Legislature(2003 - 2004)

04/23/2003 01:05 PM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 23, 2003                                                                                         
                           1:05 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Hugh Fate, Chair                                                                                                 
Representative Beverly Masek, Vice Chair                                                                                        
Representative Carl Gatto                                                                                                       
Representative Cheryll Heinze                                                                                                   
Representative Bob Lynn                                                                                                         
Representative Carl Morgan                                                                                                      
Representative Kelly Wolf                                                                                                       
Representative David Guttenberg                                                                                                 
Representative Beth Kerttula                                                                                                    
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
CS FOR SENATE JOINT RESOLUTION NO. 12(RES)                                                                                      
Supporting  the  halibut  by-catch  utilization  project  of  the                                                               
Alaska Food Coalition.                                                                                                          
     - MOVED HCS CSSJR 12(FSH) OUT OF COMMITTEE                                                                                 
HOUSE BILL NO. 105                                                                                                              
"An  Act  relating to  loans  to  satisfy  past due  federal  tax                                                               
obligations  of  commercial  fishermen   and  to  the  commercial                                                               
fishing loan program."                                                                                                          
     - MOVED HB 105 OUT OF COMMITTEE                                                                                            
HOUSE BILL NO. 191                                                                                                              
"An Act relating to the  Alaska coastal management program and to                                                               
policies  and   procedures  for   consistency  reviews   and  the                                                               
rendering  of  consistency  determinations  under  that  program;                                                               
relating  to the  functions of  coastal  resource service  areas;                                                               
creating   an   Alaska   Coastal  Program   Evaluation   Council;                                                               
eliminating the Alaska Coastal  Policy Council; annulling certain                                                               
regulations relating  to the  Alaska coastal  management program;                                                               
relating  to  actions  based on  private  nuisance;  relating  to                                                               
zoning  within  a  third  class borough  covered  by  the  Alaska                                                               
coastal management program; and providing for effective dates."                                                                 
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: SJR 12                                                                                                                  
SHORT TITLE:SUPPORTING HALIBUT BY-CATCH PROJECT                                                                                 
SPONSOR(S): SENATOR(S) STEVENS G                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/13/03     0491       (S)        READ THE FIRST TIME -                                                                        
03/13/03     0491       (S)        RES                                                                                          
04/02/03                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
04/02/03                (S)        Moved CSSJR 12(RES) Out of                                                                   
04/04/03     0691       (S)        RES RPT CS 6DP SAME TITLE                                                                    
04/04/03     0691       (S)        DP: OGAN, SEEKINS, STEVENS B,                                                                
04/04/03     0691       (S)        WAGONER, LINCOLN, ELTON                                                                      
04/04/03     0691       (S)        FN1: ZERO(DFG)                                                                               
04/07/03     0732       (S)        RULES TO CALENDAR 4/7/2003                                                                   
04/07/03     0732       (S)        READ THE SECOND TIME                                                                         
04/07/03     0732       (S)        RES CS ADOPTED UNAN CONSENT                                                                  
04/07/03     0732       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
04/07/03     0732       (S)        READ THE THIRD TIME CSSJR
04/07/03     0732       (S)        COSPONSOR(S): ELLIS, ELTON,                                                                  
04/07/03     0732       (S)        LINCOLN, OLSON, HOFFMAN,                                                                     
04/07/03     0732       (S)        COWDERY                                                                                      
04/07/03     0733       (S)        PASSED Y17 N- E3                                                                             
04/07/03     0733       (S)        TRANSMITTED TO (H)                                                                           
04/07/03     0733       (S)        VERSION: CSSJR 12(RES)                                                                       
04/08/03     0836       (H)        READ THE FIRST TIME -                                                                        
04/08/03     0836       (H)        RES                                                                                          
04/08/03     0860       (H)        CROSS SPONSOR(S): LYNN                                                                       
04/09/03     0900       (H)        FSH REFERRAL ADDED BEFORE RES                                                                
04/16/03                (H)        FSH AT 9:00 AM CAPITOL 124                                                                   
04/16/03                (H)        Moved HCS CSSJR 12(FSH) Out                                                                  
                                   of Committee                                                                                 
04/16/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/16/03                (H)        Scheduled But Not Heard                                                                      
04/17/03     1024       (H)        FSH RPT HCS(FSH) 5DP                                                                         
04/17/03     1024       (H)        DP: HEINZE, OGG, GUTTENBERG,                                                                 
04/17/03     1024       (H)        SEATON                                                                                       
04/17/03     1024       (H)        FN1: ZERO(DFG)                                                                               
04/17/03     1024       (H)        REFERRED TO RESOURCES                                                                        
04/23/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
BILL: HB 105                                                                                                                  
SHORT TITLE:COMMERCIAL FISHING LOANS                                                                                            
SPONSOR(S): REPRESENTATIVE(S)STEVENS                                                                                            
Jrn-Date   Jrn-Page                     Action                                                                                  
02/14/03     0215       (H)        READ THE FIRST TIME -                                                                        
02/14/03     0215       (H)        FSH, RES, FIN                                                                                
03/12/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
03/12/03                (H)        Moved Out of Committee                                                                       
03/12/03     0509       (H)        FSH RPT 3DP 3NR                                                                              
03/12/03     0509       (H)        DP: KOTT, WILSON, SEATON;                                                                    
03/12/03     0509       (H)        NR: BERKOWITZ, SAMUELS,                                                                      
03/12/03     0510       (H)        FN1: (CED)                                                                                   
03/12/03     0510       (H)        REFERRED TO RESOURCES                                                                        
04/23/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
03/26/03     0638       (H)        FSH RPT 2DP 2DNP 1NR 2AM                                                                     
03/26/03     0638       (H)        DP: HEINZE, WILSON; DNP:                                                                     
03/26/03     0638       (H)        BERKOWITZ; NR: SAMUELS; AM:                                                                  
                                   OGG, SEATON                                                                                  
03/26/03     0639       (H)        FN1: ZERO(DFG)                                                                               
03/26/03     0639       (H)        FN2: ZERO(DEC)                                                                               
03/26/03     0639       (H)        FN3: (DNR)                                                                                   
03/26/03     0639       (H)        REFERRED TO RESOURCES                                                                        
03/26/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
03/26/03                (H)        -- Meeting Canceled --                                                                       
03/28/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
03/28/03                (H)        <Bill Hearing Postponed>                                                                     
04/11/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/11/03                (H)        <Bill Hearing Postponed>                                                                     
04/16/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/16/03                (H)        Heard & Held                                                                                 
04/23/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
BILL: HB 191                                                                                                                  
SHORT TITLE:COASTAL MANAGEMENT PROGRAMS                                                                                         
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
03/12/03     0513       (H)        READ THE FIRST TIME -                                                                        
03/12/03     0513       (H)        FSH, RES, JUD, FIN                                                                           
03/12/03     0513       (H)        FN1: ZERO(DFG)                                                                               
03/12/03     0513       (H)        FN2: ZERO(DEC)                                                                               
03/12/03     0513       (H)        FN3: (DNR)                                                                                   
03/12/03     0513       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
03/17/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
03/17/03                (H)        Heard & Held                                                                                 
03/17/03                (H)        MINUTE(FSH)                                                                                  
03/18/03                (H)        RES AT 12:30 PM CAPITOL 124                                                                  
03/18/03                (H)        <Pending Referral> -- Meeting                                                                
                                   Canceled --                                                                                  
03/26/03     0638       (H)        FSH RPT 2DP 2DNP 1NR 2AM                                                                     
03/26/03     0638       (H)        DP: HEINZE, WILSON; DNP:                                                                     
03/26/03     0638       (H)        BERKOWITZ; NR: SAMUELS; AM:                                                                  
03/26/03     0638       (H)        SEATON                                                                                       
03/26/03     0639       (H)        FN1: ZERO(DFG)                                                                               
03/26/03     0639       (H)        FN2: ZERO(DEC)                                                                               
03/26/03     0639       (H)        FN3: (DNR)                                                                                   
03/26/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
03/26/03                (H)        Moved Out of Committee                                                                       
03/26/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
03/26/03                (H)        -- Meeting Canceled --                                                                       
03/26/03                (H)        MINUTE(FSH)                                                                                  
03/28/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
03/28/03                (H)        <Bill Hearing Postponed>                                                                     
04/11/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/11/03                (H)        <Bill Hearing Postponed>                                                                     
04/16/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
SENATOR GARY STEVENS                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as sponsor of SJR 12 and HB 105.                                                                 
JOSEPH LANHAM                                                                                                                   
Petersburg, Alaska                                                                                                              
POSITION STATEMENT:  Expressed concerns about HB 105.                                                                           
CHERYL SUTTON, Staff                                                                                                            
to the Joint Legislative Salmon Industry Task Force                                                                             
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions on HB 105.                                                                              
GREG WINEGAR, Director                                                                                                          
Division of Investments                                                                                                         
Department of Community & Economic Development (DCED)                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions on HB 105.                                                                              
REPRESENTATIVE PAUL SEATON                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   As chair of the House  Special Committee on                                                               
Fisheries, explained discussion in  that committee during hearing                                                               
on  HB 105;  asked questions  relating  to HB  191 and  requested                                                               
examples  of local  enforceable policies  that meet  the criteria                                                               
under Section 14.                                                                                                               
BRUCE TWOMLEY, Chairman/Commissioner                                                                                            
Commercial Fisheries Entry Commission                                                                                           
Alaska Department of Fish & Game (ADF&G)                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 105.                                                                            
GERALD McCUNE, Lobbyist                                                                                                         
for United Fishermen of Alaska (UFA)                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 105.                                                                            
MARTY RUTHERFORD, Consultant                                                                                                    
to the Administration                                                                                                           
and to the Department of Natural Resources (DNR)                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During hearing on HB 191, explained changes                                                                
in the new proposed committee substitute (CS) dated 4/22/2003.                                                                  
DANA OLSON                                                                                                                      
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  During hearing on HB 191, discussed                                                                        
concerns; asked that members look at the issue in its entirety.                                                                 
MIKE MILLIGAN                                                                                                                   
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 191; asked that the role of                                                                
local government not be circumvented.                                                                                           
BOB SHAVELSON, Executive Director                                                                                               
Cook Inlet Keeper                                                                                                               
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Expressed concerns relating to HB 191.                                                                     
BRECK TOSTEVIN, Assistant Attorney General                                                                                      
Environmental Section                                                                                                           
Civil Division (Anchorage)                                                                                                      
Department of Law                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Responded to concerns expressed about                                                                      
HB 191 and answered questions.                                                                                                  
JACK CUSHING, Mayor                                                                                                             
City of Homer                                                                                                                   
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified on HB 191.                                                                                       
LISA VON BARGEN                                                                                                                 
Community & Economic Development                                                                                                
City of Valdez                                                                                                                  
Valdez, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 191, suggesting                                                                            
clarification in Section 39 of the new proposed CS.                                                                             
NANCY HILLSTRAND                                                                                                                
Pioneer Alaskan Fisheries                                                                                                       
Homer, Alaska                                                                                                                   
POSITION STATEMENT:   Testified in opposition to HB 191.                                                                        
MARV SMITH, Coastal Zone Coordinator                                                                                            
Lake & Peninsula Borough                                                                                                        
King Salmon, Alaska                                                                                                             
POSITION STATEMENT:  Testified on HB 191, noting concerns that                                                                  
remain and suggesting changes.                                                                                                  
JOHN OSCAR, Program Director                                                                                                    
Ceñaliulriit Coastal Resource Service Area Board                                                                                
Mekoryuk, Alaska                                                                                                                
POSITION STATEMENT:  Expressed concerns about Section 29 of                                                                     
HB 191, in particular.                                                                                                          
DANIEL BEVINGTON, Coastal District Coordinator                                                                                  
Kenai Peninsula Borough                                                                                                         
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Expressed concerns about HB 191.                                                                           
ACTION NARRATIVE                                                                                                              
TAPE 03-33, SIDE A                                                                                                            
Number 0001                                                                                                                     
CHAIR  HUGH FATE  called the  House Resources  Standing Committee                                                             
meeting  to order  at  1:05 p.m.    Representatives Fate,  Masek,                                                               
Gatto, Heinze, Lynn,  Morgan, Wolf, and Kerttula  were present at                                                               
the  call to  order.   Representative Guttenberg  arrived as  the                                                               
meeting was in progress.                                                                                                        
SJR 12-SUPPORTING HALIBUT BY-CATCH PROJECT                                                                                    
CHAIR FATE  announced that the  first order of business  would be                                                               
CS  FOR  SENATE  JOINT  RESOLUTION NO.  12(RES),  Supporting  the                                                               
halibut  by-catch   utilization  project   of  the   Alaska  Food                                                               
Coalition.  [Before the committee was HCS CSSJR 12(FSH).]                                                                       
Number 0226                                                                                                                     
CHAIR FATE asked whether anyone else  wished to testify.  He then                                                               
closed public testimony.                                                                                                        
The committee took an at-ease from 1:09 p.m. to 1:11 p.m.                                                                       
[There  were two  motions to  move  wrong versions  of the  bill,                                                               
which were then withdrawn.]                                                                                                     
Number 0424                                                                                                                     
REPRESENTATIVE MASEK  moved to  report HCS  CSSJR 12(FSH)  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes, and asked for unanimous consent.                                                                                  
Number 0459                                                                                                                     
REPRESENTATIVE GATTO objected.  He  asked the sponsor to speak to                                                               
the changes.                                                                                                                    
Number 0490                                                                                                                     
SENATOR GARY  STEVENS, Alaska State Legislature,  sponsor, turned                                                               
attention  to page  2,  lines  6-8, reporting  that  there was  a                                                               
change in the  [House Special Committee on Fisheries]  to make it                                                               
absolutely  clear  that  this  is  a  specific  permit  called  a                                                               
prohibited  species  donation permit  and  is  authorized by  the                                                               
National Marine  Fisheries Service  (NMFS).   The purpose  of the                                                               
permit  is to  authorize the  use of  halibut catch  from vessels                                                               
with observers.   The  intention is to  make it  absolutely clear                                                               
that no fish  would be used from vessels that  don't have federal                                                               
observers  aboard to  ensure that  no  one has  "played fast  and                                                               
loose" with  keeping certain halibut.   He noted he was  glad the                                                               
change was made to clarify the intention.                                                                                       
Number 0565                                                                                                                     
REPRESENTATIVE GATTO withdrew his objection.                                                                                    
Number 0574                                                                                                                     
CHAIR  FATE asked  if there  was  any further  objection.   There                                                               
being  no objection,  HCS  CSSJR 12(FSH)  was  reported from  the                                                               
House Resources Standing Committee.                                                                                             
HB 105-COMMERCIAL FISHING LOANS                                                                                               
Number 0591                                                                                                                     
CHAIR FATE  announced that  the next order  of business  would be                                                               
HOUSE BILL  NO. 105, "An  Act relating  to loans to  satisfy past                                                               
due federal  tax obligations of  commercial fishermen and  to the                                                               
commercial fishing loan program."                                                                                               
[The  bill was  sponsored  by  then-Representative Gary  Stevens.                                                               
However, the written sponsor statement  was prepared by the Joint                                                               
Legislative   Salmon  Industry   Task  Force,   on  which   then-                                                               
Representative Gary Stevens served as  vice chair and Senator Ben                                                               
Stevens served as chair.]                                                                                                       
Number 0726                                                                                                                     
JOSEPH  LANHAM testified  on his  own  behalf, informing  members                                                               
that he  had four  concerns.   First, if  this is  constructed so                                                               
that the  permit cannot  be seized,  in most  cases it  will just                                                               
delay the  inevitable.   The only  reason a  person needs  to pay                                                               
taxes is  because of  making profits; if  the person  made money,                                                               
then the  taxes should have come  out of those profits  first and                                                               
then been saved  [until the tax was paid].   Thus he suggested it                                                               
was  the person's  choice to  get  into that  situation, in  many                                                               
cases,  because the  person had  misallocated his  or her  funds.                                                               
Mr. Lanham added:                                                                                                               
     This being  said, there is  no policy in the  bill that                                                                    
     says that the  state loan officers for  the Division of                                                                    
     Investments  have  to  show any  kind  of  debt-service                                                                    
     ratios  that  show  that  the  fishermen  can  pay  the                                                                    
     estimated  taxes for  next year,  as well  as the  new,                                                                    
     current portion of long-term debt.                                                                                         
Number 0808                                                                                                                     
MR.  LANHAM  addressed his  second  concern,  what the  loan-loss                                                               
reserve is.  He explained:                                                                                                      
     It says that the program  was highly used, but does not                                                                    
     say   how   much  these   loans   cost   the  fund   in                                                                    
     delinquencies or  cost the fund in  constant deferrals.                                                                    
     And where are ... some  of these loans that were booked                                                                    
     back  then, when  the program  was  highly used,  still                                                                    
     receiving deferrals  and still only  receiving interest                                                                    
     payments?   I  may  be  wrong, but  I  have heard  from                                                                    
     several fishermen that they  receive deferrals from the                                                                    
     state constantly.                                                                                                          
MR. LANHAM noted that his third  concern relates to the waiver of                                                               
the  0.5 percent  loan fee:   he  disagrees with  it because  the                                                               
Division of Investments competes  with commercial banks; lowering                                                               
the fee will  make companies that lend to  the commercial fishing                                                               
industry  less  competitive  with  the  program.    Although  the                                                               
original intent  of the  [state] program  wasn't to  compete with                                                               
banks, he said  the state has become the lender  of first choice,                                                               
instead of  the lender of last  resort.  The state  can refinance                                                               
up  to $300,000,  which has  resulted in  the loss  of profitable                                                               
customers  who never  have missed  a  payment or  been late  with                                                               
their payments,  but who  now are  in jeopardy of  doing so.   He                                                               
     They do  this by subverting  the requirement to  have a                                                                    
     "decline letter" from the bank  and having the customer                                                                    
     qualify  for   bank  financing  through  the   bank  by                                                                    
     refinancing it back  to the state.  And  the state loan                                                                    
     officers instruct fishermen to come  to the bank to set                                                                    
     interim or  "bridge" financing.   What this is,  is the                                                                    
     customer actually comes  in, qualifies for conventional                                                                    
     financing,  and  does not  need  the  state.   But  the                                                                    
     state,  under the  [refinancing]  program,  pays off  a                                                                    
     good-performing  loan and  then takes  it over  from us                                                                    
     and  uses us,  in a  way,  to get  around the  $100,000                                                                    
     This is a deceptive  practice because it just disguises                                                                    
     the fact that they  are initiating loans over $100,000,                                                                    
     which is ...  the new money limit that they  have.  The                                                                    
     state  loan  officers  will  go   as  far  as  to  send                                                                    
     commitment letters  to the borrower assuring  them that                                                                    
     if  they   qualify  for   bank  financing,   they  will                                                                    
     refinance and do the deal.                                                                                                 
Number 0946                                                                                                                     
MR. LANHAM addressed his fourth  concern:  the only entities that                                                               
can foreclose on permits are  the Internal Revenue Service (IRS),                                                               
the  State  of  Alaska,  or   the  state's  authorized  financing                                                               
companies  such as  the Commercial  Fishing and  Agriculture Bank                                                               
(CFAB) or  the Division of  Investments.  By contrast,  banks are                                                               
prohibited  by the  state from  financing limited  entry permits.                                                               
He continued:                                                                                                                   
     The  phrase  in  HB  105   that  talks  about  stopping                                                                    
     creditors  is  really ...  referring  to  the IRS,  the                                                                    
     state, and  CFAB.   The state and  CFAB can  make their                                                                    
     own decision whether or not  to foreclose on the permit                                                                    
     in  the interest  of  the  state, as  they  are in  the                                                                    
     interest of  the fisherman in  the first place,  and if                                                                    
     it  is good  for the  fishing  community.   If the  IRS                                                                    
     forecloses  on the  permit, their  only interest  is to                                                                    
     turn it into  cash to pay a  tax bill.  To  do that, it                                                                    
     would have to  be resold, ... and the  only people that                                                                    
     would  buy a  limited  entry permit  are fishermen  who                                                                    
     would  fish it.    So  ... if  the  permits  are to  be                                                                    
     foreclosed on  and then sold,  there wouldn't  [be] the                                                                    
     dire consequences  referenced in the bill,  because the                                                                    
     permits would be fished.                                                                                                   
CHAIR FATE requested that Mr. Lanham stay on teleconference.                                                                    
Number 1058                                                                                                                     
SENATOR   GARY  STEVENS,   Alaska  State   Legislature,  sponsor,                                                               
explained that  HB 105 stemmed from the  Joint Legislative Salmon                                                               
Industry  Task  Force, appointed  by  the  House and  Senate  the                                                               
previous  year, which  met during  the summer  and fall  of 2002.                                                               
Out of  that task force came  half a dozen bills  that are moving                                                               
through  the legislature.    The  intent is  to  help the  salmon                                                               
industry, which  is in crisis,  face enormous  problems including                                                               
competition from farmed salmon and low  prices.  He said a lot of                                                               
fishermen are in jeopardy of going out of business.                                                                             
SENATOR GARY  STEVENS brought up  concerns voiced by  Mr. Lanham.                                                               
With regard to foreclosure, he said  it isn't in the state's best                                                               
interest  for fishermen  to go  out  of business  and lose  their                                                               
permits, among other  things.  Hence the purpose of  HB 105 is to                                                               
try to forestall that and  help fishermen with federal taxes when                                                               
they are  in a position of  jeopardy.  Noting that  the state had                                                               
this program from 1995-1997 and  2001-2003, he said it was widely                                                               
used and very  successful.  With respect  to delinquency, Senator                                                               
Stevens  said he  didn't  have those  figures  and suggested  the                                                               
Division of  Investments could  respond.  He  added that  the 0.5                                                               
percent waiver is to help fishermen  even more.  He urged members                                                               
to give  serious consideration to  the legislation.   In response                                                               
to a  question from Representative  Guttenberg, he said  it isn't                                                               
inevitable that  all of  these fishermen  who are  having trouble                                                               
paying  their  taxes will  go  out  of  business and  lose  their                                                               
permits; he cited the previous  two time periods during which the                                                               
program existed as evidence of that.                                                                                            
Number 1364                                                                                                                     
REPRESENTATIVE  MASEK  referred  to   the  fiscal  note  analysis                                                               
[prepared  by  Greg  Winegar  of  the  Division  of  Investments,                                                               
Department of  Community and Economic Development  (DCED)], which                                                               
read [original punctuation provided]:                                                                                           
     This legislation allows  Alaska harvesters to refinance                                                                    
     existing   Commercial  Fishing   Revolving  Loan   Fund                                                                    
     (CFRLF) loans.   Current law  requires the  Division to                                                                    
     charge a one-half percent fee  to refinance.  Section 1                                                                    
     of HB 105 removes  the one-half percent refinancing fee                                                                    
     and that  will result in  a reduction of income  to the                                                                    
     CFRLF.   Interest  rates are  currently at  record lows                                                                    
     and  as a  result,  the Division  anticipates that  the                                                                    
     majority of borrowers eligible to  refinance will do so                                                                    
     prior to  the effective date  of this legislation.   We                                                                    
     expect  approximately 180  refinancing applications  in                                                                    
     FY 04  and then approximately 80  applications per year                                                                    
     thereafter.   This will  result in  a reduction  to the                                                                    
     fund in  FY 04  of $30,150 and  a reduction  of $13,400                                                                    
     each year thereafter through FY 09.  These reductions                                                                      
     were calculated as follows:                                                                                                
     180 loans x $33,500 (average loan size) = $6,030,000 x                                                                     
     .005 = $30,150                                                                                                             
     80 loans x $33,500 = $2,680,000 x .005 = $13,400                                                                           
         These calculations are based on interest rates                                                                         
       remaining relatively flat or increasing gradually                                                                        
     through FY 09.                                                                                                             
REPRESENTATIVE MASEK  asked why language  was put in the  bill to                                                               
remove that [0.5 percent].                                                                                                      
Number 1397                                                                                                                     
SENATOR GARY STEVENS replied that  at this point he doesn't think                                                               
it's  necessary  [to include  the  0.5  percent].   He  said  the                                                               
program has been successful in the  past, and that this is just a                                                               
further encouragement  to fishermen  to use  this program  and to                                                               
make it less expensive.                                                                                                         
REPRESENTATIVE  MASEK responded  that she  is really  troubled by                                                               
the legislation because  many Alaskans have to  pay federal taxes                                                               
and are delinquent  on them, and yet the state  doesn't help them                                                               
out.   Calling it  self-serving in  this time  of a  state fiscal                                                               
crisis, she  said she isn't  happy to see  that Section 1  of the                                                               
bill removes  the 0.5 percent.   Representative  Masek questioned                                                               
the long-term  viability of fishing for  many people as a  way to                                                               
earn a  living, and  remarked that when  Canada had  trouble with                                                               
its  fishing  industry,  it  looked   at  helping  fishermen  get                                                               
training in other occupations.                                                                                                  
Number 1513                                                                                                                     
REPRESENTATIVE  HEINZE recalled  hearing this  bill in  the House                                                               
Special Committee  on Fisheries  and said she  supports it.   She                                                               
asked whether  the IRS  has seized limited  entry permits  in the                                                               
SENATOR  GARY  STEVENS  deferred  to Cheryl  Sutton,  who'd  been                                                               
working on  this bill [as  staff to the Joint  Legislative Salmon                                                               
Industry Task Force, which Senator Ben Stevens chairs].                                                                         
Number 1540                                                                                                                     
CHERYL  SUTTON, Staff  to the  Joint Legislative  Salmon Industry                                                               
Task Force, responded:                                                                                                          
     No.   Thus far, we  have been successful in  not having                                                                    
     the  IRS seize  any permits,  largely due  to the  fact                                                                    
     that  Bruce  Twomley  with CFEC  [Commercial  Fisheries                                                                    
     Entry  Commission] has  been  very  successful in  this                                                                    
     area.   And a large  portion of  this bill has  to deal                                                                    
     with  that  subject.   We  are  trying to  protect  the                                                                    
     state's  interests in  this, and  clearly  it's in  the                                                                    
     state's interest not to lose permits.                                                                                      
MS.  SUTTON,  in  response   to  Representative  Masek's  earlier                                                               
question, said  the task force  had recommended removing  the 0.5                                                               
percent refinancing  fee just  as an  additional help  for people                                                               
who want  to refinance  their loans and  take advantage  of lower                                                               
interest  rates.     She  pointed  out  that  this   is  a  self-                                                               
perpetuating revolving  loan fund.   It's  the borrowers  who are                                                               
putting money back into the fund,  and the last general fund (GF)                                                               
appropriation was in fiscal year 1985 (FY 85).                                                                                  
Number 1653                                                                                                                     
REPRESENTATIVE GATTO  asked whether  the 0.5  percent forgiveness                                                               
would be absorbed easily by the fund.   He suggested it is in the                                                               
state's best interest to prevent  defaults with the IRS, and that                                                               
part of the  loan capital therefore is being  invested [under the                                                               
bill] in trying to  avoid that.  He asked, when  the IRS comes to                                                               
collect from  a person who is  out of money, whether  it can take                                                               
the person's permit.                                                                                                            
MS.  SUTTON suggested  Mr. Twomley  of CFEC  could address  that.                                                               
She added, "Our whole objective is  not to allow the IRS to seize                                                               
a  state  asset,  which  is  the  limited  entry  permit."    She                                                               
clarified that the 0.5 percent  refinancing fee has nothing to do                                                               
with "the IRS  loans."  She also pointed out  that people who are                                                               
most  at  risk are  those  with  no  other "economy"  apart  from                                                               
commercial fishing, mostly  those in Western Alaska.   She added,                                                               
"I'm  sorry that  they're not  on line  to testify  to this  bill                                                               
today,  because  we  heard immense  testimony  through  the  task                                                               
force."   She emphasized that this  is a state loan  program that                                                               
is only for state residents, and  that the interest is in keeping                                                               
these permits  in rural  areas where there  is no  other economy.                                                               
She suggested it serves a dual purpose in that regard.                                                                          
Number 1812                                                                                                                     
REPRESENTATIVE  MASEK  referred  to  page  3,  lines  7-12  [sub-                                                               
subparagraphs (ii) and (iii)], which  relate to lack of training,                                                               
lack of employment  opportunities in the area  of residence, lack                                                               
of other  occupational opportunities besides  commercial fishing,                                                               
and economic dependence or a  traditional way of life.  Referring                                                               
to passage of the Alaska  Native Claims Settlement Act (ANCSA) as                                                               
well  as federal  funding through  the Bureau  of Indian  Affairs                                                               
(BIA),  she said  there  is  a lot  of  federal  and state  money                                                               
invested  through  nonprofit  and for-profit  organizations  that                                                               
have the ability to help folks who  live out in these areas.  She                                                               
recalled growing  up as an  Alaska Native  in a village  of fewer                                                               
than 100 people, relying on  fishing.  Now, however, her father's                                                               
fishing permit is useless.  She said:                                                                                           
     They  do have  other funding  to retrain  him, but  the                                                                    
     only jobs  that are available are  basically federal or                                                                    
     state or municipal,  or through tribal entities.   So I                                                                    
     just kind  of take that into  ... strong consideration,                                                                    
     because I don't  think that's a very  fair statement to                                                                    
     put  into  this  bill  here, because  there  are  other                                                                    
     opportunities  available.     It's   just  up   to  the                                                                    
     individual  person on  ... if  they  want to  [further]                                                                    
     their training in other areas.                                                                                             
REPRESENTATIVE MASEK  asked why  this language  was added  in the                                                               
Number 1933                                                                                                                     
SENATOR  GARY STEVENS  replied that  he could  speak for  the six                                                               
coastal  villages on  Kodiak Island  that depend  heavily on  the                                                               
salmon  industry and  traditionally  have fished  for salmon  for                                                               
years.  He agreed that  if fishing disappears, other programs can                                                               
help, but  said they're all "social  programs, giveaway programs"                                                               
to  provide  people  with  food  and  so  forth.    Speaking  for                                                               
fishermen  he  knows   on  Kodiak  Island  and   in  Old  Harbor,                                                               
specifically, he  said they don't  want those  giveaway programs,                                                               
but want  to compete  and want  help to  keep participating  in a                                                               
fishing industry  they know well  and have performed well  in for                                                               
years.   He suggested Representative  Masek's comments  play into                                                               
what he is saying.                                                                                                              
REPRESENTATIVE MASEK stated her preference for removing lines 7-                                                                
12 from  [page 3  of] the  bill, but left  it to  the committee's                                                               
Number 2032                                                                                                                     
REPRESENTATIVE  MORGAN  responded that  he  tends  to agree  with                                                               
lines 7-12 because  he sees no difference in  the timber industry                                                               
in Southeast Alaska.  He  asked, when that collapsed, who stepped                                                               
in to  provide training and  jobs.   Noting that he  represents a                                                               
lot of villages  in Bush Alaska, he voiced his  belief that it is                                                               
a fiduciary  responsibility of the state  and federal governments                                                               
to deal  with social issues.   He said  he sees nowhere  that the                                                               
state or federal  government asks a private company  to take over                                                               
the social problems.   Private companies exist to  make a profit,                                                               
he observed, whereas the state  and federal governments are there                                                               
to help socially, as much  as they can, whether through education                                                               
or food stamps or welfare.                                                                                                      
REPRESENTATIVE  MORGAN agreed  with  Senator  Gary Stevens  about                                                               
handouts,  saying  there  is  nothing  better  than  working  and                                                               
receiving a paycheck to make  a person feel good and independent.                                                               
He offered  his belief  that training  should exist,  although he                                                               
suggested looking into what kind of training it should be later.                                                                
Number 2138                                                                                                                     
CHAIR FATE  related his understanding  that HB 105  allows people                                                               
to borrow money from the revolving  loan fund in order to pay for                                                               
their income  tax.  He posed  a situation in which  an individual                                                               
files for  a late tax return,  which takes close to  nine months;                                                               
then the individual enters into  litigation over the tax and that                                                               
exceeds  the date  specified [when  the delay  was granted].   He                                                               
asked  if  there  are  any  remedies or  allowance  [for  such  a                                                               
SENATOR  GARY STEVENS  deferred  to the  representative from  the                                                               
Division of Investments.                                                                                                        
Number 2260                                                                                                                     
CHAIR FATE  asked how prudent businesspeople  allow themselves to                                                               
get  behind to  that extent.   He  asked, "How  can they  not pay                                                               
their taxes and save the  money out, because paying taxes implies                                                               
that  they've made  a net  income  that's $30,000,  which is  the                                                               
limit  here, which  we'll say  ... is  close to  a net  profit of                                                               
about $100,000."                                                                                                                
SENATOR  GARY  STEVENS turned  attention  to  factors beyond  the                                                               
control  of commercial  fishermen,  such as  the  market and  the                                                               
production of  farmed fish.   The  current situation  is probably                                                               
the worst  situation commercial  fishermen have  found themselves                                                               
in the  last 50 years, he  said.  Due  to the costs, even  a good                                                               
fishermen who does  everything correctly can be in  [debt] at the                                                               
end of the season.                                                                                                              
CHAIR FATE  suggested that if  the season was bad,  the fishermen                                                               
wouldn't have  much income  tax to  pay, especially  when writing                                                               
off  expenses  [for boats  and  equipment].    An income  tax  is                                                               
predicated on  one's net  income.  He  remarked that  whether the                                                               
fishermen is  using cash accounting  or accrual  accounting would                                                               
make a difference.                                                                                                              
Number 2406                                                                                                                     
GREG WINEGAR,  Director, Division  of Investments,  Department of                                                               
Community &  Economic Development  (DCED), responded.   In regard                                                               
to the two-year  requirement, Mr. Winegar said  he believes Chair                                                               
Fate  is referring  to  the eligibility  section.   The  two-year                                                               
requirement essentially  relates to  residency.   As far  as what                                                               
taxes can be  covered, the division can go back  several years if                                                               
CHAIR FATE asked if most fishermen  operate on a cash basis or an                                                               
accrual basis.                                                                                                                  
MR. WINEGAR answered that both are  used - and for some, neither,                                                               
which is part of  the problem.  Mr. Winegar said  that much of it                                                               
is an  education problem.   Since this program was  introduced in                                                               
1995, the division  has done what it can to  educate people about                                                               
necessary recordkeeping.  For instance,  the division created the                                                               
volunteer  tax and  loan program;  the  division, in  cooperation                                                               
with the  University of  Alaska and  the IRS,  goes to  areas and                                                               
helps people prepare  tax returns at no expense.   Over the years                                                               
there has been  quite a change, and the situation  is much better                                                               
now,  which is  in part  due to  this cooperative  effort.   This                                                               
legislation  would provide  another  tool.   He  added that  this                                                               
would apply  to about 15-20 loans  a year and thus  wouldn't be a                                                               
costly program.  This loan fund has done well, he added.                                                                        
MR. WINEGAR  informed the committee  that currently  this program                                                               
has  a  fairly  high  delinquency   rate  of  about  43  percent.                                                               
However, 79 loans  have actually been paid in full.   The program                                                               
began with  a total  of 307  loans that have  been made  over the                                                               
life of  the program; most  of the loans  were made in  the first                                                               
two to three  years of the program, when there  was a substantial                                                               
noncompliance problem.  In the  last three fiscal years, 20 loans                                                               
have been made.  Therefore, he  characterized it as a small tool.                                                               
A  total  of  $5  million  in  payments  has  been  obtained,  in                                                               
comparison with $6.4 million that  was loaned.  Mr. Winegar noted                                                               
that   the   division  will   work   with   borrowers  who   have                                                               
CHAIR FATE asked if those  [loans] are collateralized with assets                                                               
other than the limited entry permit.                                                                                            
MR.  WINEGAR replied  yes, in  some cases.   In  most cases,  the                                                               
permit is the primary collateral for the loan.                                                                                  
Number 2619                                                                                                                     
REPRESENTATIVE  GATTO directed  attention to  page 3  and pointed                                                               
out that  in order to  satisfy the loan,  either sub-subparagraph                                                               
(i), (ii),  or (iii) is  required.  He said  he sees it  from the                                                               
point of  view of a  loan's being refused because  satisfying one                                                               
of the three would make it  easy for an individual not to satisfy                                                               
any  of the  sub-subparagraphs.   For instance,  sub-subparagraph                                                               
(i) says,  "has had  a crewmember  or commercial  fishing license                                                               
under AS 16.05.480".                                                                                                            
MR. WINEGAR  clarified that  a lot  of individuals  qualify under                                                               
[sub-subparagraph (i)] because in order  to qualify, someone must                                                               
have a  limited entry permit that  is in jeopardy of  being taken                                                               
by the IRS.                                                                                                                     
REPRESENTATIVE GATTO  suggested it would be  difficult to satisfy                                                               
sub-subparagraph  (ii),  and  thus  one  would  default  to  sub-                                                               
subparagraph (iii).   He said,  "For me,  it seems like  for some                                                               
people who  might purposely not want  to give a loan  to for some                                                               
reason,  you could  find  somewhere  ... in  all  of these  three                                                               
things  where they  might  not  qualify."   However,  he said  he                                                               
understood that almost everyone would qualify under sub-                                                                        
subparagraph (i).                                                                                                               
MR. WINEGAR agreed  for this particular part of the  program.  He                                                               
explained  that sub-subparagraphs  (ii)-(iii) come  from language                                                               
already in  the statute for  [subparagraph (B)] loans,  which was                                                               
put  in  place  in  the  early to  mid-1980s.    He  related  his                                                               
understanding  that the  legislature  at the  time  felt that  in                                                               
order to  qualify for  this program, someone  would need  to have                                                               
some  sort   of  commercial  fishing  experience   or  the  other                                                               
specified conditions.                                                                                                           
Number 2754                                                                                                                     
REPRESENTATIVE  WOLF referred  to the  high delinquency  rate and                                                               
recalled hearing  about a  loss of  over $1  million.   He called                                                               
this proposal a handout.                                                                                                        
MR. WINEGAR  responded that he  wouldn't say $1 million  has been                                                               
lost because  the [division] is  working with  those individuals,                                                               
although these  are collateralized  loans and  some of  the money                                                               
could be  lost.  With regard  to the 0.5 percent  fee, it relates                                                               
to the  refinancing program.   In  the last  couple of  years the                                                               
rates have  dropped dramatically,  and thus  the majority  of the                                                               
portfolio has already refinanced.                                                                                               
MR. WINEGAR noted that during  [Joint Legislative Salmon Industry                                                               
Task  Force] hearings  a number  of  testifiers [requested]  that                                                               
they not  have to  pay the  0.5 percent  to refinance.   However,                                                               
there would  be some impact to  the fund; because the  rates have                                                               
decreased  so far,  most people  have already  financed.   If the                                                               
rates  drop further,  the fiscal  note  could be  adjusted.   The                                                               
fiscal note  is something on  the order  of $30,000 in  the first                                                               
year and $13,000 for the next couple  of years.  There will be an                                                               
impact, he said,  although he didn't believe it  would affect the                                                               
financial integrity of this particular loan fund.                                                                               
Number 2854                                                                                                                     
REPRESENTATIVE  WOLF pointed  out  that every  time the  interest                                                               
rates  decrease,  people  refinance,  and that  includes  a  loan                                                               
origination fee.  Representative Wolf  said he has a problem when                                                               
the  legislature is  cutting programs  and that  this is  already                                                               
capable of  being done by  CFAB.  In  1987, when the  economy hit                                                               
bottom, the  state didn't come  in and bail out  the contractors.                                                               
Although Representative Wolf said he  had no problems helping out                                                               
industry  in  the  state,  he  said he  finds  this  0.5  percent                                                               
MR. WINEGAR  said he wouldn't  argue with Representative  Wolf on                                                               
the 0.5 percent,  as it's a relatively small fee.   He noted that                                                               
the process has  been streamlined as best as  possible, but there                                                               
are costs associated with a refinance.                                                                                          
REPRESENTATIVE WOLF said it all adds up.                                                                                        
Number 2963                                                                                                                     
REPRESENTATIVE GUTTENBERG  inquired as to  the impact of  the 0.5                                                               
percent reduction on the revolving loan fund.                                                                                   
MR. WINEGAR answered  that the division forecast  that the impact                                                               
would be about $30,200 in  2004 and $13,400 each year thereafter.                                                               
This is really a factor of what interest rates do, he said.                                                                     
TAPE 03-33, SIDE B                                                                                                            
MR.  WINEGAR  continued by  saying  if  the rates  don't  decline                                                               
further,  it won't  be substantial.   If  the federal  government                                                               
cuts the  rate again  and the  rates drop,  then the  fiscal note                                                               
would increase  to some  extent because there  would be  a larger                                                               
group seeking refinancing.   Therefore, it's related  to what the                                                               
market rates do.                                                                                                                
Number 2965                                                                                                                     
REPRESENTATIVE MORGAN inquired  as to the impact to  the state if                                                               
these permits are lost to the IRS.                                                                                              
MR. WINEGAR  answered with his belief  that it would be  a fairly                                                               
substantial impact.   With this program and  through working with                                                               
the  IRS, the  intent  has  been to  avoid  [the  IRS taking  the                                                               
state's permits].                                                                                                               
Number 2920                                                                                                                     
REPRESENTATIVE  PAUL SEATON,  Alaska State  Legislature, informed                                                               
the committee that  in the House Special  Committee on Fisheries,                                                               
which he  chairs, it was  discovered that [fishermen]  have filed                                                               
tax  returns  and  have  made  arrangements with  the  IRS.    He                                                               
explained that  some people in  rural Alaska didn't  realize that                                                               
the IRS existed and had  accumulated IRS debt without maintaining                                                               
receipts to  write off expenses.   Therefore, this  population is                                                               
being aided by this program.   With regard to the 0.5 percent, he                                                               
said this program places no cost on the state general fund (GF).                                                                
REPRESENTATIVE SEATON  reported that  the task force  had related                                                               
to [the  House Special  Committee on Fisheries]  that one  of the                                                               
few  ways fishermen  could be  helped is  through refinancing  of                                                               
loans  at the  lower  interest  rates and  not  being charge  0.5                                                               
percent of the  whole loan fee as an upfront  fee.  Therefore, [a                                                               
fisherman's] ongoing expenses could be  lowered at this time when                                                               
the salmon prices are so low.                                                                                                   
REPRESENTATIVE GATTO asked whether any  of this IRS obligation is                                                               
allowed  to be  a result  of some  nonfishing obligation  such as                                                               
child support or whether it's restricted  to IRS debt as a result                                                               
of fishing.                                                                                                                     
Number 2796                                                                                                                     
MR. WINEGAR answered that this  particular language is restricted                                                               
to IRS  obligations.  He  noted that in the  original legislation                                                               
in 1995 a provision allowed this  to be used for child support as                                                               
well, which  created a lot  of concern.  Therefore,  the relating                                                               
language  was  removed  in  one  of the  first  hearings  on  the                                                               
original legislation.                                                                                                           
REPRESENTATIVE GATTO  asked, "Is it obligations  that are limited                                                               
to a  debt as a result  of fishing deficiencies or  losing years,                                                               
or can it be any debt?"                                                                                                         
MR. WINEGAR answered  that technically he believes it  can be any                                                               
debt,  although  he  didn't  recall   any  that  fell  into  that                                                               
CHAIR FATE  said that's a  good question because of  the two-year                                                               
timeframe.  He related his  understanding that the revolving loan                                                               
fund was initially funded with GF funds.                                                                                        
MR. WINEGAR  replied yes.   He explained  that when the  fund was                                                               
created in  1972, approximately $60  million went into  the fund.                                                               
About $74  million has  gone out  of the  fund since  fiscal year                                                               
1985, when the last appropriation was made.                                                                                     
CHAIR FATE  asked if CFAB also  lends money for the  same type of                                                               
MR. WINEGAR explained  that CFAB is a bit  different because it's                                                               
a  cooperative.   Although the  programs  do overlap  to a  small                                                               
extent, basically those qualifying for  a CFAB loan don't qualify                                                               
with the division.                                                                                                              
CHAIR FATE surmised,  then, that there is  no competition between                                                               
CFAB and the state.                                                                                                             
Number 2654                                                                                                                     
MR. WINEGAR reiterated that there are  a couple of areas in which                                                               
the  two program  overlap.    One is  in  the refinancing  arena.                                                               
Under current statute, the division  has the ability to refinance                                                               
existing vessel  and gear loans.   However, the  division doesn't                                                               
encourage someone to take out  bank loans and immediately come to                                                               
the  division.   In  fact,  the division  is  going to  implement                                                               
regulations to  make it clear that  someone would have to  have a                                                               
loan on  the books for  at least a  year before being  allowed to                                                               
refinance.      There   is   also    overlap   with   regard   to                                                               
[subparagraph (A)] permit loans.   By law, only  two entities can                                                               
take  a  permit as  collateral:    CFAB  and the  state  program.                                                               
However,  there is  language that  specifies that  the loans  are                                                               
intended for those who don't have other sources of financing.                                                                   
Number 2569                                                                                                                     
BRUCE TWOMLEY, Chairman/Commissioner,  Commercial Fisheries Entry                                                               
Commission  (CFEC), Alaska  Department  of Fish  & Game  (ADF&G),                                                               
recalled that fewer  than 10 years ago there was  an IRS official                                                               
in Anchorage who'd  attended a meeting of  the Alaska Association                                                               
of  Village  Council  Presidents;  afterward,  the  official  had                                                               
remarked that the IRS is trying  to collect taxes from people who                                                               
don't even know the IRS exists.   He said those in rural villages                                                               
who  don't know  of  their  tax obligations  and  don't file  tax                                                               
returns  can end  up having  enormous  tax debts  because of  the                                                               
penalties.     In  these  cases,  IRS   officials  thought  these                                                               
individuals were evading taxes and  thus went after limited entry                                                               
permits in some of  those cases.  The IRS has  seized a number of                                                               
limited entry permits and forced  the sale of those limited entry                                                               
permits.  Often, this has  resulted in these permits' being taken                                                               
out  of villages  and sold  at bargain  prices to  people out  of                                                               
state.    However,  for  one reason  or  another,  those  permits                                                               
haven't actually  transferred because the permits  go through the                                                               
[CFEC], and  often there is a  basis under state law  to deny the                                                               
transfer, which results in [CFEC's]  negotiating with the IRS and                                                               
resisting the forced sale of the limited entry permits.                                                                         
MR.  TWOMLEY  explained  that the  commission  has  resisted  the                                                               
forced  sale  of   the  limited  entry  permits   because  it  is                                                               
protecting  state law  in  the matter;  state  law declares  that                                                               
limited entry  permits are privileges  not subject to  the claims                                                               
of creditors.   The aforementioned is the case  for two important                                                               
reasons,  he said.   First  and foremost,  the legislature  wants                                                               
control  over this  privilege so  that it  can be  changed.   The                                                               
other reason this  is a privilege is to  keep [Alaskan fishermen]                                                               
in the water,  especially those in rural areas who  may depend on                                                               
fisheries as their only source of cash income.                                                                                  
MR. TWOMLEY  emphasized his belief  that it would  be devastating                                                               
to a number  of communities to lose  these particular privileges.                                                               
With  regard  to compliance  rates,  Mr.  Twomley indicated  he'd                                                               
recently  reviewed  statistics  which illustrate  that  fishermen                                                               
aren't less  compliant than other small  independent businessmen.                                                               
The limited  entry system and  permits make  fishermen especially                                                               
vulnerable to tax  enforcement.  Therefore, the  loan program has                                                               
helped  in  that it  allows  the  [commission] to  intervene  and                                                               
negotiate with the IRS and help those facing enormous claims.                                                                   
MR. TWOMLEY  noted that the state  has also made it  easy for the                                                               
IRS  to go  after the  earnings from  the limited  entry permits.                                                               
Since this program  has been in place, the IRS  has realized that                                                               
its patience  can pay off  and that fishermen and  their families                                                               
can retain  the benefits of  the local fisheries, he  said, which                                                               
is why [CFEC] supports HB 105.                                                                                                  
Number 2282                                                                                                                     
REPRESENTATIVE LYNN expressed shock that  some people in the U.S.                                                               
don't  know that  the IRS  exists.   He said  he hoped  something                                                               
would be  done to contact  [the state's] educational system  as a                                                               
method  of  informing Alaskans  that  the  IRS  exists.   In  the                                                               
meantime, he  asked if anything  is being done to  educate people                                                               
about the IRS.                                                                                                                  
MR. TWOMLEY  pointed out  that since [CFEC]  has become  aware of                                                               
the  problem, a  number of  forces  such as  the university,  the                                                               
Alaska Business  Development Center,  and the state  loan program                                                               
have brought  a lot of resources  to this matter.   The situation                                                               
has greatly  improved.  Mr.  Twomley related that  this situation                                                               
isn't totally  unique to Alaska.   As a  result of this  work, he                                                               
has been  appointed to  a national  taxpayer advocacy  panel from                                                               
which he has  learned that there are other  groups of individuals                                                               
who are  equally unaware  of the  IRS tax  obligations.   The IRS                                                               
joined the  educational effort.  Mr.  Twomley said that a  lot of                                                               
resources have gone  into education and a great  deal of progress                                                               
has  been made  and continues  to be  made.   The situation  that                                                               
existed in 1995 doesn't continue now.                                                                                           
REPRESENTATIVE  LYNN clarified  that  he blames  the system  that                                                               
allows this lack of knowledge about the IRS.                                                                                    
Number 2150                                                                                                                     
REPRESENTATIVE GATTO made the following  analogy.  He pointed out                                                               
that he  uses an office provided  by the government.   If he were                                                               
to be  kicked out and the  IRS said he  owed a lot of  money, the                                                               
IRS couldn't take his office and  rent it out, because the office                                                               
belongs  to  the state.    Similarly,  the limited  entry  permit                                                               
belongs  to the  state.   Therefore,  he questioned  how the  IRS                                                               
could take a permit to use something and sell it.                                                                               
MR. TWOMLEY said  Representative Gatto has put  forth the state's                                                               
theory.    This  permit  is  a  privilege,  and  it's  critically                                                               
important to the  state that it remains that way,  because it's a                                                               
means  of  enforcing  conservation   laws,  among  other  things.                                                               
However,  he acknowledged  that [the  permit] generates  property                                                               
REPRESENTATIVE GATTO inquired as to the resolution.                                                                             
MR.  TWOMLEY answered  that currently  there is  an agreement  to                                                               
disagree.  He emphasized that there are discussions.                                                                            
Number 2020                                                                                                                     
GERALD  McCUNE, Lobbyist  for United  Fishermen of  Alaska (UFA),                                                               
testified in support  of HB 105.  He informed  the committee that                                                               
UFA has worked with fishermen,  and advocates that people pay and                                                               
file taxes  on time.   Mr. McCune emphasized that  UFA's interest                                                               
in the tax loan obligation program  is the desire to keep the IRS                                                               
from taking these  permits.  For example, a permit  was seized in                                                               
Yakutat two days  before Christmas; there was an  attempt to sell                                                               
the permit for $5,000, although it was worth $15,000.                                                                           
MR.  McCUNE pointed  out that  other  assets can  be obtained  to                                                               
satisfy tax payments, such as a  paid-off boat.  The IRS seized a                                                               
boat in Cordova  to pay for an individual's taxes,  but since the                                                               
permit wasn't taken, the individual  could continue to fish.  Mr.                                                               
McCune likened  permits to a  carpenter's tools.  He  agreed with                                                               
earlier  testimony that  the education  process has  come a  long                                                               
way.    Mr. McCune  added  that  fishing  this year,  in  certain                                                               
arenas, isn't  looking too bad.   He  related his belief  that in                                                               
the  next two  to three  years there  is a  good chance  that the                                                               
industry will be  turned around so that people can  make a decent                                                               
wage and many of these difficulties will be eliminated.                                                                         
Number 1835                                                                                                                     
REPRESENTATIVE GUTTENBERG  acknowledged that the season  would be                                                               
one  factor [when  people don't  pay their  taxes].   However, he                                                               
suggested that  there are other  liabilities that  prevent people                                                               
from being able to pay their taxes.                                                                                             
MR.  McCUNE reiterated  that this  problem  has come  a long  way                                                               
since  10 years  ago.    He acknowledged  that  there  are a  few                                                               
problems because  of low [fish] runs  and low prices at  the same                                                               
REPRESENTATIVE GUTTENBERG pointed out  that a good season doesn't                                                               
necessarily mean  that someone will  make a profit or  even [have                                                               
money to] pay taxes.                                                                                                            
MR.  McCUNE said  people need  to be  responsible.   He clarified                                                               
that he  wasn't advocating bailing  out fishermen or  anyone else                                                               
who doesn't pay  taxes.  He reiterated that his  main interest is                                                               
to keep  the IRS  out of the  state program.   He noted  that the                                                               
program  has been  used less  each  year; he  surmised that  more                                                               
education  is  happening and  more  people  are aware  of  taxes.                                                               
Still,  it's the  loan program's  job to  review an  individual's                                                               
portfolio [to determine the risk], he said.                                                                                     
Number 1675                                                                                                                     
REPRESENTATIVE MORGAN asked about start-up  costs.  He noted that                                                               
like  farmers, fishermen  must have  the  necessary equipment  in                                                               
order to make a profit.                                                                                                         
MR.  McCUNE answered,  depending upon  the fishery,  that someone                                                               
can spend from $2,000  to $10,000 to gear up.   If the fish don't                                                               
return, the person will still owe  some kind of tax such as self-                                                               
employment tax at some point.                                                                                                   
CHAIR FATE closed public testimony.                                                                                             
Number 1604                                                                                                                     
REPRESENTATIVE KERTTULA moved [to report  HB 105 out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes].  There  being no objection, HB 105 was  reported from the                                                               
House Resources Standing Committee.                                                                                             
The committee took an at-ease from 2:20 p.m. to 2:25 p.m.                                                                       
HB 191-COASTAL MANAGEMENT PROGRAMS                                                                                            
Number 1565                                                                                                                     
CHAIR FATE  announced that the  final order of business  would be                                                               
HOUSE  BILL NO.  191,  "An  Act relating  to  the Alaska  coastal                                                               
management   program  and   to   policies   and  procedures   for                                                               
consistency   reviews   and    the   rendering   of   consistency                                                               
determinations under  that program; relating to  the functions of                                                               
coastal  resource  service  areas;  creating  an  Alaska  Coastal                                                               
Program  Evaluation  Council;   eliminating  the  Alaska  Coastal                                                               
Policy  Council; annulling  certain regulations  relating to  the                                                               
Alaska coastal  management program; relating to  actions based on                                                               
private  nuisance;  relating  to  zoning  within  a  third  class                                                               
borough  covered by  the Alaska  coastal management  program; and                                                               
providing for effective  dates."  [The bill was  sponsored by the                                                               
House Rules Standing Committee by request of the governor.]                                                                     
CHAIR FATE indicated  the committee aide was  obtaining copies of                                                               
a  new   proposed  committee  substitute  (CS)   labeled  03-0069                                                               
bil2.doc, 4/22/2003, 1:30  pm., which he said tries  to meet some                                                               
of the problems articulated by  committee members, the Alaska Oil                                                               
and Gas Association  (AOGA), and the governor's staff.   He asked                                                               
Marty Rutherford to  explain the changes that  resulted from this                                                               
cooperative effort.                                                                                                             
Number 1475                                                                                                                     
MARTY  RUTHERFORD, Consultant  to the  Administration and  to the                                                               
Department  of Natural  Resources (DNR),  informed the  committee                                                               
that   the  Senate   Resources   Standing   Committee  would   be                                                               
considering the  companion bill that  afternoon.  She  noted that                                                               
available  to  answer  questions   were  Breck  Tostevin  of  the                                                               
Department of Law; Patrick Galvin,  currently with DNR's Division                                                               
of  Oil &  Gas,  but formerly  the director  of  the Division  of                                                               
Governmental Coordination  (DGC), which used to  house the Alaska                                                               
Coastal  Management Program  (ACMP); and  Randy Bates,  the newly                                                               
appointed coastal program coordinator in the ACMP.                                                                              
The committee took an at-ease from 2:28 p.m. to 2:29 p.m.                                                                       
Number 1324                                                                                                                     
MS.  RUTHERFORD  drew  attention  to a  one-page  synopsis  dated                                                               
April 21, 2003,  which she said  is generic in nature  and little                                                               
different from the one members  saw the previous week; an updated                                                               
timeline dated April 21, 2003, which  reflects changes in the new                                                               
proposed CS; an  updated chart that compares the  new proposed CS                                                               
with  the   existing  coastal  management  program;   an  updated                                                               
sectional analysis  [dated April  23, 2003];  and one  sheet that                                                               
discusses  changes   between  last  week's  proposed   CS  [dated                                                               
4/12/2003] and the new one [dated 4/22/2003].                                                                                   
Number 1240                                                                                                                     
MS. RUTHERFORD highlighted  changes in the new proposed  CS.  She                                                               
told members:                                                                                                                   
     Section 3  adds the  word "maintenance" of  an improved                                                                    
     district  plan  as  eligible  for  funding  assistance.                                                                    
     This  change  was  requested by  the  Alaska  Municipal                                                                    
     League and the coastal districts. ...                                                                                      
     Section 11 includes  very specific statutory references                                                                    
     to  what  was  intended  as DEC's  [the  Department  of                                                                    
     Environmental  Conservation's]  air,  land,  and  water                                                                    
     quality  requirements.   This change  was requested  by                                                                    
     Doug Mertz on  behalf of the Prince  William Sound RCAC                                                                    
     [Regional  Citizens'   Advisory  Council];   they  were                                                                    
     indicating they  were concerned about the  broadness of                                                                    
     the air, land, and water quality references.                                                                               
     Section  12,  which is  also  on  page 8,  extends  the                                                                    
     required renewal period of district  plans from five to                                                                    
     ten  years.   Also, this  change was  requested by  the                                                                    
     Alaska Municipal League and the ... coastal districts.                                                                     
     Section  13,  which  is  on ...  page  9,  removes  the                                                                    
     addition  of   the  term  "unduly"   in  the   type  of                                                                    
     restrictions a  district plan  can impose  on a  use of                                                                    
     state concern.   This was  requested by  Chairman Fate,                                                                    
     and   I  believe   Representative  [Seaton]   had  some                                                                    
     concerns about that word as well, earlier.                                                                                 
     Section 14,  which is  on page 10:   there  are several                                                                    
     changes  to  this section.    It  amends AS  46.40.070,                                                                    
     which  sets up  the requirement  for department  review                                                                    
     and approval  of district  plans.   It ...  changes the                                                                    
     introduction from  "The department may  approve", which                                                                    
     is  a  discretionary  action,  [for]  a  district  plan                                                                    
     meeting  the requirements  of (a)(1)  and (2),  to "The                                                                    
     department  shall  approve"  a  district  plan  if  the                                                                    
     commissioner ... finds that  it meets the requirements.                                                                    
     This  change  was  requested by  the  Alaska  Municipal                                                                    
     League and the coastal districts.                                                                                          
     It also removes ... (a)(2)(B)  as duplicative.  I think                                                                    
     several  members   on  the  committee   requested  that                                                                    
     change, and we heard it  also from the Alaska Municipal                                                                    
     League  and   the  coastal   districts.     It  changes                                                                    
     "geographic area within the  coastal zone" in (a)(2)(D)                                                                    
     to "a  defined portion  of a district's  coastal zone".                                                                    
     And it  changes "identified"  - and  this change  is in                                                                    
     [(a)(2)(C)(i)] - ... to  "demonstrated" as sensitive to                                                                    
     development. ...                                                                                                           
Number 0981                                                                                                                     
MS. RUTHERFORD continued with changes in the new proposed CS:                                                                   
     [Section 14 also] deletes  the phrase "or contemplated"                                                                    
     from (a)(2)(C)(ii) as redundant.   We heard the concern                                                                    
     about  that from  various  parties as  well.   Also  in                                                                    
     Section 14,  ... line 28,  ... (a)(2)(C)(iii),  it adds                                                                    
     "local" [before]  "usage" to  clarify that a  matter of                                                                    
     local concern  must, among other  requirements, involve                                                                    
     local usage  or scientific  evidence.  This  change was                                                                    
     requested by ... Chairman Fate.                                                                                            
     There is one  error on your sheet.   The next reference                                                                    
     to Section 19 should say  Section 20. ... Section 20 is                                                                    
     on  page  12.    It  changes  "interested  parties"  to                                                                    
     "affected parties"  in [the] list of  persons from whom                                                                    
     DNR requests consistency review  comments.  This change                                                                    
     was requested by Chairman Fate.                                                                                            
     In  Section 21,  which is  on page  13, it  revises the                                                                    
     lead-ins to (1)(A) and (B)  and revised (B), to reflect                                                                    
     the  listing of  statutes  instead of  the simple  term                                                                    
     "air,  land, and  water  quality"  in AS  46.40.040(b).                                                                    
     And,  again,   the  intent  is   to  ensure   that  the                                                                    
     definition of  "air, land, and water  quality" is quite                                                                    
Number 0810                                                                                                                     
MS. RUTHERFORD continued with changes:                                                                                          
     Section 22 amends new subsection  (k), which is on page                                                                    
     13, governing the scope of  a consistency review to add                                                                    
     "that are  located".   The administration  thought that                                                                    
     there was ... lack of  clarity there, so we added those                                                                    
     words [ourselves].   New subsection  (m), ...  page 14,                                                                    
     adds the  requirement that DNR establish  in regulation                                                                    
     the state  resource agency permits and  federal permits                                                                    
     that trigger  a consistency review.   It also  adds new                                                                    
     subsections  (n) and  (o), which  [establish] a  90-day                                                                    
     deadline for  completing consistency  reviews.   And it                                                                    
     adds  a new  ...  subsection (p),  ... which  expressly                                                                    
     states that  a final consistency determination  may not                                                                    
     be  held up  by a  DEC or  other permit  excluded under                                                                    
     AS 46.40.096(g).                                                                                                           
     Section  43,  ... on  page  21,  adds a  definition  of                                                                    
     "project" from  6 AAC 50,  which are  newly promulgated                                                                    
     regulations dealing  with consistency reviews,  so it's                                                                    
     consistent with the current regulations.                                                                                   
     Section  46(b),   which  is   on  page  22,   ...  adds                                                                    
     clarifying  language  that   the  ...  former  [Alaska]                                                                    
     Coastal Policy  Council's regulations  implementing the                                                                    
     coastal management  program remain in effect  until DNR                                                                    
     adopts  new  regulations  or they  are  annulled  under                                                                    
     Section 45, whichever  occurs first.  This  was done in                                                                    
     order  to   provide  [assurance]   that  Representative                                                                    
     Kerttula and her office requested.                                                                                         
     And Section 47, which is  on page 23, is a transitional                                                                    
     provision  requiring   revised  ...   district  coastal                                                                    
     management plans; [it] now  gives all coastal districts                                                                    
     one  year  after DNR  adopts  new  regulations for  the                                                                    
     statewide standards  or until  July 1,  2005, whichever                                                                    
     is  later,  to submit  revised  district  plans.   And,                                                                    
     again,  this  was  requested by  the  Alaska  Municipal                                                                    
     League, the coastal districts, and Chairman Fate.                                                                          
Number 0565                                                                                                                     
CHAIR  FATE   reopened  public  testimony.     He  announced  his                                                               
intention to move the bill from committee at the next hearing.                                                                  
Number 0464                                                                                                                     
DANA  OLSON testified  that she  lives  in the  Matanuska-Susitna                                                               
coastal  district.   She indicated  she'd  asked the  Legislative                                                               
Information  Office  (LIO)  to fax  an  article  titled  "Chicago                                                               
Biosphere Reserve Considered by  Steering Committee," dated April                                                               
2, 2003, from the  Paragon Foundation's The Powerhouse, reprinted                                                             
with  permission of  the Property  Rights Foundation  of America.                                                               
She  told members  this legislation  fails to  consider that  the                                                               
U.S. Man  and [Biosphere]  Program under  the U.S.  Department of                                                               
State  reviews  and  approves nominations  for  the  U.S.  before                                                               
forwarding  them  to  the  UNESCO  [United  Nations  Educational,                                                               
Scientific and  Cultural Organization] headquarters in  Paris for                                                               
formal consideration;  it also fails to  consider that curtailing                                                               
the existing political processes in  Alaska will result in having                                                               
no access for submitting nominations for this.                                                                                  
MS. OLSON  said this establishes  "criteria of  urban interface";                                                               
she cited the lawsuit over the  Miller's Reach fire as an example                                                               
of  intergovernmental  agreements  and policy  relating  to  that                                                               
interface issue.   Suggesting members  need to address  that, she                                                               
explained, "This  1970 Act does give  us legal standing to  go in                                                               
and  create nominations,  whether or  not you  feel that  you can                                                               
curtail our political process or  not."  She said AS 46.03.040 is                                                               
the requirement  for an  environmental plan  that never  has been                                                               
implemented.    She  added,  "Negotiated  rule  making  does  not                                                               
provide  for  nominations.   And  it's  anticipated that  I  will                                                               
probably  make  recommendations  for  nominations.   And  it  may                                                               
impact your rule  making, your permitting, while  that process is                                                               
Number 0179                                                                                                                     
MS. OLSON  observed that people  often think only  wilderness can                                                               
be put  under such a designation,  but she said that  isn't true.                                                               
She told members:                                                                                                               
     Where  there's  been  no  consideration  whatsoever  on                                                                    
     shallow  gas,   natural  gas,  impacts  to   the  local                                                                    
     communities,  I asked  ... my  local coastal  district,                                                                    
     the Mat-Su Borough,  to provide me, under  a Freedom of                                                                    
     Information Act,  the impact of that  type of activity,                                                                    
     and they've not yet provided it  to me.  And, two, I've                                                                    
     asked that the Mat-Su Borough  also respond when I made                                                                    
     a  request for  a permit  standard that  would allow  a                                                                    
     citizen group  to determine whether  or not  the notice                                                                    
     requirement   that  is   required   under  the   Alaska                                                                    
     constitution  is being  met,  and that  be a  permanent                                                                    
     part  of  ...  their administrative  process  or  their                                                                    
     coastal  district  program,  and   they  have  not  yet                                                                    
     responded on that.                                                                                                         
MS.  OLSON concluded  by saying  she didn't  feel this  issue had                                                               
been looked at in its entirety, and asked that members do so.                                                                   
Number 0040                                                                                                                     
MIKE MILLIGAN  told members  his comments would  be of  a general                                                               
nature.   He noted that  he'd served  on the borough  assembly in                                                               
TAPE 03-34, SIDE A                                                                                                            
Number 0001                                                                                                                     
MR.  MILLIGAN recalled  that through  working  with coastal  zone                                                               
management,  [the assembly]  was able  to craft  a solution  that                                                               
enabled  them  to express  how  they  wanted to  see  oil-related                                                               
development occur in the borough.  He said:                                                                                     
     From that, we were able  to set various parameters, not                                                                    
     the least  of which was how  we wanted to tax  oil.  We                                                                    
     were able  to work with  industry, and our  ... borough                                                                    
     mayor  at   the  time  eventually  got   on  the  outer                                                                    
     continental  shelf council  and became  a chairman  for                                                                    
     Arctic  Power.   So I  think ...  there seems  to be  a                                                                    
     predilection that there is  some development that's not                                                                    
     occurring  because of  regulations.   My  view is  that                                                                    
     development occurs  when the  regulations are  good and                                                                    
     adhered to.                                                                                                                
     I  see   no  advantage  for  resource   development  in                                                                    
     decreasing   the   power   of  local   governments   to                                                                    
     participate in  this process.   If you were to  look at                                                                    
     an  area  that's  overregulated,   ...  that  would  be                                                                    
     Europe.   And if you go  look at Europe right  now, you                                                                    
     look at the  environmental regulations, particularly in                                                                    
     regards  to timber,  and  you will  see  a much  higher                                                                    
     level of  regulation.  We  are not timbering  right now                                                                    
     because of markets.  If you  go to Fairbanks, you go to                                                                    
     Anchorage, and  even probably  Juneau -  certainly here                                                                    
     in Kodiak, you can go to  Spenard's, you can go to Home                                                                    
     Depot - you  can buy European forest  products in those                                                                    
     stores right  here in  Alaska.   You can't  buy Alaskan                                                                    
     products.   And it's  not because of  regulations; it's                                                                    
     because of markets.                                                                                                        
     If you  want this  resource development to  occur, then                                                                    
     you need  to look at  ways to develop  those resources,                                                                    
     ways  that are  happening through  the [Alaska  Science                                                                    
     and Technology Foundation].  Do  not circumvent ... the                                                                    
     role of local government;  ... I strongly encourage you                                                                    
     to keep local government involved in this matrix.                                                                          
Number 0248                                                                                                                     
BOB  SHAVELSON,  Executive  Director, Cook  Inlet  Keeper,  who'd                                                               
testified  at  the  previous hearing,  added  that  the  timeline                                                               
provided  in  the  materials  circulated  by  the  administration                                                               
doesn't  appear to  provide any  conditions for  an environmental                                                               
impact statement (EIS), which likely  would be required under the                                                               
National  Environmental  Policy  Act  (NEPA)  for  such  sweeping                                                               
changes  to the  state's program.   He  said this  implicates not                                                               
only the zero fiscal note  attached to this legislation, but also                                                               
the timeline for implementation.                                                                                                
MR.  SHAVELSON noted  that  his organization  has  more than  500                                                               
members  throughout Southcentral  Alaska.   He expressed  concern                                                               
that the bill  will deal a significant blow  to local communities                                                               
that seek  to have some  type of  local oversight with  regard to                                                               
local-resource decisions.   Section 14  of the bill will  make it                                                               
virtually  impossible for  a local  coastal district  to have  in                                                               
place  an enforceable  policy that  doesn't  conflict with  state                                                               
criteria  or  law;  thus  it   will  disenfranchise  those  local                                                               
communities from regulating their resources.                                                                                    
MR.  SHAVELSON expressed  hope  that  in order  to  truly get  an                                                               
understanding  of  the  effects of  this  legislation,  committee                                                               
members will ask the administration  to come forward with a dozen                                                               
or so examples  of enforceable policies, based  on specific facts                                                               
and  related to  coastal districts,  that would  "sustain through                                                               
the very  convoluted and legalistic  criteria that's laid  out in                                                               
Section 14."                                                                                                                    
Number 0438                                                                                                                     
BRECK   TOSTEVIN,  Assistant   Attorney  General,   Environmental                                                               
Section,   Civil  Division   (Anchorage),   Department  of   Law,                                                               
responded to  Mr. Shavelson with  regard to the necessity  for an                                                               
EIS.  He stated:                                                                                                                
     It's our  understanding on  this legislation  that that                                                                    
     would not be required, that  ... these changes would be                                                                    
     done  incrementally  as  routine plan  changes.    They                                                                    
     would  be reviewed  by ...  the federal  NOAA [National                                                                    
     Oceanic  and Atmospheric  Administration] agency,  OCRM                                                                    
     [Office of Ocean and  Coastal Resource Management], and                                                                    
     that it would not require that kind of delay.                                                                              
MS. RUTHERFORD added:                                                                                                           
     I  would  note  that  in   the  third  year  after  the                                                                    
     Department of  Natural Resources does  the promulgation                                                                    
     of  new statewide  standards  and  the following  year,                                                                    
     during which the local plans  are updated, ... there is                                                                    
     a third  year identified  for working the  OCRM process                                                                    
     as well.   And we  will be proceeding  incrementally on                                                                    
     those  sort of  mundane changes  that are  already laid                                                                    
     out and  effective immediately, with OCRM,  during that                                                                    
     time as well.                                                                                                              
Number 0534                                                                                                                     
REPRESENTATIVE  KERTTULA asked  whether OCRM  has stated  that it                                                               
will be  a routine plan change  and that there won't  be anything                                                               
more onerous required for the state.                                                                                            
MR. TOSTEVIN replied:                                                                                                           
     We've had  discussions with OCRM.   They ...  can't, at                                                                    
     this point, ... guarantee that  ... it's a routine plan                                                                    
     change  or   a  minor  amendment.     But  they're  not                                                                    
     indicating  that  this  is  the  kind  of,  quote,  new                                                                    
     program  -  a  wholesale   revision  -  that  would  be                                                                    
     triggered  under the  prior version.   So  ... I  think                                                                    
     that the  [word] that we're  getting from them  is that                                                                    
     this is going to be much  more of [an] amendment of the                                                                    
     current program  or routine plan change,  as opposed to                                                                    
     a wholesale reapproval of a new plan.                                                                                      
REPRESENTATIVE  KERTTULA asked,  however,  whether  OCRM in  fact                                                               
won't be able  to give that kind of guarantee  until it sees what                                                               
the legislature  does with this.   She said she'd barely  made it                                                               
through  [the new  proposed CS],  and surmised  that it  had only                                                               
reached Washington, D.C., the previous night.                                                                                   
MS. RUTHERFORD responded:                                                                                                       
     That  is  correct. ...  We  really  don't know.    And,                                                                    
     frankly,  what my  expectation is,  is  that ...  since                                                                    
     we're not changing the structure  of the program - that                                                                    
     fundamentally the  districts will continue and  ... the                                                                    
     basic shape  of the  program will  continue -  that ...                                                                    
     that  will be  routine program  changes. ...  But I  do                                                                    
     think that  as the  department and the  districts begin                                                                    
     to  rewrite the  standards, ...  there will  be a  more                                                                    
     substantive review  by OCRM. ... And  whether that ends                                                                    
     up  being routine  or  not will  be  determined by  the                                                                    
     federal OCRM.   But  we have built  in time  to address                                                                    
     that as well, as part of the process.                                                                                      
Number 0703                                                                                                                     
REPRESENTATIVE  PAUL SEATON,  Alaska State  Legislature, referred                                                               
to Section 14  and said he is hard-pressed to  figure out whether                                                               
any  local  enforceable  policies  can   be  written.    He  also                                                               
expressed concern  that local ordinances  that are  adopted won't                                                               
be able to be  enforced.  He said it seems  there will be [major]                                                               
structural impacts upon the coastal zone.                                                                                       
MR. TOSTEVIN suggested  looking at the big picture as  far as the                                                               
ordinances and said:                                                                                                            
     This  legislation   does  not  affect  the   powers  of                                                                    
     municipalities  to enact  zoning ...  within their  own                                                                    
     boundaries.    They have  that  right  now, the  zoning                                                                    
     authority.   There's actually a  savings clause  in the                                                                    
     CS that says  this doesn't affect ...  the zoning power                                                                    
     of Title 29, municipalities or boroughs. ...                                                                               
     With respect  to the coastal program,  what the coastal                                                                    
     program does  is allow  municipalities or  boroughs ...                                                                    
     and [Coastal  Resource Service Areas  (CRSAs)], coastal                                                                    
     districts, to  enact ... enforceable policies  to apply                                                                    
     to the state where  they wouldn't ordinarily apply, ...                                                                    
     and also to the  federal government where they wouldn't                                                                    
     ordinarily apply.  So the  legislation ... is requiring                                                                    
     that  to impose  those additional  enforceable policies                                                                    
     that meet ... those tests in ... Section 14.                                                                               
Number 0860                                                                                                                     
REPRESENTATIVE SEATON asked whether  it's the case, however, that                                                               
the  requirements  in  Section   14  preclude  almost  any  local                                                               
enforceable policies.  He requested  that the administration come                                                               
forward  before   the  next  hearing   with  perhaps   six  local                                                               
enforceable policies  from any coastal  district that  would meet                                                               
the criteria in the bill.                                                                                                       
MS. RUTHERFORD replied:                                                                                                         
     We'll be glad  to do that.  And I  know that there have                                                                    
     been other  districts that have suggested  that ... one                                                                    
     of  the  most  helpful   exercises  ...  might  be  for                                                                    
     Department  of Natural  Resources  to identify  problem                                                                    
     enforceable  policies within  ... the  various district                                                                    
     plans.   And I think  that that  might be a  useful ...                                                                    
     exercise,  and I  think that  the department's  looking                                                                    
     seriously  at that.    We'll be  glad  to develop  some                                                                    
     I   might  note,   though,  ...   it's   a  matter   of                                                                    
     perspective. ... I  still get a lot of  comments from a                                                                    
     lot  of   the  development  community  that   they  are                                                                    
     concerned  about how  broad this  is. ...  The language                                                                    
     here, in  their opinion, is  too broad.   And literally                                                                    
     they've said  that it's large  enough to drive  a truck                                                                    
     through, whereas the districts  are saying it's smaller                                                                    
     than  a breadbox  and nothing  can be  approved through                                                                    
     The reality  is that I think  ... it is in  balance.  I                                                                    
     think  that it  does  limit a  duplication of  existing                                                                    
     standards  ...  and  it  does   require  ...  that  the                                                                    
     drafting of  the new enforceable policies  be done with                                                                    
     an eye  towards more  prescriptive and more  precise --                                                                    
     and be  more substantiated.   But I think  it certainly                                                                    
     does  allow for  them, and  we'll try  to show  that to                                                                    
Number 1002                                                                                                                     
JACK CUSHING, Mayor, City of  Homer, informed members that he has                                                               
been  on the  Alaska  Coastal Policy  Council representing  lower                                                               
Cook Inlet  since about  1996.   A civil  engineer, he  said he'd                                                               
worked  on  the  Alyeska  pipeline   and  the  Northwest  Alaskan                                                               
pipeline during the planning phases.  He told members:                                                                          
     I'm afraid  what's happening here is  you're opening up                                                                    
     a bigger can  of worms than what you  might be solving.                                                                    
     I  think that  the program  ...  was up  and going  and                                                                    
     smooth after  years of work on  it, and I think  by the                                                                    
     time  you get  thing  rewritten, you're  going to  find                                                                    
     that you've ... opened up a  whole lot of new doors and                                                                    
     it's   going  to   be   ready   almost  for   immediate                                                                    
     modification just about  the time it takes  to get this                                                                    
     to where we are right now.                                                                                                 
     I  think  we're  going   to  possibly  be  jeopardizing                                                                    
     funding during  this interim time,  just in  the manner                                                                    
     we're talking about.  If  nothing else, the elimination                                                                    
     of  the  Alaska  Coastal  Policy  Council:    that  was                                                                    
     perceived   by  the   people  of   the   state  as   an                                                                    
     intermediary  board  to  go  to,  during  the  petition                                                                    
     process, that  had elected  citizens on  it as  well as                                                                    
     the administrative folks.  And  I think a lot of people                                                                    
     held  off  going into  court  just  because they  felt,                                                                    
     well, ...  if they  had a  chance to  go by  these nine                                                                    
     elected  officials and  they  heard  what the  comments                                                                    
     were, they  got their input,  that ... they  could live                                                                    
     with the determination that was made.                                                                                      
     When I looked  at the number of  projects that actually                                                                    
     got   stopped,  that   got   turned   down,  ...   it's                                                                    
     pathetically few.   And the  few that did get  input at                                                                    
     the  coastal policy  council level,  I think,  came out                                                                    
     better for it.                                                                                                             
Number 1155                                                                                                                     
LISA  VON  BARGEN,  Community &  Economic  Development,  City  of                                                               
Valdez,  thanked   [Ms.  Rutherford]   and  others  at   DNR  for                                                               
considering comments in reworking the  proposed CS.  However, she                                                               
expressed concern  with Section  39, page 19,  subsection (2)(C),                                                               
"home rule and  first class cities of the  unorganized borough or                                                               
within  boroughs  that  do  not   exercise  planning  and  zoning                                                               
authority".  She  suggested it is vague as to  whether that means                                                               
"home rule  and first  class cities  that do  not or  do exercise                                                               
planning and  zoning authority".   Thus she asked that  after the                                                               
words "unorganized  borough" there be  a comma added and  that it                                                               
then read:   "or within home  rule and first class  cities within                                                               
boroughs  that do  not exercise  planning and  zoning authority".                                                               
She thanked participants for their hard work.                                                                                   
[Chair Fate called  upon Lawrence Widmark and  June Kegnan, who'd                                                               
signed  up  to  testify  at  the Sitka  LIO,  but  there  was  no                                                               
Number 1287                                                                                                                     
NANCY HILLSTRAND, Pioneer Alaskan  Fisheries, spoke in opposition                                                               
to HB 191.  She told members:                                                                                                   
     I think that it's time  that we stopped being afraid of                                                                    
     regulations that  give us  some structure  in planning.                                                                    
     We're in  business.   We've been  a corporation  for 40                                                                    
     years here  in Alaska.   And  the structure  and delays                                                                    
     and all the different stopgaps  that allow us to run as                                                                    
     a business  have saved us from  making extremely costly                                                                    
     And  HB  191  takes  the  crucial  oversight  of  local                                                                    
     communities out of the democratic  process.  And I just                                                                    
     wonder why  this administration is afraid  of a healthy                                                                    
     tension of democracy.   It just seems  as though that's                                                                    
     what we're looking at here. ...                                                                                            
     Our   corporation  relies   on  policy   that  sustains                                                                    
     fisheries.   Habitat sustains fish.   And the community                                                                    
     and  most   other  coastal  communities  rely   on  the                                                                    
     oversight needed from this policy  to create a level of                                                                    
     planning to  minimize "oops."   "Oops" is when  we make                                                                    
     costly mistakes  because of lack of  ... conscientious,                                                                    
     meaningful debate.   "Oops" causes  extremely expensive                                                                    
     And I wonder:  are we  willing to be responsible to pay                                                                    
     this price  in the future?   Thank heavens  for delays,                                                                    
     because  it's  really important  for  us  to have  good                                                                    
     debate and good,  conscientious oversight, because that                                                                    
     way, we  won't have to  pay in the  future.  And  so, I                                                                    
     thank you very kindly, and I'm against [HB] 191.                                                                           
Number 1380                                                                                                                     
MARV SMITH,  Coastal Zone Coordinator, Lake  & Peninsula Borough,                                                               
thanked Ms.  Rutherford and  the DNR staff  for listening  to and                                                               
incorporating  earlier testimony.   However,  he voiced  concerns                                                               
with Section  14, specifically, the  ability for  local districts                                                               
to have  some control  over how they  implement changes  in their                                                               
plans.  He said it seems DNR  still has too much control over how                                                               
that  can  happen  effectively.   Referring  to  sub-subparagraph                                                               
(2)(C)(i),  he  therefore   suggested  "demonstrated"  should  be                                                               
changed back to "identified".                                                                                                   
MR. SMITH turned  attention to Section 22 and the  90 days to get                                                               
a coastal consistency review completed.  He asked:                                                                              
     If we  ... do not have  all the information we  need to                                                                    
     effectively do  a consistency review, is  that 90 days'                                                                    
     clock  still  [ticking]?   Will  ...  the  clock  stop?                                                                    
     Because if  that's the  case, then  we'll be  forced to                                                                    
     [be]  inconsistent with  the  consistency  review.   We                                                                    
     just need to  know:  the 90-day rule, is  it from start                                                                    
     to finish or whatever?   It's vague in how it's worded;                                                                    
     I think it should be  clarified a little better in that                                                                    
     category because it could make  ... far more ability of                                                                    
     us to do a better job.   If we've got a good product to                                                                    
     begin with and we can  do a good consistency review, we                                                                    
     like to do those.  And we  want to do them on time, and                                                                    
     we agree with the  administration's policies on getting                                                                    
     them  done timely  in  all manner,  and  we try,  every                                                                    
     effort we can, to do that.                                                                                                 
     Also, another concern  ... is that if we do  have to do                                                                    
     all  these plans  and go  through the  public hearings,                                                                    
     ... the  recent budget cuts [are]  going to drastically                                                                    
     affect  our ability  to  do them  in  a timely  manner.                                                                    
     Just  going  to  places  like Chignik,  ...  from  King                                                                    
     Salmon  it's  a  $500  plane  ticket  for  one  person;                                                                    
     additionally, if  you go to  the northern parts  of our                                                                    
     borough where  you [have] to charter  an airplane, it's                                                                    
     almost a thousand  dollars. ... You can fly  to ... the                                                                    
     Lower 48 cheaper than you  can fly ... to some portions                                                                    
     of our borough  to make these meetings.   So it's going                                                                    
     to be very costly [for] us to do that.                                                                                     
Number 1547                                                                                                                     
MR.  SMITH referred  to discussion  in  a previous  hearing.   He                                                               
asked that instead  of [districts] having to  rewrite their plans                                                               
completely, time  should be taken  to help them identify  what is                                                               
needed to  make the plans  meet the needs of  the administration.                                                               
He suggested this would be much more effective.                                                                                 
Number 1576                                                                                                                     
JOHN  OSCAR,  Program  Director,  Ceñaliulriit  Coastal  Resource                                                               
Service  Area Board,  who'd testified  at  the previous  hearing,                                                               
referred to  Section 29  and questioned  the relationship  of the                                                               
state constitution to these bills.                                                                                              
     Where the  federal government requires  equal treatment                                                                    
     in   the    coastal   zone   communities,    only   the                                                                    
     municipalities  in these  bills can  be represented  in                                                                    
     the  makeup of  [the proposed]  Alaska Coastal  Program                                                                    
     Evaluation  Council.     If  the  traditional,  primary                                                                    
     governments  are to  be included  in these  bills, does                                                                    
     this  also  provide  the  state's  recognition  in  the                                                                    
     existence of these traditional governments?                                                                                
     Two,  would  these   traditional  governments  be  also                                                                    
     considered  as  affected  parties?    And,  third,  ...                                                                    
     there's no fiscal  note attached with these  bills.  It                                                                    
     will  also  cost the  state  hundreds  of thousands  of                                                                    
     dollars to  provide for the  rewrite of all  33 coastal                                                                    
     districts' [plans]  in Alaska.  We  are already [short]                                                                    
     of funds.   But  how is the  state going  to adequately                                                                    
     provide for these public hearings?                                                                                         
Number 1674                                                                                                                     
DANIEL BEVINGTON, Coastal District Coordinator, Kenai Peninsula                                                                 
Borough, told members:                                                                                                          
     The  borough has  a  long history  of  support for  its                                                                    
     coastal program;  it goes back  more than  two decades.                                                                    
     We've found  that the coordinated review  of permitting                                                                    
     under the ACMP  has helped us manage  our resources and                                                                    
     expedite  development,  which benefits  the  applicant,                                                                    
     our  communities,  ... and  the  environment.   A  good                                                                    
     example of this  is the Kenai gas  pipeline that's well                                                                    
     The  legislation  asserts  that  the  local  government                                                                    
     should  exert   its  own  coastal   management  control                                                                    
     through planning and  zoning powers.  At  this time, it                                                                    
     is our view that this  would add an unneeded complexity                                                                    
     and  duplication,  and  ultimately slow  down  valuable                                                                    
     economic   development  opportunities   throughout  the                                                                    
     borough.  We also concur  with the comments made by ...                                                                    
     Lake & Peninsula Borough.                                                                                                  
     One  crucial  aspect  of  the   bill  proposal  is  the                                                                    
     elimination  of  local  district  review  of  oil-spill                                                                    
     prevention  and  contingency  plans.   Also,  the  bill                                                                    
     removes  the district  from  reviews  of federal  outer                                                                    
     continental shelf  [OCS] plans.   On this  first point,                                                                    
     the lower Cook Inlet has  ... [a] significant amount of                                                                    
     activity requiring oil-spill ...  plans.  And presently                                                                    
     the district  reviews all those plans  and participates                                                                    
     when it's appropriate.                                                                                                     
     On the  second point,  a great  area of  federal waters                                                                    
     occurs  within the  boundaries of  the Kenai  Peninsula                                                                    
     Borough  in lower  Cook Inlet,  and  the activities  in                                                                    
     that  area could  very  well  affect and  significantly                                                                    
     impact   the   resources   and   ...   ultimately   the                                                                    
     [socioeconomic] well-being of our communities.                                                                             
     So the  issue of  promoting economic  development while                                                                    
     balancing  development  interests  with  our  long-term                                                                    
     community  interests is  a  complex  ... subject  which                                                                    
     demands  meaningful  involvement   of  our  communities                                                                    
     across  the  state  of   Alaska,  including  the  local                                                                    
     districts. ...                                                                                                             
Number 1786                                                                                                                     
MR. BEVINGTON continued:                                                                                                        
     At a  minimum, the  bill should  assure that  the local                                                                    
     district  has  a  seat  at   the  table  for  oil-spill                                                                    
     contingency plans  and federal outer  continental shelf                                                                    
     plans.  ...   Also,  we're  very  concerned   with  the                                                                    
     elimination  of   the  structure  under   the  [Alaska]                                                                    
     Coastal Policy Council structure,  and believe that ...                                                                    
     DNR should  adopt some representative body  which would                                                                    
     allow that  type of involvement  of our  communities in                                                                    
     the planning for the Alaska Coastal Management Plan.                                                                       
Number 1825                                                                                                                     
REPRESENTATIVE WOLF asked that Mr. Bevington call his office to                                                                 
talk about this.                                                                                                                
Number 1845                                                                                                                     
CHAIR FATE closed public testimony.                                                                                             
Number 1865                                                                                                                     
MS. RUTHERFORD referred to concern about the DNR process and                                                                    
     First  of all,  I want  to assure  people that  DNR has                                                                    
     probably the most expansive  public process imbedded in                                                                    
     statute, in  regulation, and  the [resultant]  case law                                                                    
     of   any   other   agency.     It   exceeds   the   APA                                                                    
     [Administrative  Procedure Act]  that is  in place  for                                                                    
     most other  agencies.   And I might  note that  ... the                                                                    
     commissioner   of   DNR  regularly   balances   various                                                                    
     interests  as  part  of  all  their  areawide  planning                                                                    
     exercises that they do.   And that is something that is                                                                    
     inherent in DNR's function. ...  It's imbedded in their                                                                    
     area-planning    exercises,   in    their   special-use                                                                    
     designation  development;  it's   imbedded  in  forest-                                                                    
     timber sales, land sales, and  oil and gas lease sales.                                                                    
     So  this  balancing  of  interests  that  involves  the                                                                    
     public process  will be part  of what DNR does  as they                                                                    
     proceed [under] the new legislation.                                                                                       
     Another  thing  that I  want  to  note is,  this  bill,                                                                    
     again, does  not eliminate the districts'  place at the                                                                    
     table.  They will be at  the table.  They will have due                                                                    
     deference on  their enforceable  policies.   And that's                                                                    
     something  that  the  districts  need  to  hear  again,                                                                    
     because it's important to them and we recognize that.                                                                      
Number 1938                                                                                                                     
MS. RUTHERFORD continued:                                                                                                       
     The   other   thing   that  I   think   is   important:                                                                    
     Mr. Shavelson  made a  reference  to  the EIS  process.                                                                    
     One of  the things  that I  think will  bring a  lot of                                                                    
     comfort to  the Office of [Ocean  and] Coastal Resource                                                                    
     Management ... is  the fact that under  this revised CS                                                                    
     that   replaced  the   original  [HB]   191,  statewide                                                                    
     standards   and   local   enforceable   policies   will                                                                    
     continue.     And  those  statewide  standards   are  a                                                                    
     comprehensive body  of standards.  Under  the old bill,                                                                    
     they were  ... eliminated, and  that would have  been a                                                                    
     major concern to OCRM. ...                                                                                                 
     On the  funding:  the  reason there's not  fiscal notes                                                                    
     associated with this bill is  there are special project                                                                    
     monies  that are  available to  the coastal  management                                                                    
     program,  and they  will simply  be  refocused to  help                                                                    
     support the  districts as they  rewrite their  plans or                                                                    
     review their plans and  rewrite their local enforceable                                                                    
     policies.   Again,  hopefully, the  department will  be                                                                    
     helping  them  to   identify  those  truly  problematic                                                                    
     enforceable policies,  instead of  just having  to sort                                                                    
     of  pick up  the rock  and see  whether it's  the right                                                                    
Number 1998                                                                                                                     
MS. RUTHERFORD continued:                                                                                                       
     Regarding the  90-day clock, someone asked  whether ...                                                                    
     there  was some  additional  opportunity. ...  It is  a                                                                    
     comprehensive   timeframe,  except   if  there   is  an                                                                    
     elevation. ... It does provide  for a 45-day elevation.                                                                    
     However, this has  been an issue that  has been focused                                                                    
     on by Alaska Municipal League,  and we're trying to see                                                                    
     whether  or not  there is  a way  to provide  them some                                                                    
     I  would note  something, however,  that under  ... the                                                                    
     federal law there are already  timeframes in place that                                                                    
     very closely mimic  what was in this bill,  now, in the                                                                    
     new sections,  that for federal  activities there  is a                                                                    
     60-day  clock:   if,  in fact,  the  state doesn't  act                                                                    
     within that ...  60-day ... clock, then  an activity is                                                                    
     presumed  consistent.   ...  For   federally  regulated                                                                    
     activities, it's  a six-month clock.   And, frankly, 80                                                                    
     percent  of all  projects that  are reviewed  under the                                                                    
     coastal  management  consistency   review  program  are                                                                    
     subject  to one  of these  ...  federal clocks.   So  I                                                                    
     think that's ... another important piece to it.                                                                            
     And, finally,  ... I want  to assure Dan  Bevington and                                                                    
     the  Kenai Peninsula  Borough that  ... the  program as                                                                    
     it's currently  laid out  in this  bill does  allow for                                                                    
     OCS  enforceable policies.    It's one  of the  primary                                                                    
     concerns of  this administration, and it  is protected.                                                                    
     And we  want to  assure you that  ... those  [kinds] of                                                                    
     enforceable policies are allowed.                                                                                          
Number 2082                                                                                                                     
REPRESENTATIVE KERTTULA  expressed concern that although  the OCS                                                               
may be included,  there is a definite change with  regard to "how                                                               
we're  dealing with  DEC  standards"; that  the  program is  only                                                               
continued for a  couple of years while everything else  is put in                                                               
place;  and about  the language  that says  "we continue  only if                                                               
it's not inconsistent with the  Act."  She highlighted the number                                                               
of issues remaining.  [HB 191 was held over.]                                                                                   
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:15 p.m.                                                                 

Document Name Date/Time Subjects