Legislature(2007 - 2008)HOUSE FINANCE 519

04/08/2008 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 2:00 pm today --
+ SB 243 COMMISSION ON AGING TELECONFERENCED
<Bill Hearing Postponed to 4/9/08 @ 8:30>
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 265 SEX OFFENDERS & CHILD KIDNAPPERS: PFD TELECONFERENCED
Moved HCS CSSB 265(FIN) Out of Committee
<Bill Hearing Rescheduled from 04/07/08>
+= SB 202 PROHIBIT STATE SPENDING FOR REAL ID ACT TELECONFERENCED
Moved HCS CSSB 202(STA) Out of Committee
+= SB 119 SCHOOL LIBRARY GRANTS TELECONFERENCED
<Bill Hearing Postponed>
+= SB 259 EFFECTIVE DATE: MEDICAL ASSISTANCE LAWS TELECONFERENCED
<Bill Hearing Postponed to 4/10/08@ 8:30>
+= SB 254 AK REGIONAL ECONOMIC ASSISTANCE PROGRAM TELECONFERENCED
Moved HCS SB 254(FIN) Out of Committee
SENATE BILL NO. 254                                                                                                           
                                                                                                                                
     An Act extending the termination date of the Alaska                                                                        
     regional economic assistance program; and providing for                                                                    
     an effective date.                                                                                                         
                                                                                                                                
REPRESENTATIVE  PAUL  SEATON,  SPONSOR,  explained  that  the                                                                   
committee substitute  for SB 254 contains the  entire purpose                                                                   
of HB 16, extension of the vessel  base fishing limited entry                                                                   
system.                                                                                                                         
                                                                                                                                
      HOUSE BILL NO. 16                                                                                                       
      "An  Act  providing  for  an  effective  date  by                                                                         
      delaying  the effective  date  of  repeal of  the                                                                         
      authority  of  the  Commercial   Fisheries  Entry                                                                         
      Commission    to   maintain   the    vessel-based                                                                         
      commercial  fisheries limited  entry systems  for                                                                         
      the Bering  Sea Korean hair crab  and weathervane                                                                         
      scallop  fisheries,  and  the effective  date  of                                                                         
      conforming  amendments related  to the repeal  of                                                                         
      those systems."                                                                                                           
                                                                                                                                
HB  16 did  not languish  in Committee.    It was  introduced                                                                   
early  with   extensive  hearings   last  year.     Following                                                                   
discussions  with   the  Department   of  Fish  and   Game  &                                                                   
Commercial Fisheries  Entry Commission  (CFEC).  He  hoped to                                                                   
see  seamless  management tools  in  place for  managing  the                                                                   
coast of Alaska  State waters.  He wanted to  see regulations                                                                   
in place.                                                                                                                       
                                                                                                                                
Senator Seaton pointed out the  inclusion of two fisheries in                                                                   
the  work draft.   When  it was  adopted in  2002, there  was                                                                   
significant   statewide   testimony   regarding   anticipated                                                                   
problems  including  "super  consolidation.   The  hair  crab                                                                   
fishery  was closed two  years before  the temporary  limited                                                                   
entry permits  were granted.   There is no hair  crab fishery                                                                   
anticipated for the next three years.                                                                                           
                                                                                                                                
He  referenced  the scallop  fishery  permits  that had  been                                                                   
issued.  Currently,  there are only three boats  that harvest                                                                   
100%  of the  scallops  in  Alaska.   There  is  a tax  issue                                                                   
because  the  fishery  has  been  consolidated  too  far  and                                                                   
information  is not available.   There  are only two  Alaskan                                                                   
boats  participating  in  that  fishery.    Both  boats  have                                                                   
testified  that they  would like  to see  the license  period                                                                   
extended to  five years.  There  is a sunset included  in the                                                                   
bill.  In the current plan, the  ownership goes to the vessel                                                                   
owner and is the same system used  by the federal government.                                                                   
The  program  would  not  terminate  the  70%  fisheries  now                                                                   
occurring  in  federal waters.    The federal  water  limited                                                                   
entry system will remain in place.                                                                                              
                                                                                                                                
Representative  Seaton reviewed the  temporary nature  of the                                                                   
permits.    He addressed  how  well  the program  worked  for                                                                   
Alaska.  He maintained  that there needs to be  a policy call                                                                   
on that fishery.                                                                                                                
                                                                                                                                
2:34:40 PM                                                                                                                    
                                                                                                                                
Representative Seaton  continued, nothing in  the legislation                                                                   
prevents the  system from being  in place in  federal waters.                                                                   
The State  recognizes that  individual participants  gain the                                                                   
rights and  that it can be  transferred, but no one  else can                                                                   
enter the fishery.                                                                                                              
                                                                                                                                
He maintained that there is ample  time to go back and create                                                                   
a limited  entry program  based on  the proposed  deliveries.                                                                   
Historically,   the   Alaska   fishery   attempts   to   have                                                                   
participants, however,  at this time,  it is in the  hands of                                                                   
only three.   Those provisions have prevented  many fishermen                                                                   
from participating on an economic scale.                                                                                        
                                                                                                                                
Representative   Seaton   emphasized   that   the   Community                                                                   
Development  Quota  (CDQ)  is  an  excellent  program.    The                                                                   
language  of  the  bill  would  not  prevent  it  but  rather                                                                   
proposes monitoring a statewide  program, maintaining fishing                                                                   
permits.                                                                                                                        
                                                                                                                                
Representative  Seaton stated that  there is no  conservation                                                                   
issue  attached to  the  fisheries, which  is  driven by  the                                                                   
economics of participation.                                                                                                     
                                                                                                                                
2:39:33 PM                                                                                                                    
                                                                                                                                
Representative   Thomas  asked   about  the  statewide   boat                                                                   
displacement.   Representative Seaton explained,  there is no                                                                   
way to  legally indicate  that it  is an  Alaskan boat.   The                                                                   
program displaces  those boats so they do not  have access to                                                                   
the fishery.   He  reiterated, there  are only three  fishing                                                                   
vessels in the entire fishery.                                                                                                  
                                                                                                                                
Representative  Thomas  was concerned  and  asked if  limited                                                                   
entry was  eliminated, how  the fleets  would access  an open                                                                   
fishery.  Representative  Seaton explained that  the question                                                                   
is not whether the vessels could  be excluded from Alaska but                                                                   
rather that  they are receiving  dollars from  Alaska without                                                                   
coming to the  State.  He maintained that the  program should                                                                   
go away.                                                                                                                        
                                                                                                                                
2:44:00 PM                                                                                                                    
                                                                                                                                
Representative   Nelson  asked   if  the   concern  is   with                                                                   
shareholders not  fishing the vessel, yet  receiving benefits                                                                   
from  the  resource.   Representative  Seaton  indicated  his                                                                   
concern with  people who do  not participate in  the fishery,                                                                   
but actually  "own" the fishery.   He added that  the program                                                                   
has constricted jobs  available to Alaskans and  that jobs in                                                                   
the fishing industry  are removed through the  program, which                                                                   
means a loss of jobs and opportunities to coastal Alaska.                                                                       
                                                                                                                                
2:45:27 PM                                                                                                                    
                                                                                                                                
Representative  Nelson  elaborated that  the  vessels are  so                                                                   
large that no one  in her village can actually  afford to own                                                                   
one.   Representative Seaton pointed  out that some  are only                                                                   
75 feet and  that the fishery does  not have to be  in a huge                                                                   
vessel.  Historically, there have  been smaller boats used in                                                                   
coastal towns.  The consolidation  included a vessel 123 feet                                                                   
long.   He recognized that  some coastal villages  do receive                                                                   
small checks  because a larger  vessel is distributing  those                                                                   
funds.   He  reiterated  that  the  bill only  addresses  the                                                                   
scallop fishery, which fishes three miles within the coast.                                                                     
                                                                                                                                
2:48:18 PM                                                                                                                    
                                                                                                                                
Representative Thomas  mentioned halibut fishing  outside the                                                                   
coast of  Alaska.   He asked why  there are complaints  being                                                                   
voiced  now,   after  so  many  years  of   being  displaced.                                                                   
Representative  Seaton explained  that  the personal  limited                                                                   
entry system in  Alaska is not consolidated  and remains with                                                                   
that person,  which does  not guarantee  that Alaskan  people                                                                   
are actually participating in the fishery.                                                                                      
                                                                                                                                
Representative  Thomas  commented  on  the  medical  transfer                                                                   
permit    restrictions    allowed    every    three    years.                                                                   
Representative  Seaton  spoke  to  the  illegal  practice  of                                                                   
leasing  a   permit,  noting   the  exceptions  for   medical                                                                   
emergencies  limited  to  a  specific  length of  time.    He                                                                   
worried about one boat harvesting the entire fishery.                                                                           
                                                                                                                                
2:57:22 PM                                                                                                                    
                                                                                                                                
Representative  Kelly summarized that  the bill outlines  two                                                                   
issues.   One related  to procedure  and the other  regarding                                                                   
the merits  of the  issue.  He  inquired which committee  the                                                                   
bill  should  have  been  assigned  to  after  the  Fisheries                                                                   
Committee.                                                                                                                      
                                                                                                                                
Vice-Chair  Stoltze understood  that it  should have  gone to                                                                   
the House Resources Committee.   Representative Kelly thought                                                                   
that forwarding the bill to the  House  Finance Committee was                                                                   
a  "clear  violation  of  the  rules".    He  disagreed  with                                                                   
incorporating it  into an unrelated  bill and the  process it                                                                   
had followed.                                                                                                                   
                                                                                                                                
Co-Chair  Meyer  acknowledged that  was  a correct  recap  of                                                                   
Speaker Harris' position & what happened.                                                                                       
                                                                                                                                
3:00:54 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked to  take public testimony  on the                                                                   
issue.   The sunset  is being  requested to  be changed  from                                                                   
five to ten years.   He reiterated that the  issue needs more                                                                   
attention and that he does not  support the proposed ten year                                                                   
sunset.                                                                                                                         
                                                                                                                                
3:02:06 PM                                                                                                                    
                                                                                                                                
Representative  Gara  interjected that  consideration  should                                                                   
have  gone  through  the  public  issue  and  not  have  been                                                                   
determined  in the  Majority Caucus.    He was  uncomfortable                                                                   
with the process,  maintaining that anything  of merit should                                                                   
always be debated and that the  committee process provides an                                                                   
opportunity to hear and deliberate issues.                                                                                      
                                                                                                                                
Representative  Gara acknowledged he  was confused  about the                                                                   
issue.   He was sympathetic for  a piece of the  State, which                                                                   
does not have a  vibrant economy, yet has an  interest in the                                                                   
fishery.  He  agreed that the power of the  Alaskan fisheries                                                                   
should not  be consolidated  by huge  outside companies.   He                                                                   
acknowledged it is not a black and white issue.                                                                                 
                                                                                                                                
If  the sunset  was not  extended,  the Commercial  Fisheries                                                                   
Entry Commission (CFEC) would  have to determine who receives                                                                   
the vessel  permits.   If the  sunset went  into effect,  the                                                                   
State would  then have to determine  who gets the  permits to                                                                   
protect  the resource.    He  asked if  there  was  a way  to                                                                   
determine permits distributed  statewide and continue to have                                                                   
an interest in them given a preference.                                                                                         
                                                                                                                                
3:06:21 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  commented that  if  the issue  is  important                                                                   
enough,   it    will   surface   for   a    public   hearing.                                                                   
Representative  Seaton  interjected that  the  bill has  been                                                                   
heard and given multiple hearings over the past two years.                                                                      
                                                                                                                                
Representative  Gara questioned the  effect of the  sunset on                                                                   
the vessel permitting.                                                                                                          
                                                                                                                                
3:08:58 PM                                                                                                                    
                                                                                                                                
FRANK   HOMAN,  COMMISSIONER,   COMMERCIAL  FISHERIES   ENTRY                                                                   
COMMISSION (CFEC),  JUNEAU, responded that CFEC  would not be                                                                   
able to  do anything if  that happened.   There is no  way to                                                                   
take  the vessel  license program  to  an individual  license                                                                   
program.   There is no way to  go backward except to  go "way                                                                   
back  in time"  in the last  ten to  fifteen years.   In  the                                                                   
last five  years, since the  vessel license program  has been                                                                   
in  effect,  the fishery  has  been  limited to  the  vessels                                                                   
participating.   To  establish  a limited  entry system,  the                                                                   
law  clarifies   the  need  to   look  back  to   four  years                                                                   
experience and then  choose from those participants.   At the                                                                   
end of 2008,  there is no  population to draw on,  except the                                                                   
vessel participating.                                                                                                           
                                                                                                                                
The  traditional  method  determines   that  those  fishermen                                                                   
recently fishing get  the most points.  Mr.  Homan added that                                                                   
in 2002,  when the Legislature  allowed the system  for these                                                                   
two fisheries,  it had been studied  for five years  prior at                                                                   
the Department  of Fish and  Game, attempting to  determine a                                                                   
way to use  the individual permitting system  that identified                                                                   
the conservation  of the  fishery.  There  could be  too many                                                                   
fisherman  eligible to  apply  and the  resource is  fragile.                                                                   
The idea  was presented to  the Legislature, who  debated and                                                                   
studied it.   The  Legislature allowed  the exception  to the                                                                   
general  rule.  He  clarified that  there is  no way  at this                                                                   
time to prevent non residents from participating.                                                                               
                                                                                                                                
3:14:00 PM                                                                                                                    
                                                                                                                                
JOHN  HILSINGER,  DIRECTOR,  COMMERCIAL  FISHERIES  DIVISION,                                                                   
DEPARTMENT  OF FISH  AND GAME,  advised  that the  Department                                                                   
supports the  limited base entry  system because  it provides                                                                   
for conservation  of the  resource.  If  it is determined  to                                                                   
return to  the entry system,  the Department has  developed a                                                                   
management plan  that will  work if there  is not  much entry                                                                   
into the fishery.   It is unknown how many  people would come                                                                   
into that fishery  if it was open entry.  He  reiterated that                                                                   
the  Department  is  attempting  to  develop  a  plan,  which                                                                   
provides the necessary conservation of the resource.                                                                            
                                                                                                                                
The Division  will  need to divide  the scallop  beds into  a                                                                   
State  and federal  waters portion  and  manage each  section                                                                   
separately.  The  boats would have to register.   The vessels                                                                   
would loose  flexibility where  they could  fish.   There are                                                                   
many questions  regarding how  the system  would work  in the                                                                   
open entry system.                                                                                                              
                                                                                                                                
Mr.   Hilsinger   noted   that   fishery   is   a   voluntary                                                                   
cooperative.    The  economics   of  the  fishery  is  small,                                                                   
harvesting approximately  ½ million  pounds of scallops.   He                                                                   
noted  that there  is 100%  observer coverage  except in  the                                                                   
Cook Inlet.   He added that most  of the scallop beds  are in                                                                   
federal  waters;  there  are  only  three  that  cross  over.                                                                   
There are  only three places where  a State water  boat could                                                                   
fish.                                                                                                                           
                                                                                                                                
3:18:58 PM                                                                                                                    
                                                                                                                                
Mr. Hilsinger  commented that  if there are regulations  that                                                                   
are  too restrictive,  the  fishery could  become  uneconomic                                                                   
for everyone.   That is not the intent of the  Division.  The                                                                   
intent  is  not  to have  different  regulations  inside  and                                                                   
outside  the   three  mile   limit  because  of   enforcement                                                                   
difficulties.  He  offered to answer additional  questions of                                                                   
the Committee.                                                                                                                  
                                                                                                                                
3:19:39 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze asked  if  the Department  had  initiated                                                                   
the  discussion   regarding  emergency   regulations.     Mr.                                                                   
Hilsinger  replied that  the preference  was to maintain  the                                                                   
vessel base limited entry system.                                                                                               
                                                                                                                                
3:20:38 PM                                                                                                                    
                                                                                                                                
Representative Hawker  asked if the Limited  Entry Commission                                                                   
and  Commercial  Fisheries  Division   support  the  language                                                                   
proposed  in the bill.   Mr.  Homan stated  that the  Limited                                                                   
Entry  Commission  does.    Mr.   Hilsinger  added  that  the                                                                   
Commercial Fisheries  Division, Department of Fish  and Game,                                                                   
also does.                                                                                                                      
                                                                                                                                
Representative  Hawker inquired  about the  term position  of                                                                   
each  agency.     Mr.  Homan  responded  that   the  original                                                                   
intention  for the  agency  was to  make  the vessel  license                                                                   
permanent  for  the  two fisheries.    Mr.  Hilsinger  echoed                                                                   
comments made by Mr. Homan.                                                                                                     
                                                                                                                                
Mr. Homan  addressed consolidation  issues.   He stated  that                                                                   
in 2002, the  Legislature wrote into law [AS  16.42.450] that                                                                   
CFDC  would  establish regulations  to  avoid  consolidation;                                                                   
that has  been accomplished.   The cooperative nature  of the                                                                   
fishery is a result of that mandated legislation.                                                                               
                                                                                                                                
3:23:17 PM                                                                                                                    
                                                                                                                                
Representative   Kelly   interjected    previous   discussion                                                                   
regarding  a way  to  determine  bill management,  which  the                                                                   
public  can understand.   He  did  not intend  to change  his                                                                   
position on the legislation.                                                                                                    
                                                                                                                                
3:26:43 PM                                                                                                                    
                                                                                                                                
Representative  Hawker MOVED  to ADOPT  Amendment 2,  Page 1,                                                                   
Line 3, after "system", inserting  "for the Bering Sea Korean                                                                   
hair  crab and  weathervane scallop  fisheries".   Vice-Chair                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
Representative Hawker  explained that the  amendment provides                                                                   
"title  tightening".     Vice-Chair   Stoltze  WITHDREW   his                                                                   
OBJECTION.    There  being  NO   further  OBJECTION,  it  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
3:27:39 PM                                                                                                                    
                                                                                                                                
Representative Foster MOVED to  REPORT HCS SB 254(FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal notes.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCS SB  254 (FIN) was  reported out of  Committee with  a "do                                                                   
pass"  recommendation   and  with   new  zero  note   by  the                                                                   
Commercial Fisheries  Entry Commission and fiscal  notes #1 &                                                                   
#2  by the  Department of  Commerce,  Community and  Economic                                                                   
Development.                                                                                                                    
                                                                                                                                
                                                                                                                                
AT EASE:       3:29:11 PM                                                                                                     
RECONVENE:     3:33:46 PM                                                                                                     
                                                                                                                                

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