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Alaska Statutes.

Title 44. State Government

Chapter 25. Department of Revenue

Section 40. Security For Certain Obligations.

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AS 44.25.040. Security For Certain Obligations.

(a) A person applying for a license as a fish processor or primary fish buyer shall file with the commissioner of revenue a performance bond, conditioned upon the promise to pay the following:

(1) wages owing to all persons employed by the fish processor or primary fish buyer, including contractual employee benefits;

(2) independent registered commercial fishermen for the price of the raw fishery resource purchased from them;

(3) fees owing for the service of transporting raw fish;

(4) contributions imposed under AS 23.20 (Alaska Employment Security Act).

(b) A fish processor or primary fish buyer that processes more than 30,000 pounds of fish a year or purchases more than $30,000 of fish a year shall file a performance bond with the commissioner in the amount specified in this subsection. The amount of the bond is $10,000 unless, during the five years preceding the application, one of the following has occurred:

(1) a final judgment in excess of $10,000 was awarded against the bond required under this section; if the final judgment against the bond was in excess of $10,000 but less than $50,000, the amount of the bond is increased to a total of $50,000; if the final judgment against the bond was $50,000 or more, the amount of the bond is increased to a total of $100,000;

(2) the commissioner has determined that the fish processor has engaged in the business of fish processor in the state or the primary fish buyer has engaged in the business of primary fish buyer in the state while not in compliance with this section and has not yet satisfied a final judgment entered against the fish processor or primary fish buyer for payment for labor furnished to, raw fishery resources purchased by, or raw fish transportation services provided to the fish processor or primary fish buyer; if the fish processor has engaged in the business of a fish processor or the primary fish buyer has engaged in the business of primary fish buyer while not in compliance with this section and has not yet satisfied a final judgment for payment for labor furnished to, raw fishery resources purchased by, or raw fish transportation services provided to the fish processor or primary fish buyer, the amount of the bond is increased to a total of $100,000; or

(3) the commissioner has determined under (j) of this section that a claim against the bond filed by the Department of Labor and Workforce Development under (i) of this section met the requirements in (i) of this section; if the amount of the claim was in excess of $10,000 but was less than $50,000, the amount of the bond is increased to a total of $50,000; if the amount of the claim was $50,000 or more, the amount of the bond is increased to a total of $100,000; an increase in bond amount under this paragraph may not be imposed until 45 days after the commissioner determines under (j) of this section that the claim of the Department of Labor and Workforce Development met the requirements in (i) of this section.

(c) A fish processor or primary fish buyer that processes 30,000 pounds or less of fish a year and purchases $30,000 or less of fish a year shall file a performance bond with the commissioner in the amount specified in this subsection. The amount of the bond is $2,000 unless, during the preceding five years, one of the following has occurred:

(1) a final judgment in excess of $2,000 was awarded against the bond required under this section; if the final judgment against the bond was in excess of $2,000 but less than $10,000, the amount of the bond is increased to a total of $10,000; if the final judgment against the bond was $10,000 or more, the amount of the bond is increased to a total of $20,000;

(2) the commissioner has determined that the fish processor has engaged in the business of fish processor in the state or that the primary fish buyer has engaged in the business of primary fish buyer in the state while not in compliance with this section and has not yet satisfied a final judgment entered against the fish processor or primary fish buyer for payment for labor furnished to, raw fishery resources purchased by, or raw fish transportation services provided to the fish processor or primary fish buyer; if the fish processor has engaged in the business of fish processor or primary fish buyer has engaged in the business of primary fish buyer while not in compliance with this section and has not yet satisfied a final judgment for payment for labor furnished to, raw fishery resources purchased by, or raw fish transportation services provided to the fish processor or primary fish buyer, the amount of the bond is increased to a total of $20,000; or

(3) the commissioner has determined under (j) of this section that a claim against the bond filed by the Department of Labor and Workforce Development under (i) of this section met the requirements in (i) of this section; if the amount of the claim was in excess of $2,000 but was less than $10,000, the amount of the bond is increased to a total of $10,000; if the amount of the claim was $10,000 or more, the amount of the bond is increased to a total of $20,000; an increase in bond amount under this paragraph may not be imposed until 45 days after the commissioner determines under (j) of this section that the claim of the Department of Labor and Workforce Development met the requirements in (i) of this section.

(d) If a fish processor who has filed a performance bond under (c) of this section processes more than 30,000 pounds of fish in a year or purchases more than $30,000 of fish in a year, the fish processor shall, within seven days after the day on which the 30,000 pound threshold or the $30,000 threshold is exceeded, notify the commissioner and comply with (b) of this section. If a fish processor who has filed a performance bond under (c) of this section processes more than 30,000 pounds of fish in a year or purchases more than $30,000 of fish in a year, and does not comply with (b) of this section within seven days after the date on which the 30,000 pound threshold or the $30,000 threshold is exceeded, the fish processor shall suspend processing fish until a bond has been filed under (b) of this section.

(e) If a primary fish buyer who has filed a performance bond under (c) of this section purchases more than $30,000 of fish in a year, the primary fish buyer shall, within seven days after the day on which the $30,000 threshold is exceeded, notify the commissioner and comply with (b) of this section. If a primary fish buyer who has filed a performance bond under (c) of this section purchases more than $30,000 of fish in a year, and does not comply with (b) of this section within seven days after the date on which the $30,000 threshold is exceeded, the primary fish buyer shall suspend purchases of fish until a bond has been filed under (b) of this section.

(f) A fish processor or primary fish buyer may use only a surety bond, cash deposit, or other negotiable security as a performance bond under this section. The surety must be satisfactory in the determination of the commissioner. The use of other negotiable security as a performance bond must be in a form acceptable to the commissioner. The commissioner shall waive the filing of a performance bond under this section if

(1) the fish processor or primary fish buyer has more than $10,000 in lienable real property located in the state and provides proof of the property in a form satisfactory to the commissioner;

(2) the fish processor or primary fish buyer is not required under (b) or (c) of this section to post a bond in excess of $10,000; and

(3) within the five years preceding the application under AS 43.75.020, an employee, fisherman, or contracted raw fish transporter has not obtained a final judgment against the fish processor's or primary fish buyer's bond under this section.

(g) If an applicant for a license as a fish processor or primary fish buyer has complied with this section, the Department of Revenue may issue that applicant a license to engage in the business of fish processor or primary fish buyer.

(h) A claim against a fish processor or primary fish buyer for failing to pay an employee for wages or contractual benefits owed, for failing to pay an independent registered fisherman for the price of raw fishery resource purchased from the fisherman, or for failing to pay an independent contractor for the transportation of raw fish may be brought upon the bond filed under this section in the superior court of the judicial district in which the work was done or in any judicial district in the state in which jurisdiction may be obtained. If an action is brought upon the bond, a copy of the complaint shall be served by registered or certified mail upon the commissioner at the time the suit is filed. The commissioner shall transmit a copy of the complaint and any judgment to the surety or holder of the negotiable security. If a judgment is entered against cash deposited with the commissioner, the commissioner, upon receipt of a certified copy of a final judgment, shall pay the judgment from the amount of the deposit. The commissioner shall maintain a record, available for public inspection, of all suits commenced under this subsection.

(i) A claim against a fish processor or primary fish buyer for failing to pay contributions imposed under AS 23.20 may be brought by the Department of Labor and Workforce Development against the bond filed under this section by filing a claim against the bond with the commissioner, along with proof, satisfactory to the commissioner, that the fish processor or primary fish buyer

(1) received a notice of assessment under AS 23.20.205 ;

(2) did not pay the amount specified in the notice of assessment within 30 days after receiving the notice of assessment or, if the assessment was contested under AS 23.20.220 , within 30 days after receiving the department's final decision under AS 23.20.220 (c); and

(3) did not file an appeal of the assessment under AS 23.20.220 or filed an appeal but did not initiate a proceeding for judicial review under AS 23.20.445 within 30 days after the department's final decision under AS 23.20.220 (c).

(j) If the commissioner determines that the Department of Labor and Workforce Development has met the claim requirements in (i) of this section, the commissioner shall forward the claim and supporting documents to the surety or holder of the negotiable security. If the fish processor or primary fish buyer has deposited cash with the commissioner, the commissioner shall pay the claim of the Department of Labor and Workforce Development from the amount of the deposit. If the commissioner determines that the Department of Labor and Workforce Development has not met the claim requirements in (i) of this section, the commissioner shall provide the Department of Labor and Workforce Development with written notice of the deficiency of its claim.

(k) If a performance bond is insufficient to satisfy all claims filed against it under this section, claims brought against the bond under (h) of this section have priority over a claim filed against the bond under (i) of this section. The Department of Labor and Workforce Development shall return to the commissioner money received from a claim filed against a fish processor's or primary fish buyer's performance bond under (i) of this section if an employee, fisherman, or contracted raw fish transporter obtains a final judgment under (h) of this section against that fish processor's or primary fish buyer's bond and the

(1) fish processor or primary fish buyer has not replenished the bond after it was used to cover the claim filed under (i) of this section; or

(2) final judgment obtained by the employee, fisherman, or contracted raw fish transporter is more than the amount of the bond available under (b) or (c) of this section.

(l) The term of a performance bond expires two years after the fish processor or primary fish buyer is no longer licensed in this state, except that if, during that two-year period, a claim has been asserted against the bond, the term of the bond is five years. If the surety on the bond wishes to cancel the bond, the surety may do so by giving the commissioner written notice of intention to cancel. The cancellation is effective 30 days after the notice is delivered to the commissioner.