an
inability to pay fishermen, or employees, or their ESC
at certain levels, they can lose the right to use real
property in lieu of a bond; they must post a cash
bond.
9:11:30 AM
MR. HARLAMERT continued:
Thirdly, it allows [Alaska Department of Labor and
Workforce Development ("Labor")] to reach the bond to
pay unpaid ESC contributions in a more streamlined,
simplified manner than they can today. Current law
requires Labor to get a judgment.... This bill will
allow them to go after that bond after their internal
administrative processes are done; they'd no longer
have to go to court.
9:12:02 AM
REPRESENTATIVE HARRIS asked for further clarification of the
changes to the current statute.
MR. HARLAMERT explained that certain things will not change,
such as the basic bonding requirement, which is $10,000 for a
normal processor. No changes were made to the increments for
higher bond levels, as he explained, "In the case where $10,000
is found not to be sufficient under current law and under the
proposed bill, it goes up to either [$50,0000] or [$100,000],
depending on the level necessary to meet the risks anticipated
under those laws." He then clarified two principle changes:
Under current law, ... in order to increase a bond,
you actually have to have a judgment paid from the
bond, and the bond be insufficient to pay the whole
judgment. ... Aside from operating without a license
or other legal behaviour, which is unchanged by the
bill, that is the only condition under current law
where you're normally going to see a bond level
increase. We found that that is too restrictive, or
has been so restrictive ... that it has left us with
high-risk processors with a $10,000 bond or nothing
more that a $10,000 Deed of Trust against their real
property. That offers very little protection for
fisherman and wage-earners.
9:15:35 AM
MR. HARLAMERT continued:
One primary difference is, now you don't have to
actually pay the judgment from the bond to increase
the bond level. The simple existence of a judgment
over $10,000 can increase the bond level to $50,000.
The simple existence of a judgment over $50,000 will
increase the bond to [$100,000]. Second major change
is that Labor no longer needs to bring to us a
judgment from a court in order to go after that bond.
And so they can reach that bond quicker.
9:16:23 AM
REPRESENTATIVE WILSON asked Mr. Harlamert to give the committee
an example of this.
MR. HARLAMERT explained:
[The Department of Revenue] holds a bond or, in the
case of real property, a Deed of Trust on the
taxpayer's property that is available to the
Department of Labor or employees of the processor or
fishermen to pay judgments against the processor for
unpaid wages, for unpaid fish, or for unpaid
Employment Security Tax. And under current law,
Labor, even after going through their administrative
processes, holding hearings and allowing for due
process appeals, still has to go one step further to
court to get a judgment to go after that bond. And
that is a principle change of the current bill. They
no longer have to do that; they can simply go after
the bond now. The taxpayer then has to replace it,
just like they do under existing law.
MR. HARLAMERT related that another primary difference is that
under current law, there is a priority for payment of the bond,
and employees and fishermen are first, while Labor comes last.
In practice, he said, that priority is ineffective and would
only apply if the claims came in at the same time and were
competing, in which case the priority claim would be paid out
first. But if Labor came in first for an ESC claim, Department
of Revenue would pay out the bond to Labor and, unless the
[processor] intends to stay in business and therefore replaces
that bond, the fishermen and employees will not be paid. He
stated:
Under this bill, in order to preserve that priority,
where Labor now has an easier route to get to the bond
than fishermen or employees, we have basically a grab-
back provision, and so if, for instance, Labor came in
and scooped up the bond and ... if subsequent to that
a fisherman or employee brings a judgment forward and
the bond that remains was insufficient to pay that
judgment, Labor is obligated under the bill to kick
back what they've collected against the bond to cover
the fishermen's claim. So it's substantially more
protection for both employees and fishermen than under
existing law.
9:19:28 AM
CO-CHAIR LEDOUX asked Mr. Harlamert why Labor would take the
bond if not for fishermen and employees.
MR. HARLAMERT replied that under current law and the proposed
law, Labor has the right to use the bond to pay unsatisfied
unpaid Employment Security Contributions.
CO-CHAIR THOMAS asked if contracted tendermen can file claims
against processors as well.
MR. HARLAMERT replied that tendermen are not covered under
current law or the proposed bill.
CO-CHAIR THOMAS related a story about a contract tender who
never got paid, yet the processor continued to operate the
following year. He asked if the bill could be amended to
include contract tenders.
9:21:57 AM
MR. HARLAMERT responded that the bill could be amended to
include tenders. However, he said:
Some players will inherently have a leg up on others.
We traditionally see fishermen have an advantage over
employees, for example, because their claims are
larger [so] it's more economical to pursue them in
court. And they tend to beat employees to the punch
at the bond. And if you introduce tenders, who, in
all likelihood ... would have an even higher claim,
then you would further ... dilute fishermen's
protections and those of employees.
CO-CHAIR THOMAS expressed interest in adding new language to the
bill to include contract tenders.
9:23:36 AM
CO-CHAIR LEDOUX asked if under the proposed bill, the employees
would be able to file a claim to a bond without going to court.
MR. HARLAMERT replied that the proposed bill would still require
everyone except for Labor to get a court judgment. He explained
that the processor is entitled to due process and, unless the
Department of Revenue awards it, they have to rely on some other
body [such as a court]. He reiterated that the Department of
Labor provides due process in their collection of ESC, but
independent fishermen and employees have to get a court
judgment, which is "the processor's chance to give their side of
the story."
9:25:40 AM
CO-CHAIR LEDOUX asked if there is an administrative process for
employees.
MR. HARLAMERT replied that there are no hearings in the
Department of Revenue's administration of the bond privisions.
9:26:28 AM
GREY MITCHELL, Director, Division of Labor Standards and Safety,
Alaska Department of Labor and Workforce Development, said:
There's two different reasons why the Department of
Labor might be interested in a fish processor bond.
One is for taxes, and that's this Employment Security
Tax issue - Unemployment Tax contributions [that] are
overdue and haven't been paid timely. The other
reason is that we have workers who haven't been paid
their wages. In the case of the workers who haven't
been paid their wages, this bill doesn't change
anything. It still requires the same process that is
currently in existence, which is that we go through an
administrative process with the employer to work out
the wage claim if we can, and if we can't, then we
have to take him to court and get a judgment before we
can pursue the bond. In the case of the Unemployment
Insurance Taxes, it's essentially the same, where the
tax office has to get a judgment to be able to pursue
the bond proceeds. This bill makes it easier for the
tax office to collect dilinquent Unemployment
Insurance Taxes, but then it also puts in this ...
kick-back requirement where, if the Unemployment
Insurance Tax people come in and seize the bond
proceeds, and then a fisherman or a worker comes in
and is able to get a judgment, then that ... trumps
the tax collection and the money had to be paid back
to the worker.
9:28:31 AM
CO-CHAIR LEDOUX commented, "Due process doesn't mandate that the
department get a court order judgment. It can be simply through
the administrative process of determining that ... the funds are
owed. Is that correct?"
MR. MITCHELL replied:
I'm not sure exactly what you're asking. I think what
you're asking is whether or not the administrative
process with respect to determining whether taxes are
delinquent is sufficient for the Department of Revenue
to accept that as due process for seizing the bond.
And that's essentially what they've accepted with this
bill; ... that a final determination for the
Employment Security Division at Department of Labor
saying, "This amount is due", is good enough; they
don't have to go to court to get that.
CO-CHAIR LEDOUX asked, "Would it be constitutionally acceptable
to allow the bond to be seized by employees through an
administrative judgment?" She related to the committee that
last year a processor in her district hired 20 or 30 young men
from Turkey, but then didn't pay the men. She noted that the
employees' cases are still pending.
9:30:47 AM
MR. MITCHELL acknowledged that there were problems with a few of
the processors recently. He commented that there are still
about 100 wage claims still open against one particular
processor, and "we're actually going to get some percentage of
funding due to a fish pack that was seized by the U.S.
Department of Labor in that case, and so somewhere close to a
half million dollars is going to be paid back to workers." He
noted that in that particular case, the processor had a bond
that was secured with real property, which made it more
difficult to pursue even with a judgment because "you're stuck
with trying to execute against a piece of property rather than a
... cash bond."
9:31:53 AM
CO-CHAIR LEDOUX asked, since one of the purposes of this bill is
to prevent incidents like that from happening, if it would be
easier if the bond could be seized by the employees after the
administrative adjudication that they are in fact owed funds,
rather than having to go to the court to do it after the
administrative adjudication.
MR. HARLAMERT replied that the effect of that would be to push
the fishermen's claims out of the way because, although the
administrative process would simplify the process, fisherman
would be left with the same judgment requirement. Because the
fishermen don't have a process in place within the state to have
their claims adjudicated, they still have to go through court.
Therefore the consequence would be to have a superpriority for
wages, fishermen would be pushed to number two, and Labor would
be last. In order to prevent that result, you would have to
find some comparable adjudictive process for fishermen to get a
part of the bond.
9:33:58 AM
CO-CHAIR THOMAS commented that he once filed against a bond, and
only three fishermen were paid off because there was no more
money to pay the rest of them. He suggested that perhaps the
bond requirement was too small and the bond should be increased
to $20,000 or $30,000.
MR. HARLAMERT noted that the Department of Revenue had
considered that because, in most cases of a business
catastrophe, $10,000 is insufficient [to cover debts]. He
pointed out that the department canvased other states and found
that Alaska is "already the most severe" state, as it is the
only state that requires a bond for fish buyers and processors,
although many states have general labor bond requirements that
can be imposed at the discretion of the commissioner. He also
noted: "We are looking at some underperforming processors ...
and we wanted to address that problem but we did not want to
punish the processors who are good corporate citizens. And so
we felt we were limited to keeping the status quo so that any
processor without a history of problems is unaffected by the
bill."
9:36:17 AM
CO-CHAIR THOMAS remarked, "That's another reason why I think
that the contract employee should be involved in there, too,
because you can dump a contract employee if he's not protected
under the bond."
REPRESENTATIVE WILSON asked for clarification as to why some
processors don't pay their employees, fishermen, and the
contract tenders.
CO-CHAIR THOMAS answered, "They are bad people. ... If we can
tighten this up ... we may get rid of some of these bad people."
He explained that a tender could owe a fishing fleet as much as
$50,000-$70,000 for a three-week period and the processor could
leave without ever paying the tender. The processor could then
return to the fishing grounds the following year under a
different company name, which has happened in the past, he
remarked. He said that for this reason he supports raising the
bond and adding contract tenders to the bill.
9:39:16 AM
CO-CHAIR LEDOUX pointed out:
What some of [the processors] do is they bring in
students from one country [to work at the processor]
one year - let's say they bring in students from
Turkey one year. By the next year, nobody in Turkey
wants to work for them, so then they bring in students
from Croatia, for example, the next year. I
understand what you folks are saying about not wanting
to penalize ... our good processors, and so it seems
reasonable to me to leave the initial bond at a low
rate, but I'm not sure that what you're going to
increase it to is enough. In other words, if somebody
has claims of $50,000 or more, you're increasing the
amount of the bond to $100,000. I think that some of
these [processors] ..., by the time the adjudicative
process is over, are going to owe significantly more
than $100,000. ... I would suggest that maybe if [a
processor] got a judgment of $75,000, for example,
that the bond the next year be increased to twice the
amount of ... the previous year's judgment.
9:41:03 AM
MR. HARLAMERT stated that he is happy to work with the committee
to try to balance the needs of the industry. He said, "We don't
want to see any unnecessary barriers to entry, and another
concern would be ... [that] it's possible that a 'good guy' can
get stuck with a judgment."
CO-CHAIR THOMAS asked Mr. Harlament, "How do you track these bad
guys?"
MR. HARLAMERT responded:
We can only stop them under ... the rules that the law
allows us to. And essentially [the Department of
Revenue] can only deny a license if they haven't paid
their tax, haven't secured their estimated tax, and
don't have a bond. As long as they meet those
requirements it really doesn't matter that they have
outstanding obligations to any other business or
fishermen individually. That's just the way law is
and we're required to give them a license. ... In
enforcing the restrictions we do have, we look through
these front companies and look back to business owner,
also the owner of someone who has not paid us in prior
years, and we will simply look through that shell
company, and deny them their license until they pay.
9:43:58 AM
REPRESENTATIVE WILSON commented that there are processors that
are trying to switch from a cannery to value-added processing,
which is an expensive process, and those processors shouldn't be
penalized.
MR. HARLAMERT noted:
Not all the [processors] who don't pay are
legitimately called "bad guys." They are people
trying to protect their business and in dire financial
straits, and they pay what they have to to operate
first, and what they don't have to [pay] to stay in
business last. ... It's just what they have to do to
stay in business when things get lean.
9:45:38 AM
CO-CHAIR LEDOUX remarked to Mr. Harlamert, "You say you look
past the shell, but I don't see anything in this statute that
has you looking past the shell. Is that in some other law
someplace?"
MR. HARLAMERT answered, "There is nothing in the statute. If
you read the statute quite literally, someone could start up a
brand new company the very next year after they've stiffed us
and ask for a license." He explained that if he can determine
that a new company is just a sham to avoid the consequences of
not paying [debts and taxes], he denies the company a licence.
CO-CHAIR LEDOUX asked if he had done this in the past.
MR. HARLAMERT replied affirmatively.
CO-CHAIR THOMAS announced that HB 192 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 9:47:20
AM.
| Document Name | Date/Time | Subjects |
|---|