HB 141-LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS  The committee took an at-ease from 5:56 p.m. to 5:57 p.m. 5:57:36 PM CHAIR THOMPSON announced that the final order of business would be HOUSE BILL NO. 141, "An Act relating to loans for the purchase of fishing quota shares by certain community quota entities; and providing for an effective date." 5:57:51 PM REPRESENTATIVE AUSTERMAN, introduced HB 141, paraphrasing from the sponsor statement, which read as follows [original punctuation provided]: The Community Quota Entity (CQE) program was developed in 2004 by the federal North Pacific Fishery Management Council to help communities maintain and build involvement in the halibut and black cod longline fisheries. The CQE program provided the legal opportunity for communities to form non-profit organizations to purchase individual fishing quota (IFQ), anchoring fishery participation in these coastal communities. In response, the 23rd Legislature modified the Commercial Fishing Revolving Loan Fund to provide authorization to finance fishing quota for CQEs. Despite the Alaska Legislature's initial efforts to provide financing to the communities, only two of 42 eligible communities have procured quota share to date. In fact, small coastal communities continue to see a significant out-migration of fisherman and quota shares, leaving them with limited or no access to fisheries occurring just off their shores. House Bill 141 will modify the financial instruments the state has previously provided, to assist communities to participate in the program and bolster their economies. By establishing an independent revolving loan fund modeled upon the existing Commercial Fishing Revolving Loan Fund, HB 141 will enable the state to structure a successful loan program that supports rural community development and strengthens Alaska's coastal regions. An active commercial fishing fleet in a rural community employs residents, provides tax revenues, and spends income locally, which has a substantial multiplier effect in small communities. This piece of legislation is an important tool to support rural coastal communities and develop sustainable economies throughout the state. 6:02:23 PM DUNCAN FIELDS, Vice President, Fisheries and Economic Development, Old Harbor Native Corporation, introduced himself as a fisheries advocate and active fisheries consultant. 6:03:08 PM OLE OLSEN, Board Member, Gulf of Alaska Coastal Communities Coalition (GOAC3), stated that, being born into a Kodiak fishing family, he has a lifelong history with Alaskan fisheries, and has been involved with the Gulf of Alaska Coastal Communities Coalition (GOAC3) since it was formed. 6:03:44 PM MR. FIELDS stated support for HB 141, and pointed out that the committee packet includes [five] pages of written testimony and supplemental material, which he submitted. He underscored that HB 141 is a culmination of six years of work; not a new concept. 6:04:49 PM MR. OLSEN directed attention to the committee packet handouts titled "Community Quota Entities (CQEs)," dated 2/17-18/09, prepared by the Restricted Access Management (RAM) division of the National Oceanic & Atmospheric Administration (NOAA), which contain a history of CQEs and supporting statistical information. He described the development of individual fishing quotas (IFQs), beginning with the inception of limited entry and the effect it has had on the coastal community fishing fleets, as a continual erosion of fishery access to these areas. In 1998 CQE's were created under federal law to address the situation and assist coastal communities to rebuild the local industry. 6:07:46 PM MR. OLSEN provided an example of what occurred in Old Harbor and the effect that the IFQ has had through the rationalization program. The fleet has been significantly reduced, and every coastal community has felt similar effects. The CQE was seen as a means to level the playing field and regenerate opportunities. Forty-five coastal communities, with less than 1,500 inhabitants, and not connected to the road system were identified as eligible to organize into CQE's. He further explained how the CQEs were formed using a point system to distribute an equitable quota, and allow community governance. MR. FIELDS interjected that the issue has been funding. 6:12:17 PM MR. OLSEN stated that, in 2004, the opportunity to purchase CQEs was extended, but immediately met with the lack of a funding mechanism. Lending institutions could not be approached, federal sources were not a fit, and the state loan package requirements were prohibitive. In the case of Old Harbor, a fisherman was able to provide backing, and of the 20 CQE's that have formed, it is the only one operating, due to the funding issue. 6:15:03 PM MR. FIELDS reviewed the provisions of the bill, stating that a long term loan is important for a CQE, as it is about quota share, in the community, in perpetuity. The second provision requires a down payment of five percent, which should be possible; a higher rate would be a barrier. The third provision is the interest rate of prime plus two percent, which is standard; however, he suggested, an incentive would be created if it were lowered to prime plus one percent. Finally, he said an essential provision is the ability, as stated in the bill, for a CQE to ask for postponement or deferment of the interest on the principle, for up to ten years. The deferment would eventually be paid back, but allowing this on the front end of the loan, is critical to enable the CQE to build up reserves; necessary in a fluctuating fishery industry. 6:17:26 PM TIM GREENE, Representative, Nanwalek IRA (Indian Reorganization Act) Village Council, stated support for HB 141, and said that the CQE has been a total failure, noting that only one is operational. He reported that the North Pacific Fisheries Management Council (NPFMC) has been unwilling to meet with the village council claiming exemption from EO 13175, which states that all federal agencies are to provide government to government consultation to tribal entities. Finally, he said: I support HB 141. It gives a chance for a CQE to possibly make a purchase. ... But there's nothing to purchase. So that can be the next thing that can be resolved. 6:21:14 PM BILL LUCEY, Coastal Planner, City and Borough of Yakutat, stated support for HB 141, and said there has been an active CQE in Yakutat for about four years. Periodically the cost is evaluated and the numbers do not pencil out. He predicted that HB 141 could help with the financial situation, and the program could be a huge benefit to the area, generating upwards of $600,000 through the CQE non-profit. The infusion of the revenues would provide the community with a great deal of infrastructure security. 6:23:45 PM GALE VICK, Executive Director, Gulf of Alaska Coastal Communities Coalition (GOAC3), stated support for HB 141, and said the CQE would be a viable, sustainable program, if provided with a financial mechanism. The bill will provide a positive economic stimulus. 6:26:04 PM PATRICIA BROWN SCHWALENBERG, Executive Director, Chugach Regional Resources Commission (CRRC), stated support for HB 141, and indicated that the commission has been involved in the evolution of the CQE program. Two years ago a workshop was held on forming CQE's, but obtaining financing has not been possible. Funding options are essential to get this program up and running. 6:28:28 PM BOB HENRICKS, Board Member, Chugach Regional Resources Commission (CRRC), stated support for HB 141, and said this loan program is desperately needed to get the CQE groups off the ground. He said: We're almost back to the days before statehood, when all of the fishermen, and all the processors, were from the south forty-eight, and controlled our resources. 6:29:29 PM TONY GREGORIO, Fisherman, stated support for HB 141, and said that it will help the villagers to help themselves, and create an economic base. 6:31:22 PM FREDDIE CHRISTIANSEN, Fisherman, stated support for HB 141, and said this would make CQE's plausible, and stressed that the program is needed in coastal communities. CHAIR THOMPSON closed public testimony. 6:35:42 PM REPRESENTATIVE JOHNSON stated support for HB 141, and said it is the type of legislation that provides people a means to help themselves. REPRESENTATIVE PRUITT concurred and stated support for HB 141. 6:36:59 PM REPRESENTATIVE JOHNSON moved to report HB 141 27-LS0158\I, out of committee, with individual recommendations and the accompanying fiscal notes. There being no objection, HB 141 was moved from the House Special Committee on Fisheries.