Legislature(2001 - 2002)

02/04/2002 03:39 PM FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 288-LIMITED ENTRY BUY-BACK PROGRAM                                                                                         
Number 0325                                                                                                                     
CO-CHAIR WILSON  said that the  next matter before  the committee                                                               
was HOUSE BILL NO. 288,  "An Act relating to commercial fisheries                                                               
limited  entry  permit  buy-back  programs."    She  deferred  to                                                               
Representative Scalzi, the sponsor of the bill.                                                                                 
REPRESENTATIVE SCALZI said  the "buy-back bill" is  a simple one.                                                               
He said  it takes what is  currently in statute -  allowing for a                                                               
buy-back program - and simplifies  it by having less requirements                                                               
to  impose a  buy-back.   Under  current statute,  if a  buy-back                                                               
program  is implemented,  the industry  must buy  back the  boat,                                                               
gear, permit,  and other  miscellaneous equipment.   He  told the                                                               
committee that  it would be  cumbersome to  evaluate "everybody's                                                               
whole  operation,"  and  there  would  be  funding  appropriation                                                               
problems as a result of that evaluation.                                                                                        
Number 0463                                                                                                                     
REPRESENTATIVE SCALZI  said there has  not been a  buy-back since                                                               
the implementation  of commercial  limited entry.   He  said some                                                               
attempts  may have  been made,  but he  was not  sure.   Allowing                                                               
fishermen to  buy only the  permits would streamline  the process                                                               
and make  the buy-back, or  buy-down, provisions  more palatable.                                                               
He  said there  is  also  the removal  of  language stating  that                                                               
"there would be a collection of fees, up to 7-percent."                                                                         
REPRESENTATIVE  SCALZI  said  that the  7-percent  provision  was                                                               
illegal as written.  He said  there would still be fees collected                                                               
in a  buy-back program, and  those fees would be  disseminated by                                                               
the legislature.   He  said that  the way  the fee  provision was                                                               
written, there was an assumption  that they were dedicated funds,                                                               
which are  illegal.  The  legislature would have to  collect fees                                                               
into  the general  fund and  reappropriate them  to administer  a                                                               
buy-back program.                                                                                                               
Number 0639                                                                                                                     
DON  JOHNSON   (ph),  Soldotna,  Alaska,  testified   before  the                                                               
committee  that he  had a  question about  the 7-percent  funding                                                               
mechanism.   He said it  sounded as if Representative  Scalzi was                                                               
talking about another  bill to establish the  7-percent as coming                                                               
from the  industry.  Mr. Johnson  asked, "Why not just  put it in                                                               
this bill?"                                                                                                                     
MR. JOHNSON  said he also  had a  question about the  time limit.                                                               
He said  originally there was  a ten-year  time limit for  a buy-                                                               
back program to be completed.   He said he would rather see about                                                               
a five-year  limit, and asked  if the  time limit had  changed in                                                               
the new  bill.  He  said HB 288 leaves  the perimeters of  when a                                                               
buy-back  is  established  "open-ended  to  what  the  commission                                                               
wants."  He said as it stands,  if the commission did not want to                                                               
perform a  buy-back, it would not  have to.  Mr.  Johnson said he                                                               
would like  to see  the word  "shall" replace  the word  "may" on                                                               
line 6 of the bill.                                                                                                             
MR.  JOHNSON  then  voiced  some of  his  concerns  about  public                                                               
protections.   He  said  the original  buy-back  program was  not                                                               
concerned  about  the  way  the  limited  entry  system  affected                                                               
"common users" or subsistence users.   He called for wording that                                                               
would require the commission to  address whether or not a limited                                                               
entry area was affecting the  public.  Mr. Johnson suggested that                                                               
there be a clause saying  that "the commission shall maintain the                                                               
number of permits to impinge as  little as possible on common use                                                               
of fisheries."   He said that this wording comes  from the Alaska                                                               
Supreme Court's  intent on  "a couple  of major  cases" including                                                               
McDowell v. State and Owsichek v. State.                                                                                    
MR. JOHNSON  said that the  Alaska Supreme Court's  intent behind                                                               
limited entry was to not impact  common users by entering into an                                                               
"optimum  number  procedure"  that  would reduce  the  number  of                                                               
permits in  an area.  He  said that when a  limited entry fishery                                                               
overwhelms  a public  fishery, it  "brings  on the  wrath of  the                                                               
public, the  federal government,  and everybody  else."   He said                                                               
the state  has not  been listening  to the  public, and  that the                                                               
public has  gone beyond the  state to the federal  government, as                                                               
in the  case of federal  management of subsistence.   Mr. Johnson                                                               
briefly mentioned the issue of taxes and dedicated revenues.                                                                    
Number 1066                                                                                                                     
REPRESENTATIVE  SCALZI reported  that  the reason  the bill  says                                                               
"may" on line 6 was so  that the industry would be "onboard" with                                                               
a  buy-back.   He  said  that  there  is  no "dedication  of  the                                                               
allocation  of  the  fish  to  pay that  back."    If  the  entry                                                               
commission mandated a buy-back in  every fishery, the state would                                                               
be  forced to  promote buy-back  programs where  it might  not be                                                               
economically   feasible.     Representative  Scalzi   said  "that                                                               
flexibility must be in there."                                                                                                  
Number 1199                                                                                                                     
MARY   McDOWELL,   Commissioner,   Commercial   Fisheries   Entry                                                               
Commission, Alaska  Department of Fish and  Game testified before                                                               
the  committee.   She  said  that  the  statute talks  about  "an                                                               
optimum  number"   as  the  provision  that   keeps  the  program                                                               
constitutional.    She  said  that there  is  a  balance  between                                                               
limited entry  and the risk  of exclusivity.   She said  that the                                                               
optimum  number  provision  gives  a  mechanism  with  which  the                                                               
commission  can make  an evaluation  of whether  there should  be                                                               
more or  fewer permits in  a fishery to allow  the aforementioned                                                               
balance to be struck.                                                                                                           
MS. McDOWELL said if an  optimum-number analysis is performed and                                                               
the determination  is that the  optimum number is lower  than the                                                               
current  number  of  permits,  the  commission  is  obligated  to                                                               
initiate  a  state-run  buy-back  program.    She  said  that  is                                                               
problematic because  many in the fishing  industry are interested                                                               
in exploring  federal and self-funded buy-back  programs, as well                                                               
as state-funded buy-backs.  She  said they want the commission to                                                               
perform  the optimum-number  determination,  but  would prefer  a                                                               
choice in  the source of  the funding for  a buy-back.   She said                                                               
that was the "problem with the may-shall issue."                                                                                
MS. McDOWELL said  that the Johns [v.  Commercial Fisheries Entry                                                             
Comm'n]  case  points  out  that  a  fishery  cannot  become  too                                                             
exclusive, and if  it does, the state is required  to put permits                                                               
back into it.   She said fishermen  want to know that  if they do                                                               
go into  a buy-back program,  there will not be  court challenges                                                               
saying the  fishery is too  exclusive.  Under that  scenario, the                                                               
state is  obligated to put  permits back  into the fishery.   She                                                               
said  that  people  want  there  to be  the  opportunity  for  an                                                               
optimum-number  determination before  there is  a decision  about                                                               
instituting a buy-back.                                                                                                         
Number 1400                                                                                                                     
MS. McDOWELL said she understood that  if there is a state funded                                                               
buy-back,  the  commission  would  work with  the  industry,  and                                                               
develop a program.  It would  then be brought to the legislature,                                                               
allowing the commission  to "custom-make a buy-back"  for a given                                                               
fishery.   She said at  that point,  an assessment could  be made                                                               
about  whether   members  of  the   industry  wanted   to  assess                                                               
themselves,  seek  an  appropriation  from  the  legislature  and                                                               
assess themselves to pay it  back, have a self-funded program, or                                                               
use some  other option.   She said  any kind of  assessment would                                                               
involve coming back to the  legislature with specific provisions.                                                               
She said  it eliminates the  dedicated-fund problem.   She added,                                                               
"This leaves the funding mechanism open."                                                                                       
Number 1541                                                                                                                     
REPRESENTATIVE SCALZI said  he believed that there  was still the                                                               
option of buying back both gear and permits with the new bill.                                                                  
MS. McDOWELL  said she  believed that the  bill would  remove the                                                               
obligation of buying vessel and  gear, but would allow the "whole                                                               
package" buy-back option if needed.   She said she was under that                                                               
impression,  but  it  would  be  best  to  ask  an  attorney  for                                                               
REPRESENTATIVE KERTTULA agreed  that it would be best  to have an                                                               
attorney take a closer look at it.                                                                                              
Number 1695                                                                                                                     
JERRY McCUNE, representing the United  Fishermen of Alaska (UFA),                                                               
said that UFA supports the legislation.   He said he thought that                                                               
if  the commission  could  design a  buy-back,  it could  include                                                               
vessel  and gear.   He  said "we  left out  the percentage  also,                                                               
because every fishery is different,"  giving the example of small                                                               
setnet fisheries  that might only  require "4 percent".   He said                                                               
the bill  offers options and  flexibility for the  differences in                                                               
fisheries around the state.                                                                                                     
Number 1820                                                                                                                     
BOB THORSTENSON,  President, UFA testified before  the committee.                                                               
He said  this was a  very important bill  for both the  state and                                                               
the commercial  fishing industry.   He  said it  changes language                                                               
that  would  have  caused  hesitation   because  of  the  "shall"                                                               
wording, it  saves on administrative  costs in  determining value                                                               
in the buying back of  miscellaneous gear, and it gives fishermen                                                               
the option of exercising  self-determination in their businesses.                                                               
Mr. Thorstenson  made note of  the tight fiscal situation  in the                                                               
state,  and said  that  this bill  is one  way  to help  Alaska's                                                               
fishermen help themselves.                                                                                                      
CO-CHAIR WILSON said that she  appreciates the way that fishermen                                                               
are trying  to help themselves  instead of "asking for  money" in                                                               
the current  fiscal situation.   She asked  for a motion  to move                                                               
the bill.                                                                                                                       
Number 1963                                                                                                                     
REPRESENTATIVE DYSON moved to report HB 288 out of committee                                                                    
with individual recommendations and zero fiscal notes.                                                                          
REPRESENTATIVE KERTTULA said she was not objecting, but the                                                                     
wording on buy-backs should be looked at more closely.                                                                          
There being no objection, HB 288 was moved out of the House                                                                     
Special Committee on Fisheries.                                                                                                 

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