03/09/2010 10:15 AM House FISHERIES

         HB 365-FISH PROCESSOR FEES, LICENSES, RECORDS                                                                      
                                                                                                                                
11:05:44 AM                                                                                                                   
                                                                                                                                
CHAIR EDGMON announced that the  final order of business would be                                                               
HOUSE  BILL  NO.  365,  "An   Act  relating  to  sharing  records                                                               
regarding fish purchased by fish  processors with certain federal                                                               
agencies,  to requirements  to obtain  and  maintain a  fisheries                                                               
business license,  and to  payment of  industry fees  required of                                                               
fish processors; and providing for an effective date."                                                                          
                                                                                                                                
11:05:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  MILLETT  informed  the  committee  HB  365  is  a                                                               
continuation of  a fishery capacity reduction  program enacted by                                                               
the  legislature  in  2002,  commonly   known  as  the  "buyback"                                                               
program.   She  read from  a letter  submitted by  the Commercial                                                               
Fisheries Entry Commission  (CFEC) dated 3/2/10, a  copy of which                                                               
was  provided  in  the  committee  packet  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     HB 365  is simply an accounting  procedure modification                                                                    
     to make the program  operate more efficiently and allow                                                                    
     the  lender to  monitor the  capacity of  the reduction                                                                    
     loan  repayment.    It  does  not  change  the  program                                                                    
     established in 2002 in any way....                                                                                         
                                                                                                                                
     HB  365  will  allow   the  National  Marine  Fisheries                                                                    
     Service  (NMFS) access  to  confidential state  records                                                                    
     and reports  through an  exception to  AS 16.05.815(a).                                                                    
     This  is not  an unusual  request since  a dozen  other                                                                    
     exceptions  have  been  granted in  statute,  including                                                                    
     NMFS  but  for  purposes   of  fishery  management  and                                                                    
     enforcement.   This legislation  is necessary  since it                                                                    
     is the State  of Alaska that maintains  the fish ticket                                                                    
     harvest data  and fish processor annual  reports.  This                                                                    
     exception will provide assurance  to NMFS that they are                                                                    
     receiving the proper repayment of their loan....                                                                           
                                                                                                                                
     The original  legislation in 2002 was  supported by the                                                                    
     Alaska   fishing   community   and   had   overwhelming                                                                    
     legislative support  in both  the House and  Senate, as                                                                    
     did the  2006 modification.  This  support stemmed from                                                                    
     the fact  that the  program was initiated  by fishermen                                                                    
     for fishermen, it  is a voluntary program  (no one will                                                                    
     be  forced to  sell  their limited  entry permit),  the                                                                    
     program requires  a majority vote of  all the fishermen                                                                    
     to   implement   the   loan  agreement,   the   fishery                                                                    
     association will  have access  to federal funds  of $21                                                                    
     million    through    the   Magnuson-Stevens    Fishery                                                                    
     Conservation and Management Act,  there is little State                                                                    
     expense or administration, the  State maintains all its                                                                    
     responsibility to  manage its  fisheries in  the future                                                                    
     should conservation or  economic conditions change, and                                                                    
     the program has had a history of legislative support.                                                                      
                                                                                                                                
REPRESENTATIVE MILLETT  asked the committee to  consider the bill                                                               
in order to continue to sustain  a healthy and vibrant fishery in                                                               
Southeast.                                                                                                                      
                                                                                                                                
11:08:02 AM                                                                                                                   
                                                                                                                                
FRANK  HOMAN, Chairman/Commissioner,  Commercial Fisheries  Entry                                                               
Commission  (CFEC), Alaska  Department  of Fish  & Game  (ADF&G),                                                               
explained the program is available  to any fishery throughout the                                                               
state; thus,  Southeast seiners developed an  association to seek                                                               
federal funding  for a buyback  loan that  will be repaid  by the                                                               
fishermen.   He stressed  that this is  a voluntary  program, and                                                               
only  works in  regions where  the fishermen  "come together  and                                                               
want to do  this."  In the last decade,  the seiners in Southeast                                                               
have only  been fishing about  one-half of their  permits because                                                               
of high  costs and low  prices for fish.   He opined  the program                                                               
gives the remaining fishermen an  opportunity to "take the chance                                                               
with  the future  and to  buy out  the permits  not fished  which                                                               
would  enable them,  those remaining,  to improve  their economic                                                               
condition in the future."                                                                                                       
                                                                                                                                
11:10:54 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSON   asked  about  the  permanence   of  the                                                               
program, given market changes and state constitutional issues.                                                                  
                                                                                                                                
11:11:40 AM                                                                                                                   
                                                                                                                                
MR. HOMAN  advised that one of  the features allows the  state to                                                               
maintain its responsibility to the  fishery; in fact, the Limited                                                               
Entry  Act  states that  if  changes  occur,  the state  has  the                                                               
opportunity  to  analyze a  fishery  through  an "optimum  number                                                               
study."   Furthermore, if  a fishery  becomes too  exclusive, the                                                               
state may issue more permits into  that fishery.  As a protection                                                               
for  the  fishermen,  modification legislation  enacted  in  2006                                                               
directed that the proceeds from the  new permits would be used to                                                               
pay off any loan balance.                                                                                                       
                                                                                                                                
11:13:51 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSON pointed  out  that  the 2006  legislation                                                               
does not  "trump the  constitution, which says  that ...  we have                                                               
rights  to  the  resources  that  are  owned  by  the  people..."                                                               
Although in  support of  the buyback  program, he  cautioned that                                                               
only  a   state  constitutional  amendment  will   guarantee  the                                                               
permanence of the program.   However, passage of a constitutional                                                               
amendment  may   create  "privileged   groups,"  in   fact,  some                                                               
fisheries are  close to this  situation already, and  opening the                                                               
fishery  may  cause  a  "false  economy,"  subject  to  lawsuits.                                                               
Representative Johnson  warned that  the state  may be  caught in                                                               
the middle,  and he asked  that the record reflect  his intention                                                               
to  protect  the resource  by  the  guarantee of  limited  entry,                                                               
although "the courts are going to end up deciding, probably."                                                                   
                                                                                                                                
11:15:36 AM                                                                                                                   
                                                                                                                                
MR.  HOMAN  agreed   that  issues  over  limited   entry  may  be                                                               
determined by  the courts;  however, he  did not  anticipate that                                                               
the changes  in the fishery that  would cause this to  happen are                                                               
coming.   He opined that  if the  statutes were changed,  and new                                                               
permits  were  not allowed,  the  court  would  "see that  as  an                                                               
overreaching limitation."                                                                                                       
                                                                                                                                
11:16:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSON applauded  the  association in  Southeast                                                               
that has  brought this legislation  forward; however, a  law must                                                               
work throughout the state, and he  asked, "If you took this model                                                               
and put  it in  Bristol Bay, or  ... put it  in Cook  Inlet, what                                                               
would it look like?"                                                                                                            
                                                                                                                                
11:17:46 AM                                                                                                                   
                                                                                                                                
MR.  HOMAN  explained that  the  program  is available  to  other                                                               
regions if they form a  fishery association, under state statute,                                                               
and  seek a  comprehensive group  of fishermen  to work  with the                                                               
federal  government.    In  addition,  there  are  other  methods                                                               
available, such  as assessing  themselves upfront  and collecting                                                               
money to buy permits back.   He assured the committee the program                                                               
is available now  to other regions, if there  are unused permits,                                                               
as an opportunity to reduce the fleet.                                                                                          
                                                                                                                                
11:19:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSON  restated  his support  of  the  program;                                                               
however, he would like to see further assurance of permanence.                                                                  
                                                                                                                                
11:20:35 AM                                                                                                                   
                                                                                                                                
CHAIR EDGMON opened public testimony.                                                                                           
                                                                                                                                
11:20:49 AM                                                                                                                   
                                                                                                                                
BRAD HANES,  commercial fisherman, informed the  committee he was                                                               
a fourth  generation purse seiner,  beginning his  fishing career                                                               
when he was 18 years old.  He  spoke in support of the bill, even                                                               
though it meant "putting a tax on myself."                                                                                      
                                                                                                                                
11:21:59 AM                                                                                                                   
                                                                                                                                
BRYAN  BENKMAN, commercial  fisherman;  member, Southeast  Alaska                                                               
Seiners Association  (SEAS), informed  the committee he  has been                                                               
fishing in  Southeast since 1973.   He recalled that  the fishery                                                               
was overcapitalized in the '80s and  '90s, but in the last decade                                                               
the number of  fisherman has dropped, making this a  good time to                                                               
pursue the  buyback.  He  supported the opportunity  to stabilize                                                               
the fishery.                                                                                                                    
                                                                                                                                
11:23:44 AM                                                                                                                   
                                                                                                                                
SETH WYMAN,  commercial fisherman; board member,  SEAS, stated he                                                               
and  his organization  support HB  365, and  that members  of the                                                               
association are  willing to  tax themselves  to make  the fishery                                                               
stable and more beneficial to the industry.                                                                                     
                                                                                                                                
11:24:56 AM                                                                                                                   
                                                                                                                                
SVEN STROUSE(ph), commercial fisherman;  board member, SEAS, also                                                               
stated support  for HB 365  on behalf of the  association, saying                                                               
that the legislation will maintain  the economic viability of the                                                               
fishery for the future.                                                                                                         
                                                                                                                                
11:25:53 AM                                                                                                                   
                                                                                                                                
RANDY  STEWART, Vice  President, SEAS,  said he  was representing                                                               
himself and the  association.  He assured the  committee that the                                                               
bill will  not cause  the cost  of permits  to rise,  or restrict                                                               
access to the  fishery; in fact, in 1977, when  he began fishing,                                                               
a  newcomer  still  needed  help  with  financing  to  enter  the                                                               
fishery.    Mr.  Stewart  recalled  that  the  implementation  of                                                               
limited entry  provided stability to  the fishery.  The  value of                                                               
the permit is a small portion of  the cost to enter a fishery, as                                                               
the cost of  becoming a commercial fisherman is too  high for any                                                               
young person  on his/her own.   Potential investors will  look at                                                               
the stability  of the industry  prior to making an  investment or                                                               
loan,  and the  possibility  of 170-200  returning  permits is  a                                                               
destabilizing  factor.    Mr.   Stewart  expressed  his  personal                                                               
interest in an industry that  is not exclusive, but is profitable                                                               
and would  attract buyers  to purchase permits  that come  on the                                                               
market.   He concluded that  the bill will provide  a stabilizing                                                               
influence.                                                                                                                      
                                                                                                                                
11:29:12 AM                                                                                                                   
                                                                                                                                
DAN   CASTLE,   President,    SEAS;   board   member,   Southeast                                                               
Revitalization  Association  (SRA),  stated he  was  representing                                                               
himself, SEAS,  and SRA.   He  related that  SRA was  tasked with                                                               
building  this  program  10  years  ago  by  securing  money  and                                                               
extinguishing latent  permits.   He described the  development of                                                               
the  program, and  opined  HB 365  simply  provides a  collection                                                               
vehicle to  collect the  money from the  fishermen and  repay the                                                               
loan.  Mr. Castle urged the committee to move the bill.                                                                         
                                                                                                                                
11:31:36 AM                                                                                                                   
                                                                                                                                
BOB  THORSTENSON, Executive  Director, SEAS,  stated that  he was                                                               
speaking on behalf of himself  and his constituents.  He stressed                                                               
the  importance of  the  bill and  that it  was  written over  an                                                               
entire  decade.   Regarding the  permanence  issue, he  cautioned                                                               
that the bill addresses this in  the best way possible without "a                                                               
series  of optimum  number studies."    He shared  Representative                                                               
Johnson's desire to deal with the  optimum number of permits in a                                                               
different  manner;  however,  this  risk will  be  taken  by  the                                                               
fishermen,  as the  language  in the  2006  legislation says  the                                                               
state  "may" use  the resulting  funds from  reissued permits  to                                                               
reimburse  the association.   Mr.  Thorstenson recalled  that the                                                               
first  round  to  purchase  permits retired  35  permits  with  a                                                               
percentage of  non-resident permit  holders at about  80 percent.                                                               
He  predicted  that  after consolidation,  Petersburg  will  hold                                                               
about  22 percent  of  the permits.   He  pointed  out the  state                                                               
legislature began this  process in 2002, and  the association has                                                               
worked  for eight  and one-half  years to  secure the  twenty-one                                                               
million dollar loan.                                                                                                            
                                                                                                                                
11:34:34 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MUNOZ  asked whether the processors  supported the                                                               
buyback program in 2002.                                                                                                        
                                                                                                                                
11:34:42 AM                                                                                                                   
                                                                                                                                
MR. THORSTENSON said  yes.  In fact, in 2003,  letters of support                                                               
were  received from  every major  processor.   He understood  the                                                               
concern  of   the  processing  sector  about   the  recent  price                                                               
fluctuations; however,  those are cyclical swings.   He expressed                                                               
his belief  that a larger fleet  does not mean more  fish will be                                                               
caught.   He advised that there  was full support to  pursue this                                                               
program recently.                                                                                                               
                                                                                                                                
11:36:38 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MUNOZ  further asked  whether the  buyback program                                                               
will have any effect on existing active permits.                                                                                
                                                                                                                                
MR.  THORSTENSON  said  no  active permits  will  be  removed  in                                                               
Southeast  unless they  are offered  for sale.   The  legislation                                                               
also pertains to other regions.                                                                                                 
                                                                                                                                
11:38:10 AM                                                                                                                   
                                                                                                                                
NIK  NEBL,  commercial  fisherman;  member,  SEAS,  said  he  was                                                               
representing himself and  the association.  He  observed that the                                                               
state, through the commercial fishing  loan fund, provided access                                                               
to the fishing industry for those  with a desire to be fishermen.                                                               
Mr. Nebl obtained  a commercial loan from  1984-1994, through the                                                               
"ups  and  downs" of  the  industry,  until  he became  a  permit                                                               
holder.    He  expressed  his hope  that  this  legislation  will                                                               
stabilize  the industry  for newcomers,  and  help families  keep                                                               
fishing.                                                                                                                        
                                                                                                                                
11:39:54 AM                                                                                                                   
                                                                                                                                
BRUCE  WALLACE,  commercial  fisherman,  stated  he  has  been  a                                                               
fisherman since 1970, and he  purchased a limited entry permit at                                                               
the inception  of the  program in  1976.   His experience  in the                                                               
industry  is broad,  and  he has  found that  most  aspects of  a                                                               
fishery cannot  have certainty.   Fish  products can  be enhanced                                                               
and well-managed,  but these factors  do not control  the biology                                                               
of  a fishery.   On  the  other hand,  there is  some ability  to                                                               
control the market.   Mr. Wallace advised that the  bill closes a                                                               
promise that  was made  in the  limited entry  law over  a decade                                                               
ago,  before the  target goal  of  300 permits  in Southeast  was                                                               
artificially  inflated  by  legal  action.   After  a  decade  of                                                               
effort, the fleet  "stayed with it" and has reached  closure.  He                                                               
asked for the committee's support of the bill.                                                                                  
                                                                                                                                
11:43:02 AM                                                                                                                   
                                                                                                                                
GARY HAYNES,  commercial fisherman,  said that  he is  a lifelong                                                               
resident  of Ketchikan.   Mr.  Haynes recalled  lobbying for  the                                                               
Limited Entry  Act in  1974, which he  thought was  a stabilizing                                                               
measure for  the industry  then.   He has  been running  his boat                                                               
since 1976, and feels strongly that  HB 365 is another great tool                                                               
for stabilization, as was limited entry.                                                                                        
                                                                                                                                
11:44:18 AM                                                                                                                   
                                                                                                                                
SCOTT MCALLISTER,  commercial fishermen, agreed with  Mr. Wallace                                                               
that  this legislation  "closes  a  deal that  was  kind of,  was                                                               
implied in  the original Limited  Entry Act."   His understanding                                                               
was  that the  act provided  for optimum  and maximum  numbers of                                                               
permits.   This left open  the possibility for  buyback; however,                                                               
the bill preserves  the commerce in commercial  fishing, which is                                                               
in  competition with  all of  the other  elements and  aspects of                                                               
fishing in  the state.   He concluded  that the bill  ensures the                                                               
balance and stability  of commercial fishing in  the future, with                                                               
the  possibility  of  achieving  the optimum  number  of  permits                                                               
within  a  fishery "and  hav[ing]  a  future, stable,  commercial                                                               
future for the participants in that fishery."                                                                                   
                                                                                                                                
11:46:35 AM                                                                                                                   
                                                                                                                                
JERRY MCCUNE,  representative, United Fisherman of  Alaska (UFA),                                                               
stated UFA supports  the bill.  In his role  on the restructuring                                                               
panel on the  Board of Fisheries, and working  on the legislation                                                               
in 2000,  he heard  from fishermen that  they supported  the bill                                                               
because  it is  voluntary.   No  one  can be  forced  out of  the                                                               
fishery; therefore, UFA supports the  action by SEAS and the vote                                                               
of the  fishermen.   He expressed  his hope  that the  program is                                                               
successful.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MUNOZ  asked  what  length of  time  is  used  to                                                               
determine that a permit is latent.                                                                                              
                                                                                                                                
MR.  MCCUNE advised  that  a  permit must  be  renewed every  two                                                               
years,  and a  permit holder  who has  not fished  in four  years                                                               
would be considered latent.                                                                                                     
                                                                                                                                
CHAIR EDGMON observed the chairman  of the CFEC is indicating his                                                               
agreement with Mr. McCune's answer.                                                                                             
                                                                                                                                
11:49:23 AM                                                                                                                   
                                                                                                                                
MITCH  EIDE, commercial  fisherman; board  member, SEAS,  said he                                                               
was a  lifelong Petersburg resident representing  himself and the                                                               
association.   He stated that  the younger fishermen  are willing                                                               
to pay a  tax for 25 years because this  legislation is important                                                               
for the  future stability  of the  fishery.   Mr. Eide  urged the                                                               
committee to pass the bill.                                                                                                     
                                                                                                                                
11:50:12 AM                                                                                                                   
                                                                                                                                
CHAIR EDGMON  closed public testimony,  and stated that  the bill                                                               
would be held [HB 365 was held over.]