Legislature(2017 - 2018)GRUENBERG 120
03/08/2018 10:00 AM FISHERIES
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|Confirmation Hearing(s):|| Fishermen's Fund Advisory and Appeals Council (ffaac)|| Commercial Fisheries Entry Commission (cfec)|
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 354-DIVE FISHERY ASSESSMENTS 10:30:00 AM CHAIR STUTES announced that the next order of business would be HOUSE BILL NO. 354, "An Act relating to dive fishery management assessment procedures." 10:30:42 AM REPRESENTATIVE DAN ORTIZ, Alaska State Legislature, read from a prepared sponsor statement, which read as follows [original punctuation provided]: This bill is necessary for the Southeast Alaska Regional Dive Fisheries Association, the only dive fishery association in the state regulated by AS 43.76.150-210, to amend the process undertaken to modify the tax on the geoduck, sea cucumber and sea urchin fisheries it represents. Each fishery can tax itself at a different rate. At present, a majority of permit holders are required to initiate the petition to change an assessment tax and then vote on the change. Many of the permits are nontransferable and less than half of the CFEC permit holders in these fisheries are actively participating in said fisheries. Due to the low involvement of permit holders, a majority participation of permit holders is unrealistic. The proposed legislation allows for a change in assessment tax to be initiated by a 3/4 vote from the Board of Directors and the vote to accept the change pass with a majority vote of permit holders participating in the vote. REPRESENTATIVE ORTIZ said the bill would allow the Southeast Alaska Regional Dive Fisheries Association to take their votes in a more workable manner. He asked his staff to elaborate on the bill. 10:33:07 AM LIZ HARPOLD, Staff, Representative Dan Ortiz, Alaska State Legislature, stated the Southeast Alaska Regional Dive Fisheries Association (SARDFA) was the only regional dive fishery association affected by the bill. She said that SARDFA was a private non-profit economic development organization established in the late 1990s, representing the harvest divers, processors, and communities of Southeast Alaska, south of Yakutat. There were approximately 380 permit holders participating in the dive fisheries, she said. The SARDFA organization oversees the geoduck, sea cucumber and sea urchin fisheries and has a self- assessed tax. She related that the association works with the Alaska Department of Fish & Game (ADF&G) to develop its annual operating plan, which determines how the dive assessment collected by the Department of Revenue would be spent. An assessment also goes to the ADF&G to manage the fishery, she noted. 10:34:41 AM MS. HARPOLD reviewed the voting process, such that the assessment would be initiated by 25 percent of the permit holders who voted in the previous election. This process worked well in the 1990s, because the dive fisheries had switched to a limited-entry fishery and most of the permit holders were actively fishing. Since permit holders must actively be engaged in the fishery to vote, many of the permit holders with non- transferable permits cannot vote, since the individuals no longer dive in the fisheries. MS. HARPOLD said that the dive permit holders in Southeast Alaska belong to SARDFA. The bill would change the initiation process for the assessment tax by allowing the SARDFA Board of Directors to initiate a change with 75 percent support of the board. The assessment change would need a majority vote by permit holders, as outlined in the bill. The election process would not change, she said. 10:36:24 AM CHAIR STUTES asked whether the vote is determined by 75 percent of the received ballots. MS. HARPOLD responded that at least 25 percent of the permit holders who participated in the previous election must initiate the change. It would require a majority vote of permit holders to pass an assessment change. She explained the response rate has declined since many diver permit holders no longer participate in the fisheries, with less than half of the permit holders sending in their ballots. 10:37:30 AM REPRESENTATIVE ORTIZ added that in the 1990s there was a much higher participation rate in voting on assessments. Currently, the overall industry activity by permit holders has shown less activity. As these permit holders cease fishing, they cannot sell the permits, but choose not to participate in the vote. Thus, it has been harder and harder to get to that level of ratio of participation in an actual vote. 10:38:24 AM REPRESENTATIVE NEUMAN asked whether there were any new applications for permits and to describe the process to apply for a new permit. REPRESENTATIVE ORTIZ deferred to the Commercial Fisheries Entry Commission (CFEC) to respond. 10:38:50 AM VANCE "FATE" PUTMAN, Chairman; Commissioner designee, Commercial Fisheries Entry Commission (CFEC), responded that this question "gets to the heart" of the reason for so many legal cases [pertaining to limited-entry fishing permits] in the Alaska Supreme Court. He explained that when a fishery initially becomes limited, that the CFEC issues permits to those fishermen who participate in the fishery and have a history of participation in the fishery. Applicants who are dependent upon that fishery strictly for their economic survival are eligible to obtain a transferable permit; however, applicants who have other sources of income or do other work, are eligible for a non-transferable permit. 10:39:50 AM MR. PUTMAN acknowledged these limited-entry permits represent very important decisions to the fishermen, their future, and their families. Non-transferable permits are often challenged in the court system. He offered his belief that in this fishery, many dive fishermen who initially applied for a limited-entry permit received a non-transferable permit because they had other sources of income. 10:40:12 AM REPRESENTATIVE NEUMAN said he was grappling over the reason for the problem, which seemed to be a lack of new applicants. He calculated that about 95 of 380, or 25 percent of permit holders vote in an election. It takes about half to pass, or about 48 permit holders; however, not enough permit holders were voting because they no longer participate in the dive fishery. He asked again if that is the reason for the non-participation. In response to Chair Stutes, he asked why new dive fishermen were not applying for permits when participants aged out of the fishery. MR. PUTMAN agreed one of the issues with non-transferable permits was that permit holders aged out, so over time the number of permits diminish in a fishery. He explained that getting new permit holders into the system was not possible because only the permits that are transferable can be moved to another fisherman. 10:41:39 AM CHAIR STUTES related her understanding that once the non- transferable permit was no longer being fished, "it's a goner" and there was no way for a new entrant to apply. MR. PUTMAN agreed. 10:42:02 AM REPRESENTATIVE NEUMAN asked whether applicants could currently apply for a transferable permit. MR. PUTMAN answered that was correct. 10:42:10 AM REPRESENTATIVE NEUMAN said that it seemed like the evolution would be someone interested in the dive fishery would try to get a temporary permit. He wondered if people were interested in qualifying for temporary permits. He further asked how much interest there was for the dive fisheries. CHAIR STUTES responded that she believed that was the issue HB 354 was trying to address. MR. PUTMAN agreed. He related his understanding, in speaking with staff, was that the problem is that many permit holders who were no longer participating in the fishery still maintained their permits each year by paying the licensing fee each year, but these permit holders may not participate in the vote. He related his understanding that with a threshold of fifty percent plus one to change the tax structure becomes a hurdle that cannot be overcome without the changes in the bill. 10:43:19 AM CHAIR STUTES opened public testimony on HB 354. 10:43:45 AM PHIL DOHERTY, Executive Director, stated that SARDFA approached Representative Ortiz to change an old statute with respect to the assessment tax. The dive association was formed in 1997 to provided management funds for the fishery because ADF&G did not have adequate funds to research and manage the three species the dive fisheries harvest, which were sea urchins, geoduck clams, and sea cucumbers. The divers in Alaska recognized the value of the resources, in part, based on fisheries in British Columbia, Washington state, and California. These divers asked [former Representative] Bill Williams to assist in forming SARDFA, including establishing a mandatory assessment tax. The divers could tax themselves at a one, three, five, or seven percent assessment tax, he said. Currently the sea cucumber fishery, which is the focus of this bill, has been taxing itself at five percent. The geoduck fishery taxes itself at seven percent, and the urchin fishery taxes itself at five percent of ex-vessel value, meaning the fisherman comes to the dock and five percent of the fish ticket would be removed immediately, he said. He compared that collection process like one for state tax collections. In addition, these fishermen also pay a three percent state fisheries tax, he stated. 10:45:58 AM MR. DOHERTY explained that the assessment funds goes into the association's fund and SARDFA, in conjunction with the ADF&G develops the annual operating plan. The ADF&G provides its plans for assessment, management, and research needs to SARDFA, which are discussed, if necessary, and the association provides the department with the funds it needs to conduct the fisheries, he said. MR. DOHERTY further explained the hurdle has arisen due to the number of non-transferable permits and even some of the transferable permits. For example, the sea cucumber fishery has 156 transferable permits and 233 non-transferable permits totaling 389 total permits. Two years ago, SARDFA had an election to change the assessment tax in the sea cucumber fishery from five percent to one percent but the association could not obtain half of the 389 permit holders to vote. Even though the active permit holders and association members wanted to get it changed, it could not do so, he advised. 10:47:43 AM MR. DOHERTY stated that the association requested HB 354, which would change the voting process to allow a majority vote of the ballots received to [count]. He characterized that as the thrust of this bill and it does not affect any other fishery or the state. The SARDFA has committed to pay ADF&G the funding it needs to manage and research the fisheries. The association also uses its assessment to fund paralytic shellfish poisoning (PSP) and water quality testing via the Department of Environmental Conservation (DEC). The permit holders understand that ADF&G must provide research and management to maintain the fisheries. He stated that the prices in the sea cucumber fishery are up and the association does not have large overhead costs for sea cucumbers. He briefly described some of the programs. He indicated that lowering the tax from five percent to one percent in the fishery, a diver would result in $1,200 to $1,500 more for the ex-vessel value of the sea cucumbers harvested. This bill would streamline the process. The SARDFA's commitment to the state would always be there, he said. 10:50:15 AM REPRESENTATIVE KREISS-TOMKINS thanked Mr. Doherty for his testimony. He commented on the unique status the dive fisheries have in Alaska. Referring to AS 16.42.40, Regional Dive Development Associations lays out the organization, which is what SARDFA would be, he said. He referred to page 3, lines 13- 14, of HB 354, which read," ... board members of the qualified regional dive fishery development association ..." He said he was curious whether multiple dive fishery associations could form for the same dive fishery. He said he asked because fishermen can debate among themselves and hypothetically a rival association could arise and submit petitions to the commissioner that could be different than what SARDFA might submit. MR. DOHERTY responded that he had not previously considered whether another dive association could compete on the same fishery. He did not think it would be allowed to happen. The only other dive fishery in Alaska could be for a small sea cucumber fishery in Kodiak. He has spoken to the Kodiak fishermen and they do not see the need for an association at this point. In Southeast Alaska, he did not envision the scenario happening. 10:53:02 AM REPRESENTATIVE KREISS-TOMKINS agreed that there is no present debate on this issue, but he wanted to know if technically or legally that could happen in the future. He said that he did not see any reason it could not happen after reviewing the language in AS 16.42.40 since the three criteria in statute would not be that difficult to meet. He wondered if anything would prevent that from happening. 10:53:57 AM CHAIR STUTES asked for further clarification as she was unsure of the concern. REPRESENTATIVE KREISS-TOMKINS asked whether there was anything that prevents a group of dissatisfied fishermen from forming a non-profit corporation and submitting a petition. 10:54:11 AM CHAIR STUTES said she still was unsure why that would be a problem. REPRESENTATIVE KREISS-TOMKINS answered that one group might have a different opinion on the preferred enhancement tax. Another group could have a different opinion and that group could submit a petition for a different tax amount. He expressed an interest in learning more about the regional dive fisheries associations and whether the statutes only allow one to exist. 10:54:44 AM CHAIR STUTES said she was trying to apply it to this specific bill. REPRESENTATIVE KREISS-TOMKINS referred to page 3, lines 13-14 of HB 354. CHAIR STUTES acknowledged the cite but pointed out that the bill does not identify a specific dive association such as SARDFA. 10:55:18 AM REPRESENTATIVE KREISS-TOMKINS stated that his question related to HB 354. He specifically asked what is "the" qualified regional dive fisheries association as opposed to "a" qualified regional dive fisheries association. CHAIR STUTES offered that it might be more direct. She asked whether the sponsor or CFEC could respond. She did not think there was any issue. MS. HARPOLD said she could not address the issue of if another regional dive fishery could form but the rules would apply to any regional dive fishery that formed. She related her understanding that ADF&G would determine an assessment. 10:57:01 AM MR. DOHERTY said he has not heard of anyone in Southeast Alaska contemplating it. He explained that SARDFA's Board of Directors has nine members who represent cities, municipalities, and areas in Southeast Alaska, out-of-state divers, and a processor. He characterized it as being representative plus the organization has three committees for sea cucumbers, geoducks, and red sea urchins. He said that about 20 divers participate in the sea cucumber committee, which he believed was a robust committee system. He related that the meetings are public meetings, and discussions have been robust, but no one has ever mentioned breaking away to form a second association. 10:58:44 AM REPRESENTATIVE KREISS-TOMKINS said he hoped it was permissible to ask questions to explore the overall structure. He was interested whether anything could prevent a second association from forming regardless of how highly unlikely it was that it would happen. He related his understanding that it could happen, that it was highly unlikely to happen, but he still wanted to be certain he understood the statute. 10:59:32 AM CHAIR STUTES asked whether an attorney from Legislative Legal and Research Services was online. REPRESENTATIVE KREISS-TOMKINS said he did not think this merited further pursuit. CHAIR STUTES wanted to be certain Representative Kreiss-Tomkins was satisfied. She understood his intent. REPRESENTATIVE KREISS-TOMKINS said, "It's a great bill." He expressed an interest in the language choice between "a" or "the" but noted in practical terms there probably was not much difference. 11:00:16 AM REPRESENTATIVE NEUMAN understood the concern expressed. He highlighted his goal when reviewing any bill was to try to make it better. He appreciated Mr. Doherty's testimony. He related his understanding that the intent was to change the [assessment] from five percent to one percent for sea cucumbers but not for geoduck or sea urchins. MR. DOHERTY answered that if HB 354 passed the SARDFA would vote on the assessment for the sea cucumber fishery. He did not anticipate the association would change the assessment tax on the geoduck fishery. He explained that the geoduck fishery was very expensive to manage. He related that due to some issues in China, which is the destination market for geoducks, the fisheries must also test for arsenic levels in geoducks. He estimated that to pay for the program, including the PSP, water quality testing, and arsenic level testing, that the divers pay between $150,000 - $200,000 per year for the program in addition to the $50,000 that the association pays to the ADF&G. He said the geoduck fishery barely manages to exist. He estimated that the sea cucumber fishermen have enough surplus funds that their assessment tax could be reduced, between one to three percent; probably to one percent. 11:02:34 AM REPRESENTATIVE NEUMAN said that he was assuming that voting lines do not cross between species, such that divers holding permits for sea cucumbers do not vote for [tax assessments for those holding permits geoducks or sea urchins]. He wondered if part of the problem was due to reduced members or if permit holders who were fishing for geoducks could vote for sea urchin tax assessments. MR. DOHERTY responded that if the association was considering a change for the sea cucumber assessment tax, that only members that could vote are the sea cucumber permit holders. He reiterated that there were so many non-transferable permit holders given out at the initial start of the sea cucumber fishery, since it was the easiest fishery to obtain landings, that it was difficult to get a majority vote. He recalled that two years ago the association received 89 positive votes to lower the tax. The remaining divers renewed their permits but no longer dive in the fishery. He emphasized the intent is to modernize [the statutes] to make it easier for the divers to change their assessment. He pointed out that the dive fisheries are very physically-demanding fisheries with the diver being the permit holder. The permit holder must be the person doing the diving, he said. As the divers get older, they tend to stop diving but maintain their permits for a small fee. 11:05:00 AM REPRESENTATIVE NEUMAN asked whether it was possible to make the non-transferrable permits transferrable to get them back in the market. CHAIR STUTES suggested that would be a question for the CFEC. 11:05:24 AM CHAIR STUTES, after first determining no one wished to testify, closed public testimony on HB 354. 11:05:44 AM REPRESENTATIVE KREISS-TOMKINS said it sounded like a great bill. 11:06:22 AM SCOTT KELLEY, Director, Division of Commercial Fisheries, Alaska Department of Fish & Game (ADF&G), introduced himself. 11:06:35 AM REPRESENTATIVE NEUMAN stated that the fisheries are statutorily required to cover any costs to administer their program. He asked if the tax assessment was reduced from five percent to one percent whether the funds would cover the program. MR. KELLEY answered yes. He explained that the division works closely with the SARDFA and the association and divers are aware if the ADF&G does not have funds to assess to manage the program, the divers cannot fish. He said the [association and permit holders] are very motivated to ensure that the ADF&G continues to receive its funding. 11:07:20 AM CHAIR STUTES stated that the fiscal note for HB 354 was zero. 11:07:37 AM REPRESENTATIVE TARR REPRESENTATIVE moved to report HB 354 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 354 was reported from the House Special Committee on Fisheries.