Legislature(2003 - 2004)
03/01/2004 01:07 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HCR 28-STUDIES OF SALMON HARVESTING COOPERATIVES CO-CHAIR DAHLSTROM announced that the first order of business would be HOUSE CONCURRENT RESOLUTION NO. 28, Relating to the socioeconomic impacts of salmon harvesting cooperatives. Number 0130 REPRESENTATIVE PAUL SEATON, Alaska State Legislature, Sponsor by request of the Joint Legislative Salmon Industry Task Force, testified. He explained that HCR 28 was recommended by the Joint Legislative Salmon Industry Task Force and the industry. It involves an analysis of the Chignik fishery, which was established as cooperative fishery in the summer of 2000. He said this is the first time there has ever been a cooperative that was actually allocated a share of a resource. This was a restructuring program that went through the Board of Fisheries process. He said HCR 28 attempts to get a better handle on the social and economic impacts. The economic impacts of the allocation co-op were looked at, but the social impacts and the community impacts have really not been looked at in any detail. He said the Joint Legislative Salmon Industry Task Force, while looking to address some of the public policy issues that are impacted by an allocation cooperative, found that it didn't have the background information on which to do it. He said the purpose of this is to ask the Institute of Social and Economic Research (ISER), a division of the University of Alaska, to look at these questions. REPRESENTATIVE SEATON said the management becomes somewhat controversial as any restructuring does. The proponents talked about the efficiency that this promotes using less boats to harvest the fish. He said working with the Alaska Department of Fish & Game (ADF&G) improves quality because the fish can be taken in a measured way over a much longer period of time only harvesting what can be processed at that point in time to get excellent quality. It decreases the operating costs to those involved in harvesting and is less competitive and more relaxed work. He said the opponents talk about the decreased number of jobs because there are fewer boats, less deckhands employed, and the possibility of decreased dollars flowing through the local economy caused by a decrease in people going to that particular area. He noted that there is non-participation from public resources. Normally, he said fisheries require that a permit holder operates his or her own gear. However, this allows a fisherman who is a member of the cooperative not to be on board harvesting fish. Representative Seaton said there are 100 permits, of which 77 permit holders were allocated. The opponents maintain that it unfairly disadvantages the processing sector, and there are some questions of fairness to independent fishermen, he said. REPRESENTATIVE SEATON said these are social economic questions that are "hard to get to." He said the public policy questions are about non-participation and allocation of a common property resource to a group and the structure that promotes industry versus a structure that spreads wealth among the absolute maximum number of people. Representative Seaton said ISER is being asked to look at the community aspects so the legislature and other groups can address whether this is good restructuring or is something to get away from. He said the fiscal note, from University of Alaska, estimated this project to be $100,000. Representative Seaton explained that the Joint Legislative Salmon Industry Task Force has money left over from its budget and is looking at several different things to do with that money. He said this may be one of the things that it may decide to do, but that decision hasn't been made yet. He brought attention to the last page of a study contained in the bill packet entitled, "Effects of the Chignik Salmon Cooperative: What Permit Holders Say," and he noted that ISER is planning several other studies of Alaska salmon management as part of its "Understanding Alaska" project." Number 0604 REPRESENTATIVE SEATON said it's not as if ISER doesn't know or isn't considering that there is further investigation that needs to be done on restructuring and the cooperative management tool. He said although the $100,000 is listed as the price of the project, it doesn't mean that ISER may not be investigating it anyway. Number 0644 CO-CHAIR DAHLSTROM asked Representative Seaton to comment on the amount of funds left over in the [Joint Legislative Salmon Industry Task Force's] budget. She asked whether it would equal the $100,000 fiscal note. REPRESENTATIVE SEATON said the study was done on the Chignik cooperative fishery and the Joint Legislative Salmon Industry Task Force felt [it was appropriate for the University of Alaska to be involved] because it has already done some of the work. He said there have been some suggestions that it go out to a private bid; however, it seemed logical for the legislature to request the University of Alaska to study this and provide background data. Representative Seaton said there is more than [$100,000] left in the Joint Legislative Salmon Industry Task Force's budget, but there is more than one project, such as studying the Chignik restructuring and looking at a request to investigate several different methods of restructuring the salmon industry. He said the determination of where that money would be spent has not been made, and he couldn't say that the money would be available. He said the University of Alaska doesn't have to do the study if it doesn't have the money. He noted that the initial report indicated that further studies are needed. Number 0831 REPRESENTATIVE LYNN asked if the University of Alaska had been asked to conduct the study and whether it is necessary to use a resolution for the request. REPRESENTATIVE SEATON said the Joint Legislative Salmon Industry Task Force, which was appointed by the legislature, asked the legislature to request the University of Alaska to conduct the study. He indicated that individual requests to can be made to the University of Alaska, but it is not the same as legislation asking for the study to be conducted. Number 0921 REPRESENTATIVE GATTO asked if the $100,000 needed for the study is within the normal range of the usual costs for this kind of a study, and whether a graduate student could do the study. REPRESENTATIVE SEATON replied that a social economic study can be quite involved because the effects of a mismanagement strategy on villages, processors, and employees could be extensive. Noting that ISER had provided the [fiscal note], he said he didn't know the [amount of funding] requested for the original study, which was basically a survey, but this request was something much more than that. REPRESENTATIVE GATTO where the money would go and if it would sidestep the university's administration if it went to a group. REPRESENTATIVE SEATON said the fiscal note is from the University of Alaska and therefore the process would be done through it. He said it's Joint Legislative Salmon Industry Task Force money; not something that the legislature itself controls. Number 1054 REPRESENTATIVE GATTO turned attention to literature contained in the bill packet relating to the Chignik salmon cooperative, and he said he expected that the people in the co-op would like it and people outside of the co-op would not like it. Noting that it appeared that some people outside of the co-op where involved in a lawsuit, he asked how many people are not in the co-op. He commented that it almost sounded like agriculture. REPRESENTATIVE SEATON explained that of the 100 permit holders in Chignik, 77 permit holders joined the cooperative effort, and 23 did not. He said the permit holders who did not join do not get paid for not participating, and are in a competitive open- access fishery. He said an equal share would be 1 percent, so the Board of Fisheries allocated nine-tenths of a percent to each fisherman in the co-op, and if the co-op had over 80 participants, the allocation would be 1 percent. He said there was a little more of a percentage left for those permit holders that didn't join the co-op on an average basis than were in the co-op. REPRESENTATIVE SEATON said the [project] has been conducted that way for two years and seems to be functioning fine for the people that are in the co-op, but the people outside the co-op would like more access. He said the biggest problem is, with an allocation of fish, the co-op has a very slow harvesting rate over time and has a lot of days to fish, whereas competitive fishermen catch fish in a hurry and get fewer days to fish. He said [it has been speculated] that competitive fishermen don't get nearly as much time, but the co-op fishermen are catching a maximum number of fish per day, rather than trying to catch as many fish as possible. He said it is definitely a different structure to the two fisheries. Number 1225 REPRESENTATIVE GUTTENBERG said the Chignik co-op is a pretty unique situation. He said some permits were not in use or were about to be sold and have now come into play because of the co- op. He said some of the permit holders are not from the area, and it must have an economic impact. He asked who will form the questions that for the study. REPRESENTATIVE SEATON said those are the answers [are not known] and it is the purpose for the study. He said the University of Alaska is being asked to look at the other social aspects, such as about all the crewmembers who are not hired under this new format, and at the non-economic effects. He said the question is whether this restructuring makes good sense for the state and can be weighed and balanced. He said the University of Alaska will be generating the questions and is being asked to do the study because people within the university are skilled in doing this kind of research. Number 1354 REPRESENTATIVE GUTTENBERG asked if, regardless of the study, the Joint Legislative Salmon Industry Task Force had developed a criteria of questions it wanted answered. REPRESENTATIVE SEATON said the Joint Legislative Salmon Industry Task Force found it was lacking social and community data, and [information related to] effects on non-participatory fishermen. He said this would cover participatory fishermen, but the effects on the community and the effects on how many jobs are held locally versus non-locally, for crewmembers as well as permit holders, are things that the Joint Legislative Salmon Industry Task Force didn't have information on, and is the whole purpose of this resolution. Number 1413 REPRESENTATIVE WOLF asked if the Chignik fishery cooperative had developed a "branding program." REPRESENTATIVE SEATON replied yes. REPRESENTATIVE WOLF expressed concern regarding language on page 1, lines 3-4, and he asked why the branding program is not looking at it. He said regional branding programs are all over the state, such as in Cook Inlet, and have expanded the efficiency, education, and quality of Alaska salmon. Representative Wolf suggested the University of Alaska would be getting $100,000 to do the same thing the branding program does. REPRESENTATIVE SEATON said the branding programs are basically a marketing program and puts certain standards on fish to ensure it is a certain quality. However, he said it is not a basic restructuring of the industry, and hypothetically, if there was a cooperative in Cook Inlet, half of the boats that are now participating would not. He said other boats would go out everyday, harvest a certain number of fish, and come in, so that the flow of fish is different. He said Cook Inlet would still have a fishery that opens, people would go out and catch as many fish as they could that day, and it would still be quite competitive. REPRESENTATIVE SEATON said the Chignik salmon cooperative is no longer competitive, because ADF&G determines how many fish will be caught each day, and since it is no longer competitive, the participants are seining the fish and taking them live to the processor. He said there are 5 seiners harvesting for 77 permit holders, so it is not necessary to worry about an over harvest. Representative Seaton said the increased efficiency and quality come from the fact that fishermen are not competitively harvesting and are taking the processing capabilities of that particular day. He said it is quite different than a competitive fishery that has a branding program. REPRESENTATIVE WOLF said a third of the fleet in Cook Inlet didn't fish last year because of price restrictions. He said the branding program is already restructuring the entire industry in Cook Inlet, and he agreed that the branding program has developed a higher quality branding, but it also expanded the educational component. He said the marketing and the industry itself are taking that quality to the next level and are able to get a higher brand. Representative Wolf asked why this money needs to be given to the University of Alaska if the industry and the branding program are doing it. Number 1697 REPRESENTATIVE SEATON said the difference is that the Board of Fisheries has restructured the Chignik fishery, and the study is needed to understand the impacts of that restructuring. He said if there was a co-op in Cook Inlet, a few boats would go out each day and catch a limited number of fish. If the fishing was good, the boats wouldn't continue to fish, only the amount of fish that the boat and the processor could handle that day would be fished, he explained. He said there wouldn't be a situation where 200,000 to 300,000 or 700,000 red salmon are caught in a day, which is what the drift fleet can do in Cook Inlet, instead there would be a limited number of boats that went out and it would be changed to so those boats go out every day. He said there is a restructuring that's taken place by the board in the way the fishery is conducted. Representative Seaton said the intention is to understand the impacts to the community when there is a change in the way the fishery is conducted. REPRESENTATIVE WOLF suggested he'd seen a change in Cook Inlet, and he added that the Board of Fisheries has forcibly restructured Cook Inlet over the years and there has been no social economic study. REPRESENTATIVE HEINZE asked how much money [U.S. Senator Ted Stevens] has brought to Alaska for marketing fish and studying the socio-economic impacts. REPRESENTATIVE SEATON said an amount of money [was provided] for salmon marketing but he was not sure how much that is, and it is totally different from this money. Representative Seaton said this study is looking at the restructuring of the industry and at the effects of the restructuring. He said this study is not looking at marketing the fish or at the value of the fish, instead it is looking at the social impacts of the restructuring of the industry, which made it so a few fishermen could harvest many fishermen's fish. He said it is quite different than marketing. Number 1857 REPRESENTATIVE HEINZE asked if the $100,000 for the study will be taken from [federal money]. REPRESENTATIVE SEATON replied that the money from the Joint Legislative Salmon Industry Task Force has nothing to do with [federal] money. He said some money allocated to the Joint Legislative Salmon Industry Task Force is left in that pool for operation of the task force and may be designated for conducting the study. Number 1906 REPRESENTATIVE STEPOVICH said he had no problem with the money, but he did have a problem with the concept. He said the words "fishermen" and "independent" seem to be the same, and "any time you strike the word cooperative" it makes him wonder if that is a part of the free market system. Representative Stepovich asked if people who are a part of the cooperative that aren't fishing or don't catch fish can still make money. REPRESENTATIVE SEATON said yes; one of the public policy questions that the Joint Legislative Salmon Industry Task Force was trying to address was the non-participatory utilization by fishermen that have a permit and don't participate in the fishery and receive the benefit from that. He said that is one of the major questions being looked at, and one of the problems in addressing this whole issue was that there wasn't a good handle on the real and whole effect of this restructuring that the Board of Fisheries was legally able to adopt. REPRESENTATIVE STEPOVICH asked if the number of jobs and money in the community will decrease because of the co-op. He noted that free markets are based on self-determination, individualism, and entrepreneurship. He asked if Representative Seaton felt that the cooperatives are the only way to efficiently harvest the fish and why cooperatives weren't used before. Number 2025 REPRESENTATIVE SEATON said there are cooperatives across Alaska, but the difference in this cooperative, established by the Board of Fisheries, is that it receives an allocation. He said many cooperatives occur that fishermen get together and participate in, but are done in a competitive fishery in which fishermen are pooling their resources and efforts. He said this is the first cooperative that has been allocated a percentage of the harvest of an area. Representative Seaton said this resolution does not support or oppose the cooperatives; rather it is an attempt to understand the effect of the cooperative. He said [the purpose of the study] is to understand the effects on the communities and the people of the region of the establishment of a cooperative, which has been challenged in court and found to be a constitutional use of [the Board of Fisheries] powers to restructure the fisheries in this way. Representative Seaton clarified that his bringing forward this resolution is not supporting or expanding cooperatives. Number 2107 CO-CHAIR MASEK asked Representative Seaton what the cost to the state was for forming the Joint Legislative Salmon Industry Task Force. REPRESENTATIVE SEATON said the Joint Legislative Salmon Industry Task Force was formed the year before he came to the legislature. He said he believed the cost was $650,000, which was designated federal money, but he couldn't say for sure. Representative Seaton said he thought there was about $375,000 left from the initial phase, which was the amount the legislature authorized the Joint Legislative Salmon Industry Task Force to continue with last year. CO-CHAIR MASEK asked why the Joint Legislative Salmon Industry Task Force doesn't do the study with the remaining funds. REPRESENTATIVE SEATON said the Joint Legislative Salmon Industry Task Force is trying to go forward with the study, which is looking at the Board of Fisheries process, so the decision makers can weigh these subjects. He said there is no request for funding in this resolution, it simply asks for a study to be done. He explained that the university has identified that this study may cost $100,000, and he didn't know if the Joint Legislative Salmon Industry Task Force was going to dedicate some of its remaining funds to this study. CO-CHAIR MASEK said she thought it was important to know [where the funding for this study would come from] before the committee takes any action with this resolution. She noted that the Joint Legislative Salmon Industry Task Force already has the [funding needed for this study]. She said the [fiscal note] for the resolution specifies that the money would come out of the general fund. REPRESENTATIVE SEATON said the [fiscal note] is from the University of Alaska, which has indicated it would like $100,000 from the general fund to conduct this study. CO-CHAIR MASEK suggested that Representative Seaton clarify that the [the resolution] is requesting that the money come from the general fund, "rather than having some hopes" that the money would come out of the Joint Legislative Salmon Industry Task Force funds. REPRESENTATIVE SEATON replied that this resolution does not request any money to be appropriated, rather it asks the university to conduct this study. He noted that the university had indicated during the previous study that is planning to perform additional studies to understand the full effects of restructuring in Alaska. He reiterated that this resolution is a request to do the study, but does not put an appropriation forward for the study. Number 2324 CO-CHAIR MASEK said the study is dated for November 1, 2004, and she asked what will happen to the study once it has been produced. She said she didn't want to see $100,000 spent on a study if it was going to sit on a shelf and collect dust. Number 2345 REPRESENTATIVE SEATON explained that the study will form the basis for the Board of Fisheries and for the legislature to weigh the positives and negatives of this kind of restructuring. He said the restructuring is in the Board of Fisheries, which is legally allowed to do these things, and has done it in the past. He noted it has been approved by the courts. Representative Seaton said the legislature may look at this and say the social- economic impacts are great and take the authority away from the Board of Fisheries, but right now [the legislature] does not have the information to say what those impacts are. He said some people come forward and say it's great, and others come forward and say it's bad, but there isn't really any social data to show what those impacts are. CO-CHAIR MASEK referred to the last paragraph of the sponsor statement, which read, "Yet, this isolated coastal community and the salmon cooperative have become the center of a statewide controversy." She asked for more information regarding the statement. REPRESENTATIVE SEATON explained that the House Special Committee on Fisheries held an overview of the Chignik cooperative, which has been heard twice by the Board of Fisheries. He said the controversy lies around those people in the co-op and those that decided not to join the co-op; the amount of time that each group gets to fish; and also the public policy issues of whether someone that is not physically there operating gear should be able to benefit from the fishery by putting his or her allocation into the co-op and having that fish harvested. He said Chignik is very unique because there are 100 permits and basically all of them were fished every year, which is quite different than most other areas, and it's also a very controlled situation because the fish come in, are counted, and the [amount to be caught is designated]. Representative Seaton said that kind of thing can't be done in most areas, such as in Cook Inlet. He said the applicability of co-ops to other regions of the state is not known yet, and indicated the impacts of this style of management, even in a place as confined and controlled as Chignik, is what needs to be figured out. Number 2508 REPRESENTATIVE HEINZE said the Joint Legislative Salmon Industry Task Force puts a lot of thought and work into any request it puts forward. She indicated she has a lot of trust in the individuals that sit on the Joint Legislative Salmon Industry Task Force [board] and applauds their work. Representative Heinze asked about the sunset date. REPRESENTATIVE SEATON replied that the sunset date is at the end of this session. Number 2537 REPRESENTATIVE HEINZE referred to Co-Chair Masek's point of ensuring that the study is utilized once it is completed. Number 2550 CO-CHAIR DAHLSTROM said her original intent was to move the resolution today, but the fiscal note has changed since she first heard the resolution, and that there are a lot of questions and some apprehensions from committee members. Co- Chair Dahlstrom said she would like to hold the bill and have Representative Seaton meet with committee members to "hash out this stuff" to get a better understanding, and to get the work done in committee rather than on the floor. REPRESENTATIVE SEATON said he appreciates the committee's time. He noted that because of the fiscal note, the resolution will receive a House Finance Committee referral to look at the fiscal note and the date the [study is scheduled to begin on], which is November 1. He said if money isn't allocated for this, the Joint Legislative Salmon Industry Task Force will meet to figure out where the money is going to be designated from. He said if there isn't money designated for [the study], the date will probably be moved back in the House Finance Committee, so the university can conduct the study on it's own schedule. CO-CHAIR DAHLSTROM asked Representative Seaton to touch base with her in the next few days. She said the resolution would be rescheduled back in committee once Representative Seaton addressed the items that had been discussed. REPRESENTATIVE SEATON said he thought the fiscal note is something that's going to require a decision by the Joint Legislative Salmon Industry Task Force, and he doesn't control that process. He asked which questions the committee would like him to address. CO-CHAIR DAHLSTROM said she would provide him with a couple of short questions. REPRESENTATIVE SEATON said that would be great. [HCR 28 was held over.]
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