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ADJUDICATIONS

Overview

The Adjudications Section at the Commission is responsible for processing applications for entry permits in limited fisheries and conducting hearings for those who contest Commission decisions affecting them. The section also conducts investigations into potential violations of the Commission's statutes and regulations, and provides assistance to other enforcement agencies.

Entry permit applications are first evaluated by Commission paralegals who classify applicants in a ranking system that measures each applicant's past participation and economic dependence on the fishery. Applicants who disagree with their initial classifications may request hearings. Hearings are also available to contest initial decisions about permit transfer requests or about qualifications for reduced permit renewal fees.

Commission hearing officers conduct administrative hearings throughout the state and decide appeals of initial determinations about entry permit applications, permit transfer requests, and fee arrearages charged to those who wrongly claimed to be Alaska residents. The Commissioners review and affirm or modify hearing officers' decisions on their own motion, or upon the request of an affected party. If no review is ordered by the Commissioners, hearing officer decisions become final in 60 days.

Commission hearing officers also preside in "show cause" hearings. These hearings are held in the presence of the Commissioners. In these proceedings, the Commission may impose fines, or revoke or suspend the permits of those who attempt to mislead the Commission with false information.


Administrative Proceedings and Decisions

During 1992, Commission paralegals continued to conduct hearings and decide appeals of denied emergency transfer requests.

During 1992, Commission paralegals completed most of the initial classification of applications for Togiak herring spawn on kelp permits, and processed applications for interim-use permits in the first year of the moratorium on new entrants into the Southeastern Dungeness crab fishery.

The hearing officers conducted 205 hearings in 1992: 157 on permit applications, 25 on permit transfers, and 23 miscellaneous actions. The hearing officers issued 172 decisions: 108 on permit applications, 40 on permit transfers, 2 on fee arrearages, 21 miscellaneous actions, and 1 on a show cause proceeding. At the end of the year, 636 cases were in various stages leading up to the issuance of a decision by a hearing officer.

The Commissioners adjudicated a total of 115 cases during 1992: 68 permit applications, 41 permit transfers, 4 show cause actions, and 2 on miscellaneous matters. At the end of the year, 187 cases were in various stages of the adjudication process leading to the issuance of final decisions by the Commissioners.


Investigations

During 1992, the Commission received fines and arrearages of $34,514 due to the successful settlement of prior actions. The Commission continues to cooperate with state and federal law enforcement agencies.


Judicial Rulings and Appeals

The Alaska Supreme Court issued an important decision in 1992 about the Commission and entry permits. In CFEC, State v. Russo, 833 P.2d 7 (Alaska 1992), the court upheld the CFEC's definition of the "unavoidable circumstances" provision, and held that earlier decisions allowing the partners of gear license holders to claim points for income dependence did not extend so far as to let these unlicensed partners receive points for fishing as gear license holders.


Internal Revenue Service Seizures of Limited Entry Permits

For the past ten years, the Internal Revenue Service (IRS) has attempted to seize and force the sale of Alaska limited entry permits. The Entry Commission has approached the issue in two ways. The Commission has done everything in its power to fulfill the purposes of the Alaska Limited Entry Act (which exempted limited entry permits from the claims of all creditors), including initiating one federal court action and defending another. Additionally, the Commission has sought to cooperate with the IRS to facilitate voluntary compliance by fishermen in order to avoid federal seizure of Alaska limited entry permits. From the beginning, the Commission has consistently warned fishermen that they must pay their taxes.

In March of 1992, the Federal District Court's decision in the Lorentzen case held that Alaska limited entry permits are subject to IRS tax liens. The net effect of this decision is that (in addition to child support claimants with judgments for arrearage) the Internal Revenue Service is authorized to enforce its liens against Alaska limited entry permits. Otherwise, the decision does not change state law: Alaska limited entry permits remain generally exempt from the claims of creditors and may not be pledged as security for debts with the exception of loans from the state commercial fisheries loan program and the Alaska Commercial Fishing and Agriculture Bank (CFAB).

In response to the Lorentzen and the earlier Anderson decisions, the Alaska Legislature unanimously adopted Governor Walter J. Hickel's SB 449 (Chapter 55, SLA 1992) to govern the two authorized forms of involuntary transfer. The new legislation authorizes such transfers and requires them to conform to applicable state law and, among other things, protects the revolving loan funds of the state loan program and CFAB. The Commission and the Department of Law have since been developing regulations to implement the new legislation.

At the same time, the Commission engaged in a dialogue with the IRS to address, among other things, the problem of informing a prospective transferee of an entry permit of the possible existence of a federal tax lien. Beginning in June, the Commission sent letters to parties to all transfers warning them that federal tax liens do apply to entry permits. The IRS refuses to provide the Commission actual notice of its liens, but, the IRS agreed to inform parties to transfers of federal tax liens filed in Alaska. However, the problem of identifying all federal tax liens against former holders of an entry permit-- particularly those who resided outside of Alaska--remains unresolved.

In late August, the IRS advertised that in October of 1992 it would conduct a public auction of 20 seized Alaska limited entry permits. By the time of the sale, only five permits remained on the auction block. Uncertainty surrounded the sale, because the IRS warned all potential buyers that the holder of an entry permit could redeem the permit up until the time of final transfer by the Entry Commission. Therefore, no successful bidder could be assured of actually receiving the permit. In turn, the Entry Commission notified all potential buyers of the newly enacted state legislation. Subsequent to the auction, the IRS requested transfer of only three of the permits sold at auction. The Entry Commission continued to develop regulations to implement Chapter 55, SLA 1992. The regulations must be effective for the Entry Commission to have authority to process the requests. The Entry Commission anticipates that regulations will be in effect prior to the 1993 salmon season.

Near the end of 1992, together with CFAB, the Entry Commission entered a formal working group with the Chief of Collections for the IRS in Alaska. The group will share public information in the hope of facilitating voluntary compliance by fishermen with tax obligations, acquainting the IRS with some of the unusual factors affecting fishermen in Alaska, and encouraging restraint in the seizure of entry permits by the IRS. In order to better define the problem, the IRS promised the Commission information as to the distribution of entry permit holders with outstanding tax obligations. Additionally, the Entry Commission is consulting with interested Alaska legislators and others for the purpose of analyzing the problem and reviewing proposed solutions.

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