Legislature(1995 - 1996)
04/23/1996 03:10 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 406 - WASTE & USE OF SALMON; HATCHERIES Number 050 CO-CHAIRMAN WILLIAMS announced the first order of business would be HB 406, "An Act relating to waste and use of salmon and parts of salmon; relating to permits for and operation of a salmon hatchery; and providing for an effective date," sponsored by Co-Chairman Williams. He said the committee members have a proposed committee substitute dated April 18, 1996. He said he would entertain a motion to adopt the committee substitute for the purpose of discussion. Number 083 CO-CHAIRMAN JOE GREEN moved to adopt CSHB 406, Version C. CO-CHAIRMAN WILLIAMS asked if there was an objection. Hearing none, CSHB 406(RES), Version C, was before the committee. Number 167 CHERYL SUTTON, Legislative Assistant to Representative Bill Williams, Alaska State Legislature, came before the committee to address the CSHB 406(RES). She noted the bill has been subtitled "The Heavy Roe Bill." Ms. Sutton explained the bill was before the legislature during the Hickel Administration, but didn't make it to the floor of the Senate. She read excerpts from the sponsor statement: "House Bill 406 will allow some measure of relief and provide for utilization of roe from pink and chum salmon that might otherwise reap no economic return for those who have paid the costs of rearing the fish. "Hatchery pinks and chums along with other hatchery fish are paid for by commercial fishermen through either a 2 percent or 3 percent tax on the gross value of a fisherman's harvest. These fish are made available to the common property fishery for harvest opportunity. "The pink and chum salmon must have originated from a hatchery; be harvested in a designated area; have matured to the point that their flesh cannot be marketed profitably and cannot be put to any other lawful use at the hatchery site or be given away. "House Bill 406 will assist fishermen and hatchery operators as they move through this difficult transition to the future. This bill should not be viewed any differently than other incentives and assistance rendered by the legislature to struggling industries." MS. SUTTON said she would like to review the history of HB 448, which was transmitted to the legislature by Governor Hickel. She then read from Governor Hickel's transition statement: "It is anticipated that persons who would be authorized under such a permit are commercial fishermen who are participating in a designated terminal fishery and, perhaps, hatchery operators or fish processors." MS. SUTTON explained this follows along the line of the committee substitute in that there are fish unfit for human consumption. They're hatchery originated fish. Ms. Sutton continued to read from the transition statement: "Because of present market conditions, it is important for the fishing industry and hatchery operators to be able to recover as much value as possible from salmon resources. The bill will contribute to this goal and, at the same time, will allow the state to more effectively enforce the statute on waste of salmon." MS. SUTTON informed the committee she would talk about some of the things that were said in the House Resources Committee regarding Governor Hickel's bill. She explained Geron Bruce of the Department of Fish and Game testified stating that HB 448 provides for an exemption to the statutory requirement that the carcass of a salmon be utilized when it is harvested. He had explained that the hatchery program begins with the most important decision made in hatchery development which is sighting of the hatchery which goes to where these fish can be harvested. Mr. Bruce also said the bill would not jeopardize the sustained yield of any wild stock because the fish are harvested in terminal areas where they have separated and are returning and they are at their final point at that time. Ms. Sutton explained Mr. Bruce testified that in 1993, the value of frozen red salmon exported from Alaska was $627.5 million and the value of salmon roe was $177 million. She noted she has some figures for 1995 relative to the pounds and they did not have the value in terms of money, but stated that a comparison could be made between 1993 in pounds also. Number 580 MS. SUTTON said Mr. Bruce further stated that the public and private players and the private nonprofit salmon program have significant investments in salmon through the salmon enhancement tax and it would be wise management to try to recover all possible revenue from returning fish, especially if there is no reason not to. She said Mr. Bruce replied to a question from Representative Carney that it would have been the most desirable circumstance to have harvested the fish and utilized the carcass and roe relative to perhaps not utilizing those carcasses. Ms. Sutton said the people who support this bill have no disagreement with that statement, in fact, things were built into the bill to try by all means to sell and give fish away so that we have full utilization. Ms. Sutton explained Mr. Bruce went on to say that in a shallow bay if all those fish would have been allowed to die, speaking of Prince William Sound, they would have caused significant environmental problems. She stated that is yet a concern with returning stocks. Ms. Sutton said Mr. Bruce went on to say that the roe market is very large and healthy and he guessed the figure would probably in the tens of millions of dollars. He added that a hatchery might have a $1 million budget and if it can recover an extra $200,000, it is a very significant percentage of its total costs. Ms. Sutton said the way they would recover that is through the sale of roe from fish that have returned whose flesh is either no longer fit for human consumption or cannot be marketed by any means or given away. MS. SUTTON referred to the House floor vote of HB 448 on final passage, and said there were 31 in favor, 1 not in favor and 1 absent. Of that membership voting in favor of the bill, the members that are members currently on the House Resources Committee are Representatives Barnes, Green, Kott, Williams and Davies. It passed overwhelmingly. She noted Representative Nicholia was absent. She said HB 448 was one of the bills that didn't make it to the Senate floor. Number 835 REPRESENTATIVE DON LONG referred to Ms. Sutton saying the bill relates to waste and use of salmon, and at the same time, she is talking about "Heavy roe." MS. SUTTON noted that was sort of a joke. She said there is "The Heavy Oil Bill," HB 325, so she calls this bill "The Heavy Roe Bill," because in essence the issues are the same. We have fishermen and hatchery operators who are in a very difficult time. What has happened in the world market has had a devastating effect on this industry. Ms. Sutton said she has full confidence, as a commercial fisherman, that our market will recover. She said she is one of the people who pays this tax for salmon enhancement. We have new challenges ahead of us, but we are in a crises at the present hour. Number 924 REPRESENTATIVE SCOTT OGAN said, "I would like to maybe know why you chose to repeal and reenact the first section of the bill and got rid of some language about waste of salmon that - a little concerned it might be a little problematic in that it kind of eliminated the whole -- whole (indisc.) body eliminated the whole section of - basically a crime to waste salmon that was intended for sale to commercial buyer processor, consumption by humans or domesticated animals or scientific educational display purposes and I was kind of curious why that language was repealed and replaced with the language that is in there." MS. SUTTON explained that they didn't delete that. She asked him to look further down the bill and said it is in Section 2, Article 2, under "USE AND WASTE OF SALMON." She said those sections weren't deleted. She asked him if he was looking at the new committee substitute. REPRESENTATIVE OGAN indicated that he wasn't looking at the committee substitute. Number 1060 MS. SUTTON explained there are a couple of changes that will probably be of concern the department. She then reviewed each section of the bill. Ms. Sutton said, "Section 1 refers to -- we had to put somewhere in the bill -- later on in the bill we referenced that the commissioner may revoke a permit at anytime that people are not doing all that they're supposed to do or that's required in the statute and in order for him to do that, he had to indeed have the authority which is his emergency order authority. So that's why that is there. Section 2, it's the waste of salmon and there are many portions of that which are similar still to what's in statute. We go down to line 17 on page 2, "USE OF HATCHERY PINK AND CHUM," and we made this specific to pinks and chums because rather than all species that are produced by hatcheries because they are the two specific species for which we're having large market problems. And also, in Southeast in particular, and other areas of the state, I don't diminish the other areas of the state, but in Southeastern in particular we have facilities producing these species who would not - you know, they would not like to waste any fish. They would like to have full utilization as much as possible and while we don't want to just give a blanket authority to do these things, we thought for these two species it would be timely to do it given the current situation. So for hatchery pinks and chums, this bill would allow both hatchery operators and commercial limited entry permit holders who fish in these designated areas or hold permits in these designated areas to fish in specific areas where these are discretely hatchery fish and to harvest them and discard of carcasses if the fish are no longer fit for human consumption, cannot otherwise be sold, cannot be given away and they must demonstrate all these things. These things must be documented. They have to do all of these things first and the attempt here is to allow folks not to have total waste of fish that they've already paid for -- and Representative Barnes for your benefit I earlier mentioned that these are fish that commercial fishermen have paid through an assessment to raise through the hatchery programs, either through a 2 percent or 3 percent assessment on their gross earnings and otherwise they would be totally wasted. They would die. They are fish that are not going to reproduce. They are fish that are just going to die in some area and have no utilization at all. And so we made it specific to chums and pinks in this section. They have, you know, as it says here...." Number 1296 REPRESENTATIVE RAMONA BARNES asked Ms. Sutton if she could say how many millions of dollars the state of Alaska put into those hatcheries before we ever got around to the assessment. MS. SUTTON responded, "They may have happened at the same time that we were actually taxed on raising it, but there are other people here who would know better than I and I'll defer to them -- but I do know that when the state wanted to get out of the hatchery business per se and transferred facilities that there were private nonprofit aquaculture associations who incurred debt to themselves to operate these facilities and produced fish for the -- all of these fish have to go through the common property fishery and are available for common property harvest." Number 1360 REPRESENTATIVE BARNES said she understands all of that. She said she has served in the legislature since the time of the hatcheries and she knows a lot about the hatcheries. She indicated she would like to know not only how much money the state invested in those hatcheries through the years, but she would also like to know what the state of Alaska is getting in the way of utilization from that. She said it seems to her instead of discarding fish, we could give them to poor people if nothing else. CO-CHAIRMAN WILLIAMS indicated that giving hatchery fish to the poor has been done is continually being done. MS. SUTTON pointed out that one of the provisions of the bill is that they have to demonstrate and do that very thing. Number 1415 REPRESENTATIVE IRENE NICHOLIA asked how much fish has to be given away before this bill comes into place for wasting fish. MS. SUTTON asked, "To legalize wanton waste?" REPRESENTATIVE NICHOLIA said in her view the bill would legalize wanton waste. She said we're giving permission for a hatchery to waste fish. She referred to fish being given away to people that need it and asked how much fish would be given away and how much would be wasted. MS. SUTTON said she couldn't answer the questions because the bill doesn't specify those things. There is criteria which must be met and is stringent criteria to even qualify to do this. These are fish that would not otherwise not be harvested and would be wasted in terms of them dying in areas. They do not reproduce and they would die in areas where, in the past, they have demonstrated environmental problems. Number 1500 REPRESENTATIVE NICHOLIA said, "Do you have any records or have you done any research on if this has happened before - how much pounds of fish were given away and to what area - to which place were they given to and do you have any records like that?" MS. SUTTON said she personally doesn't have records, but noted there are people in attendance who could perhaps give her information about fish that they have given away. She said she knows that there was some difficulty in Cook Inlet with attorneys advising the Cook Inlet Aquaculture Association that it was not recommended to give away fish that were not fit for human consumption. She said these fish are the kind of fish the bill addresses where the fish have deteriorated to the point where the flesh is no longer fit for human consumption because of health risks involved. Ms. Sutton said, "But I know that for other fish that have not deteriorated, perhaps to that point, and we have egg and nolt (Sp.?) removal for brood stock that fish have been utilized and given away, but other folks would have to speak to that." Number 1582 REPRESENTATIVE JOHN DAVIES said, "I'm a little bit confused it. I've been trying to follow the bill at small section (b) on page 2 and (c) at the top of page 3. We're talking about giving a permit and it says that the fish we're talking about would be under little (b), I guess it would be line 30, that they have matured to the extent that the fish can't be sold or marketed profitably; and then (5) says, `cannot be given away despite reasonable efforts to do so.' Then (c) it says before disposing of these things that we're giving them to food banks. I guess I'm just confused. It seems like we're talking about fish that are perhaps not fit human consumption, but we're still going to offer to give em away. I'm confused by what we're trying to do in these two sections." MS. SUTTON explained it goes back to the discussion she just had with Representative Nicholia. There are folks who say they don't mind taking these fish in that condition. The overriding intent of the bill is to use fish which otherwise would not be utilized and would have no value reaped from these fish. She said she thinks the committee will hear some public testimony that would shed more light on his question. She noted the Department of Fish and Game has issued a public notice and published regulations for public comment. They have the same language in the regulations that they have published for public comment. Number 1734 REPRESENTATIVE NICHOLIA questioned that if these fish were going to food banks and different places where they're feeding a 100 people, who is going to foot the bill. These different places barely have money to stay open. MS. SUTTON said there are people from food banks and other organizations who have indicated that they'd be more than glad to come and retrieve these fish if they're made available to them. REPRESENTATIVE NICHOLIA said Ms. Sutton had stated that some of the hatcheries are in trouble or are having problems and that is why the bill is before the committee. She asked which hatcheries they are and where the locations are. MS. SUTTON said she thinks that there are hatcheries all over the state that are in trouble in one form or another, no differently than commercial fishermen are in trouble, processors are in trouble, people who transport our fish are in trouble. Support industries are in trouble because of the downturn in the entire industry. Number 1852 REPRESENTATIVE OGAN referred to page 2, line 30, and said it talks about fish that have deteriorated to the extent that the flesh cannot be sold or marketed profitably. He said this bill is essentially a roe stripping bill and the roe really isn't mature to make into a product until the fish are mature. He asked if they're a darker less desirable when they're caught and used for this. MS. SUTTON explained, "Normally when fish move to a terminal area and they are either ready to spawn or -- and this is instance these fish are not spawning fish, they're sort of put and take fish and designed for that purpose -- they do mature and the roe actually becomes more valuable at that point or it's more recoverable at that point. It's the same in herring fisheries. They test continually for an opening on the maturity of the roe, and so that is the case. And these fish can only -- in this bill these fish can only be harvested in special areas that are hatchery special harvest areas, areas set aside that are at the very terminal...." REPRESENTATIVE OGAN said, "Ya, I'm aware of that. I guess what I was leading up to that I essentially just -- one of these hatcheries or one of these areas could essentially hold off on harvesting these fish and let them mill around out there in the pond or out in the bay till they ripe enough to strip roe and then essentially not harvest. Just essentially manipulate it so that they just would simply harvest the roe and dump the fish. Is that correct?" MS. SUTTON said that is not the intent of the bill. There are circumstances that happen. We have no control over what happens in nature. There are years when fish return all at once. No one knows why. There are years when they come in over short periods of time. It is certainly the desire of anyone who is involved in fisheries to harvest these fish in a more orderly manner. She said that is not the intent of the bill and to her knowledge, there is no one that she has spoke with who has that intent either. Number 1994 CO-CHAIRMAN WILLIAMS said, "The answer is that this isn't a bill to do just that. In fact, today the department can do what we're saying through regulations and we will have the commissioner here to talk about just that. Maybe some of the questions can be directed to the commissioner on this." Number 2017 REPRESENTATIVE BARNES said, "I want you to tell me again that the department is promulgating regulations that would do what this bill is doing and I want you to tell me under what authority that the department has to do this." MS. SUTTON said, "We asked the same question of our legal services, in terms of under what authority. Their regulations that they're attempting to promulgate do not exactly mirror the bill here, but have very similar elements and I'm sure Commissioner Rue could speak to that." REPRESENTATIVE BARNES said the bill is perhaps one of the worst bills she has ever seen and to think that the department is trying to promulgate regulation that we carry out the intent of the bill is beyond her. She said she doesn't think the department has, in any way whatsoever, the power to promulgate such regulations. Number 2069 CO-CHAIRMAN WILLIAMS informed Representative Barnes the legislature voted on this bill two years ago and it passed the House. REPRESENTATIVE BARNES indicated she didn't remember. Number 2100 FRANK RUE, Commissioner, Department of Fish and Game, was next to address the committee members. He said he would talk about the philosophical underpinnings of the bill and where the department would like to go. Commissioner Rue explained there currently is an existing statute on waste and it is very much more open for abuse than HB 406. He said the regulations the department is proposing would tighten up the ability to waste fish. Commissioner Rue indicated the department appreciates the attempt to tighten down abuses of waste and waste of fish. They think that is important and conceptually, our fisheries throughout the state and in the offshore areas needs to reduce waste. He stated they are working hard, through the Magnuson Act and other arenas, to reduce the waste of fish. Conceptually, he thinks it is very important, as a state, that we reduce waste of fish and realize full utilization of fish. It is a resource that if we're creative we can find ways to use heads, tails, etc., and make a profit. Commissioner Rue said he would suggest that there be more limited circumstances than the current version of HB 406 would allow for - an exemption to a waste statute. He stated that is one area where he thinks the department and the Administration would have a difference with this committee bill. Commissioner Rue said another area is he thinks that any language for the commissioner allowing for an exemption to a waste statute ought to be "may" for the very reasons that Representative Ogan mentioned. If there is a "shall," he has to give a permit, but somebody sitting there letting fish mill around and they have this permit, they may be abusing the statute. He stated he thinks there ought to be very limited circumstances and it should be, "May authorize the disposal of carcasses." Commissioner Rue said he believes the enforcement provisions would be difficult to enforce if someone were wasting fish. He said the concept that they have talked about is that for hatcheries, they would like to phase the need to have to dispose of any carcasses. He stated that as they would like to phase out the need to have to dispose of any carcasses, they think that we need to find ways to use that product. Commissioner Rue pointed out that there are circumstances that hatcheries, because they are limited to very specific geographic areas and they can only harvest in those terminal areas, they may not have a way to actually sell the fish. The department thinks that for hatcheries who can't fish out in the open water as they aren't part of a common property fishery, they can't make their cost recovery needs in that common property fishery. They're forced to fish in these terminal areas to get their cost recovery back. There may be circumstances where they can't sell the flesh; however, the department thinks that they ought to be required to try and sell the flesh and ought to be required to handle the fish and offer it for use by the public. Number 2280 REPRESENTATIVE ALAN AUSTERMAN said the original concept behind hatcheries was to do an assessment on fishermen to (indisc.) hatcheries. So the idea of taking of extra fish to pay for the operation of the hatchery is something that has come up because of the cost recovery aspect that was brought on because there was not enough money from the assessments. He asked if this is why we're having to deal with the carcasses. COMMISSIONER RUE noted Mr. Bruce was in attendance to help him with that question. He said the history of the hatchery cost recovery goes past his experience as to when that first began because there is an assessment. Commissioner Rue asked Mr. Bruce when the cost recovery kicked in. Number 2306 GERON BRUCE, Legislative Liaison and Special Assistant, Office of the Commissioner, Department of Fish and Game, explained the cost recovery portion was always a part of the nonprofit private hatchery program. When the program was developed the intention of it was to fund this program without it requiring general fund support. There were two parts of that. One part involved a salmon enhancement tax which only some corporations get. Other corporations do not get any of the salmon enhancement tax and those corporations depend entirely on the cost recovery portion on their cost recovery receipts to pay the cost of their operations. It has always been a part of the concept of this program. It had three funding sources. Representative Barnes is correct as there were very generous contributions from the state treasury that went into establishing these programs. REPRESENTATIVE BARNES questioned how much in contributions where there in state treasury contributions. MR. BRUCE indicated he couldn't currently answer that question, but he could generate some figures. He noted it would be a hefty amount. Number 2351 CO-CHAIRMAN WILLIAMS added that the fishermen did take those hatcheries out of the state's hands and are making them work. COMMISSIONER RUE said their concept is to narrow the times when they would have to use this. He said they do not condone the idea of waste and they do not want to go in that direction. Commissioner Rue noted the department is not running any commercial hatcheries, just sport fish hatcheries at this point. It is the nonprofit organizations that are contributing to the common property fishery. Commissioner Rue said there should be some limited situations where you might allow a hatchery operator to dispose of fish and that would be after they tried to sell or give them away. There is the fact that they do benefit the common property fishery. Number 2395 REPRESENTATIVE DAVIES asked if the nonprofit corporations are forbidden from operating common property fisheries. COMMISSIONER RUE answered in the affirmative. He said the fishermen provide fish to the common property fishery, but they are benefitting and selling hatchery caught fish. The hatchery operators are not out there. They are making their money from the enhancement tax. REPRESENTATIVES DAVIES asked if they are forbidden from doing that. COMMISSIONER RUE answered in the affirmative. He noted the department restricts them to terminal areas so they're not fishing on wild stocks. He said you don't want the cost recovery to be interfering with the wild stocks. You want the hatcheries to be harvesting hatchery stocks and not wild stocks. CO-CHAIRMAN WILLIAMS said, "For the information of the committee members, this bill was introduced to help the fishermen. We've been helping the oil people, in fact we're having North Star oil right after this bill is taken care of. As you all know what the fishermen are up against today and we have to find ways to help the fishermen. Give em incentives to go out there. We probably will not have a fishery this year if it keeps up the way it is. This type of bill is to help the fishermen. If we can get away from who put the most money into it and why, and focus on the direction that we're trying to go with this - to help the fishermen gain more out of the fish that is dying and dead and not helping the industry in any way. I would hope that this committee can do that." TAPE 96-63, SIDE B Number 001 COMMISSIONER RUE responded to a question asked by Representative Barnes. He said he agrees that we need to help fishermen, but he isn't sure that allowing the fishermen as opposed to the hatchery operators, to get exemptions for wasting fish is a good idea. One reason is they do get to fish in the common property fishery outside the terminal areas. Commissioner Rue noted the state is looking at ways to get through this year where the prices are low by working with processors and having the department's management help to make sure that the fishermen get fish that are marketable. He said he thinks by keeping the hatcheries alive, it will help the fishermen in Southeast and Southcentral Alaska because they do put fish out into the common property fishery. CO-CHAIRMAN WILLIAMS said this is a transition and he believes we have to look for ways to get the fish (indisc.) and look for other creative ways to use the carcasses that are not marketable. He said today we have 4 million cases of salmon in storage areas and by June 1, we'll have 1.5 or 1.7 million. The processors are telling us that they are not going to buy pink salmon. He asked what we are going to do with them. He said if we can help the fishermen through this crises the bill should be passed. Number 097 REPRESENTATIVE DAVIES referred to river fisheries and said we have commercial fishers who harvest fish. He asked if we allow any waste of these fish. COMMISSIONER RUE responded that we don't. We allow the taking of roe, but they have to use the carcass for food. REPRESENTATIVE DAVIES asked why we don't make the same requirement for the hatcheries. If they're going to use the roe, why don't we require them to utilize fish in the same way it is required for the up river fishermen. COMMISSIONER RUE said, "I would not have fishermen given an exemption for a couple of reasons. One, I wouldn't want to create a group of folks at that gets larger and larger and demands that they'd be allowed to discard carcasses and just harvest the roe. It's not the direction we want to go with all our fisheries. But with the hatcheries, they're somewhat different than the river fisheries." Number 139 CO-CHAIRMAN WILLIAMS asked him to explain why he doesn't want to get the fishermen involved in this. COMMISSIONER RUE said he believes that currently there are approximately 40 fishermen who have, as processors under the present law which allowed a potential exemption to processors under an earlier interpretation of the currently law, who have done this in the past - who have used the roe and discarded the carcasses. He said he believes that if you allow too broad of an exemption, you will have more fishermen participating. If said he would be concerned if we created a large group of fishermen who depend on the sale of roe and are allowed to discard the carcasses. Commissioner Rue said he thinks we need to use the carcasses. He pointed out that the only difference between the river fishermen and the hatcheries is the fact that the hatcheries can only catch fish from a very constricted area where the fish are way at the end of their life cycle when they have been milling for a long time, as opposed to a river fishermen who can still catch them when there in good shape and marketable. He noted they are going to have trouble finding markets as well. Number 200 REPRESENTATIVE DAVIES referred to the fish that mill around in terminal areas and asked what happens to them if the hatcheries don't take them. COMMISSIONER RUE explained they would die and be eaten by crabs or whatever. He noted the hatcheries have to try and sell them. He said in the regulations the department is proposing under the current law, hatcheries would have to handle the fish, try and sell them and if they couldn't sell them they would have to try and give them away. He said the department wants to encourage the utilization of these fish. REPRESENTATIVE DAVIES asked how the fish carcasses would be disposed of. COMMISSIONER RUE said he would imagine that they would be barged out or taken out on a tender offshore under the Department of Environmental Conservation (DEC) regulations. They would need to get a permit from DEC to discard the carcasses. Number 253 REPRESENTATIVE OGAN said he is hearing a couple of different things. He is hearing that this bill was introduced just in case there is some fish they can't get rid of. He said, "I'm hearing another thing saying that well it's because we're not going to be selling any fish that we're letting them do this. So it appears to me that the intent is to, with this year's harvest at least - you know allow this procedure. We also heard testimony that you are currently drafting regulations to do this and this statute was pretty much taken out of regulation. Do you have the authority I guess, you know -- Representative Barnes was asking do you have the authority to do this and if you do have the authority, then why don't we just draft some emergency regulations for a year or two to - you know, allow this roe stripping to go on and, you know, on hatchery fish only and -- it's a long question but.... Number 301 COMMISSIONER RUE said he thinks the reason for a statute, whether or not we agree on all the parts of it, is the current statute is ambiguous. The Department of Law, at one point, gave an informal opinion that processors were exempt from the waste law. They later interpreted it that you can bring processors under it. Fishermen were getting processor licenses and discarding the carcasses. Commissioner Rue said the department doesn't want that to happen. He said it needs to be tightened down. So a statute that tightens down the current waste law is needed. It also needs some other housekeeping fixes to allow, for instance, to use some salmon for bait. If a hatchery has the fish that they use for egg take, that because they've handled they might not be able to sell them. Technically you're not allowed to use them for bait, but in Alaska people have been using them for bait forever. He stated there are some technical reasons why we need a law that's better. Commissioner Rue said the promulgation of regulations would be one way to handle this. Number 391 STEVEN DAUGHERTY, Assistant Attorney General, Natural Resources Section, Civil Division, Department of Law, came before the committee. In referring to the authority issue, Mr. Daugherty said under AS 16.05.831 (c) it states "A person who violates this section or regulation adopted under it is punishable by a fine of not more than $10,000 or imprisonment for not more than six months or by both..." He said there isn't a direct statement that says the commissioner has authority to adopt regulations. This is an implied authority because it says that a person who violates this section or regulation adopted under it. That gives the commissioner implied authority to adopt regulations to implement and interpret this section. Mr. Daugherty pointed out that is a rather old statute and does not have the language that we use today directly granting the authority, but that authority is implied in the existing statute. The commissioner is also relying on the general authority of the commissioner to do things that are necessary to implement the statutes, etc., under AS 16.05.020, which is the general grant authority and the functions of the commissioner to manage, protect, maintain and improve the fish and game and aquatic resources of the state for the interest of the economy and general well-being of the state. Mr. Daugherty said the Department of Law believes that the commissioner does have the authority to adopt regulations to implement and interpret this section. They believe these regulations are necessary because of enforcement problems with the current statute, which is very ambiguous. The Department of Law has issued an opinion on the interpretation of this. Number 509 REPRESENTATIVE AUSTERMAN asked Mr. Daugherty if he is saying that the Department of Law is interpreting AS 16.05.831 (c) as the authority to change the existing statute by regulation. MR. DAUGHERTY indicated that is incorrect. He said they are saying that the commissioner has authority to implement and interpret the existing statute. The commissioner does not have authority to do anything that is inconsistent with the existing statute. REPRESENTATIVE AUSTERMAN asked if the ability of a fisherman right now to get a processors license and strip roe is strictly in regulation. MR. DAUGHERTY explained that there currently is nothing that authorizes a fisherman to get a processing license and go out and strip roe. He said the opinion that the Department of Law issued on the interpretation of this statute, as it currently exists, is applicable to all persons including processors. There is a possibility under the existing law for the commissioner to authorize roe striping. There have been some authorizations in the past for hatcheries. There may have been other authorizations, but AS 16.05.831 (b) provides that the commissioner, upon request, may authorize other uses of salmon that would be consistent with the maximum and wise use of the resource. Mr. Daugherty explained this is the section that has been used in the past to authorize some roe striping by hatcheries under conditions similar to those that the commissioner has talked about attempting to sell the fish, attempting to give the fish away and then having to dispose of the carcasses in compliance with all the applicable federal and state regulations. At this time there is nothing in regulation or statute that would allow someone to go out and get a processing license and strip roe. REPRESENTATIVE AUSTERMAN said he thought that was what was currently happening. MR. DAUGHERTY explained at one point, the Department of Fish and Game was telling people that they did not believe that this law applied to processors, so fishermen were going out and getting these processing licenses and were stripping roe. REPRESENTATIVE AUSTERMAN asked if we currently have a different interpretation. MR. DAUGHERTY indicated that is correct. He said the department went back and looked at the legislative history for this bill and that history indicated that is law was intended to prevent waste of salmon. It wasn't intended to allow someone to go out and waste salmon just because they had a processing license. REPRESENTATIVE AUSTERMAN said depending on which lawyer you're talking to, you get one interpretation or another. Number 645 COMMISSIONER RUE explained the current law is ambiguous and people read it differently. He said he would applaud any effort to try and clarify that statute and make it clear as to what the intent was. Number 667 REPRESENTATIVE LONG said he has a problem with some of the statements that have been made. He said his reading of the bill indicates that Commissioner Rue will be issuing a permit to discard carcasses of pink or chum salmon. He said there is not authority to strip roe from those carcasses other than the commissioner would issue another permit on top of a salmon permit, interim use permit or even hatchery permit, just to discard those fish. COMMISSIONER RUE said he has taken a quick look at the bill, but they haven't done a detailed analysis of some of those specific questions. He said he has talked about some of the concepts the department agrees with in the idea of tightening down the waste statute and some of the concepts that he thought the department didn't disagree with which was the broadness and enforceability of it. He stated he has not looked at the details of the bill and how it is structured. Commissioner Rue referred to the requirement that he has to issue a permit if someone meets all the qualifications and said that is another conceptual issue for him. REPRESENTATIVE LONG said he was trying to get to Commissioner Rue's interpretation of the reading of the bill and what the sponsor's intent is. Number 736 COMMISSIONER RUE explained his interpretation is that it is trying to allow for the use of the roe when you can't sell or give away the carcass. He said that is his understanding of the intent of the bill. CO-CHAIRMAN WILLIAMS stated that is the intent of the bill. He said, "You keep saying you don't want anymore fishermen involved in this roe stripping. Maybe if you could say it a different way maybe it might come in this time commissioner. You haven't given me reason yet - at least I haven't heard it." COMMISSIONER RUE said, "Here is why I would limit it to just hatcheries rather than fishermen. Fishermen have the opportunity to fish in the common property fishery outside of these terminal harvest areas. We are trying to reduce the waste of the resource, not encourage the discarding of salmon carcasses as opposed to hatcheries who are very limited in where they can get their fish plus our nonprofit organizations that contribute a lot to the common property fishery. So I see fishermen as a different kill of fish, if you will, not that they aren't having trouble this year and we were doing what we can to help. The other thing is I think for fishermen, right now, when we're trying to change the Magnuson Act to sustain offshore fisheries and reduce waste, we don't need salmon fishermen accused of wasting fish. The Canadians would love more excuses to beat up on us - to, you know, cut back our harvest of fish by using `Gee whiz, they're just throwing fish away,' but we're not talking about the same fish and it's not the same issue, but I don't think the fishermen need that perception thrown at them either. And I also am concerned that we would start creating a larger class of people who have come to depend on just using the roe and not using the carcass, and the pressure would be to continue that practice rather than the pressure there to try and find a good use for those carcasses. I would rather see the pressure on finding a use for the carcass, whether it be fishmeal, protein, you know, different processing techniques. There are lots of different ways that that raw resource can be used. So I'd rather have the pressure that direction than the pressure the other direction." Number 862 CO-CHAIRMAN GREEN said we've heard that the roe is enhanced the older the fish get, yet by the same token, the fish meat is at or beyond its peak. He asked what amount of time there is so that the carcasses could be utilized in some other fashion. COMMISSIONER RUE explained it is a continuing scale. At some point, the marketability is going to go way down and at some point, people's willingness to accept the fish will go down. You would have to look a the individual situation and that's part of the reason he thinks it shouldn't be mandatory situation where he has to give them a permit. CO-CHAIRMAN GREEN said at some period of this roe harvest, the value of the fish would go beyond "can able" to something that would have to be used as fishmeal or fertilizer or something other than edible. He asked if the canning of the fish would even be a function. COMMISSIONER RUE stated that at some point it does not do well in a can. CO-CHAIRMAN GREEN asked if that would be right in the middle of this roe harvesting period. COMMISSIONER RUE explained there are probably other people in attendance that could probably answer that question better than he could, but at some point towards the tail end when the fish had been there for a long time, at some point they will not be suitable for a can. Number 961 REPRESENTATIVE AUSTERMAN said one of his concerns with the bill is at what point in time do you allow those fish to get to where they're prime roe fish and when they become prime roe fish, they are no longer good fish. He said with a bill that is geared toward roe fishing, his concern is do you let those fish come in at $5.50 a pound for roe or 20 cents a pound for fish. There will be some tendency to take the roe. Once the roe is really prime, the fish are no good. CO-CHAIRMAN WILLIAMS said his concern is that it isn't going to be an ongoing process and we know that. It can stop at any time. He said to tell when it is a prime roe fish is could be you pick it up and in the middle it bends down and touches it's tail to the head. It's soft and they're going to die. As the commissioner said, some of the fish die in the terminal areas today and that's rotten waste. Co-Chairman Williams said he has been talking to the commissioner for about two months about this issue. He said he still doesn't by the commissioner's argument about not letting the fishermen go into the terminal areas for this season. Co-Chairman Williams referred to the Pacific Salmon Treaty and said he believes it is probably the commissioner's best argument. He said he still hasn't bought the argument on why the fishermen can't be a part of this process. Number 1094 REPRESENTATIVE OGAN read from page 3, line 8, "A permittee is not required under this subsection to transport the salmon to a location other than the permittee's normal place of business; or a point of landing in the vicinity of the place where the salmon are harvested; or preserve or process the salmon." He said it seems to him that there would be no incentive or motivation. Essentially what they've got to do is notify the public that they can jump in their boat and come out to the area where they're harvesting these fish at the hatcheries and pick up the fish if they want them. They don't have to be delivered. They would have to arrange transportation from the hatchery if they want these fish. CO-CHAIRMAN WILLIAMS said the hatchery located in downtown Ketchikan puts out the word that there will be these carcasses available and people come and get them. He noted these are black king salmon. REPRESENTATIVE OGAN said some of the hatcheries are only accessible by a boat or seaplane. CO-CHAIRMAN WILLIAMS stated what he is trying to do with the bill is help the fishermen. Number 1248 REPRESENTATIVE AUSTERMAN explained the original concept behind the hatcheries was (indisc.), they catch them and they take eggs and milt and then let more fish come back. He referred to the carcasses from that process and asked if those carcasses are dumped at sea with a DEC permit. MR. BRUCE referred to the brood stock carcasses and said there is a specific exemption in regulation for them and they do not have to be consumed or used. They can be disposed of considering the advanced state of sexual maturity and deterioration that they are in. Mr. Bruce said that they are offered for bait and one or two hatchery corporations, over the course of time, have actually tried to can them. They actually ran into concerns from the canning industry and regulators in that they were putting up a product that wasn't unwholesome, but was a product that was so altered from what you think of when you think of canned salmon. It almost consisted of misrepresentation of the product as it was almost more like a juice, so they stopped doing that. Number 1322 REPRESENTATIVE AUSTERMAN asked if there has been any current requests from the hatcheries to process any of these fish for canning or freezing them for resale. COMMISSIONER RUE said he doesn't think there would need to be a request. If they want to use them, they can use them. They could can them as part of their cost for (indisc.) effort. Number 1366 CO-CHAIRMAN WILLIAMS informed the committee the department does have management control over the issue of where the opportunities may be. He said he hopes the department keeps in consideration what fish die in the terminal areas. REPRESENTATIVE OGAN asked Commissioner Rue what the department's position is on the bill. COMMISSIONER RUE said the department appreciates the effort to narrow the current ambiguous waste law because they think it can be abused in more ways than the public would want. He said they appreciate the effort, but there is three areas where the department would have a difference. One is to include fishermen as being eligible for an exemption. The second would be the mandatory nature of giving a permit if someone met the criteria and then having to do an executive order to stop the waste or discard from happening. The third is the enforceability language. Currently, you would have to knowingly and wantonly, etc., which would be more difficult to prosecute a waste with that kind of language in it. Commissioner Rue explained the biggest issue is including the larger arena of fishermen as also being able to discard fish. Number 1455 CO-CHAIRMAN WILLIAMS said he wishes Commissioner Rue would come up with a stronger argument as to why the fishermen can't be included in this. COMMISSIONER RUE noted another reason is that he is sure that the sports fishermen, who are pushing the fish initiative, would love to use this as another reason to bash on the commercial fishermen. Number 1545 KAY ANDREW, United Southeast Alaska Gillnetters Association, testified via teleconference from Ketchikan in support of CSHB 406(RES). She said she would like to speak in favor of the bill because of the proposed regulating by the Department of Fish and Game. Ms. Andrew said the fishermen would be left out of the ability to market their eggs taken from terminal fisheries that are possibly not fit for human consumption. MS. ANDREW explained she doesn't feel the state should play the game that it is O.K. for some people to do egg roe, but not others including processors, fishermen, hatcheries, etc. This is a ploy by the processors to limit the egg market. She said fishermen pay 3 percent of their gross to raise hatchery fish and they should be allowed to market these fish in whatever manner they can get. If the fishermen cannot compete on the market for their fish, they cannot expect to get any kind of a price for the product. We need to remember that the fishermen are responsible for whatever the state has loaned the hatchery programs and if these hatcheries close tomorrow, the fishermen would still have to pay 3 percent until these debts are paid. So (indisc.) are getting something for free from the state is unfounded. These fish are not left to mill outside the terminal area until these fish are roe ready. These fish are caught going through all fisheries, commercial, sport, subsistence and personal use fisheries, before they reach the terminal area. MS. ANDREW said, "According to Mr. Rue, we should not be able to utilize our own fish. The Governor seems to be saying he is against commercial fishermen. What difference would it make if these fish are not marketable to let us take the roe? Well I'll tell you, the processors don't want us competing with them. The governor, through the commissioner, is telling us he is favoring the processors. Does the state not have a limited entry fishery on the Yukon River that allows these fish to be supposedly used for dog food? I'm sure some of them argues for dog food. In sitting on the Board of Fisheries a few years ago I heard testimony from the people along the Yukon River of the carcasses packed high along this river bank simply striped of roe. So there is waste there. And why is it? Because they can't sell those carcasses. They're not marketable. They're not fit for human consumption. What would the commissioner suggest we do with the terminal fisheries areas if there is no right cost recovery in. He stated that we have the ability to fish in the common property fishery to catch these hatchery fish, but not all terminal harvest fisheries are utilized by the hatcheries for cost recovery. What a (indisc.). They die and they become, as he stated, crab food. So why can't we be allowed to take fish and utilized what we can out of this crab food and feed the crab with what's left that's not fish for human consumption. I think this would be a waste to let them all die in a terminal harvest area not be able to utilize them. I don't believe that it's fair to the fishermen in the state of Alaska to not utilize fish to its fullest extent and, therefore, I don't think it's fair to shove the fishermen out of a way to market that fish that we pay for. In closing, I'm sure that the fish initiative would like to use this. I'm sure U.S./Canada would like to use this, but I don't think it has anything to do with U.S./Canada or the fish initiative - either one. We're talking about hatchery fish that are paid through a program of 3 percent that the commercial fishermen pay for. So I would like you to very carefully to think about this CS. It is right in line with what the department is going to present to you as regulation. The only difference is it includes the fishermen instead of excluding the fishermen. Thank you very much for your time." Number 1840 RUDY FRANULOVICH, Fisherman, was next to testify via teleconference from Ketchikan. He said he has gillnetted salmon in Southeast Alaska for 27 years. Mr. Franulovich said he believes CSHB 406(RES) is a good bill. It addresses hatchery fish only. No common property wild stock salmon can be wasted with this bill. Fishermen fish in terminal areas only for these salmon and when the salmon arrive in terminal areas, the quality is so poor that many processors refuse to purchase them. He stated he fishes for EC Phillips in Ketchikan and for the last seven years, they have refused to purchase terminal hatchery fish from him. Mr. Franulovich said he is in favor of the legislation because it gives him and others the opportunity to utilize these hatchery (indisc.) fish. He thanked the committee for listening to his testimony. Number 2183 DAVID LAWLER testified via teleconference from Ketchikan. He said he gathers that many of the committee members really don't understand what is happening with the salmon market this season and said he would like to inform them about that. MR. LAWLER said, "During 1996, we've set to harvest about ten million chums in Southeastern Alaska alone. Most of these are hatchery produced chums. Tradition chum production is only about nine million statewide. Because of this the market for dark red meat in chums, frozen, has declined to below 40 cents a pound which is also below the cost of production. No value whatsoever particularly exists for small (indisc.) chums. Our local fall chums from (indisc.) are 80 percent or more pale meated even in the common property fishery. I know this because I do meat color analysis. I'm a processor and I've air freighted and trucked fish to Seattle for about 12 years now. Waste is an issue of biology and economy. (Indisc.) to find that allowing fish surplus (indisc.) allowing them to die and rot at the terminal area. How can fertilization and addition of nutrients to the food chain be called a waste? I don't understand that. When buyers for salmon do not exist, we should utilize as much of the salmon as possible where conservation and good management allows and dictates the need to harvest those fish. At this time, two out of three of the buyers of our local salmon at Tree Point do not buy any terminal area chums. What I want the committee to answer to me is `Where are the boats going to sell their fish?' They can't fish. The state law allowing striping only by licensed processors should be kept in tact. ADF&G (Alaska Department of Fish and Game) reporting and raw fish reporting and required this. I believe, however, that catcher vessels should be allowed to scatter carcasses and be exempted from grinding. What harm does dumping of undesirable salmon cause. Who stands to gain by this new law. I (indisc.) small business (indisc.) the fishermen as well as certain processors. The supply of salmon is bountiful. Let waste be defined or define itself in the marketplace. What cannot be marketed should not be totally wasted. Harvestable salmon left uncaught are a waste. The salmon egg market is drawing and prices are rising. The egg (indisc.) should not be wasted. It is the (indisc.) chum salmon (indisc.) price. In Southeastern Alaska, the chums will pay the 1996 season. I want the commissioner to tell me does he expect the fishermen to go broke? Maybe we should make it unprofitable to be a commissioner of Fish and Game. Times are bad enough in the salmon industry without further (indisc.--coughing) restriction where no harm is being done. The status quo should be maintained and I want to reiterate that I don't see where any harm is being done. You can't sell those salmon now if you want to sell them. If the commissioner wants to adopt a regulation compelling salmon marketers to by salmon for a profitable price, he certainly can try and do it but it won't work. There is no market for those fish. I repeat `There is no market for chum salmon.' Thank you." Number 2177 REPRESENTATIVE AUSTERMAN said if there is no market, why are we raising them in hatcheries? MR. LAWLER said he appreciates that question. He explained supply and demand dictates markets. Back when the hatcheries were promulgated and put into being, this situation did not exist. Now this situation exists. He said he appreciates the commissioner's viewpoint on the utilization of salmon. We all would like to utilize salmon. Mr. Lawler said we're not against utilization of salmon, but at this time no market exists for dark chum salmon. It is a very very bad market situation. The market for pink salmon is saturated and numerous processors have put their fleet on notice that they're not going to buy pink salmon for the prices that they usually pay. In fact, the price of pink salmon this year is projected to be less than what he believes is profitable for the local seiners to fish for - about 6 cents to 8 cents. Number 2269 JOHN CHILDS, Commercial Fisherman, testified via teleconference from Fairbanks. He said he is a commercial fisherman on the Tanana River. The price of their roe dropped drastically last year do to the roe striping in Southeast Alaska. He said he was told that over 485,000 pounds of roe was striped in the hatchery located in Ketchikan and 100,000 pounds of roe was striped in the Juneau area. That is more than the entire Yukon River drainage. Mr. Childs explained their permits are becoming worthless because of this practice. He said he sells all of his carcasses to dog mushers. Mr. Childs noted he lost a few of his customers last year because the mushers got fish for free from the hatchery stocks. The practice of striping roe and throwing fish away is very wasteful. It was stopped in the pollack fishery and should not be allowed in the salmon fishery. Number 2375 JERRY MCCUTCHEON was next to testify via teleconference from Anchorage. He stated he thinks fish should be totally processed. Mr. McCutcheon said he thinks it is hilarious that the hatchery people are looking for special privileges. He said the committee should take a look at the law and see how the hatchery section has been designed by the people. Mr. McCutcheon informed the committee if he could get into the hatchery business, he would love to fully utilize the fish, but he doesn't want to fight the politics that is involved in it. Mr. McCutcheon said the state, the hatchery people and the fishermen's hatchery people are equally incompetent. The state has had approximately 30 hatcheries and only three of them every made any economic....[END OF TAPE] TAPE 96-64, SIDE A Number 001 MR. MCCUTCHEON said, "....it's like Exxon having to go get permission from Arco to operate in Alaska. It's exactly it because you've got (indisc.) and those people and you got to go before them to do anything at all and they'll absolutely screw you every way (indisc.), yet they can't operate their own hatchery. You should have no problems with the hatchery that they have down there at Ester Island. That shouldn't be a problem. Ladd McCauley was selling his spawned out fish out of Sheep Creek for more money than the fishermen were getting for their brights. You gotta know what your doing and they just don't and you shouldn't give them any special privileges - none. You really need to go back and look at the section having to with hatcheries and the licensing of hatcheries and get the Fishermen's Association completely out of it and limit it to the state. The same, you ought to get the state out of it as much as you can because you have a nest of people who don't want anybody to get anything. For example, a hatchery pond, Warm Springs Bay. The state had a big grand proposal, I looked at it and they didn't want it anymore - that's it." Number 147 KEVIN MCDOUGALL, Commercial Fisherman, came before the committee to give his testimony. He explained he is a commercial fisherman in Southeast Alaska, he pays the 3 percent enhancement tax, he does catch hatchery fish and has been involved and around this issue for about five years. Mr. McDougall explained the reason he got involved with this whole process is that he started out five years ago catching chum salmon in a common property fishery and when he went to deliver them to the local processor, and when he looked at his check after delivering 10,000 pounds of fish, he realized he couldn't do this the following week. Mr. McDougall said he made phone calls to markets in the Lower 48 and found markets for chum salmon. He said he then found out that there was a byproduct, salmon roe, and sold that also. That worked great for several years until the market for the chum salmon collapsed. At this point, he can go out and catch a chum salmon at any location, clean it and send them to Seattle and not make a profit on it. Mr. McDougall said there will be processors buying chum salmon and we don't what the price will be. At a low ball price of 15 cents a pound that will be paid to the fishermen, the processors will lose money on those salmon marketing them fresh into the marketplace. MR. MCDOUGALL informed the committee he is in support of CSHB 406(RES) because it doesn't deal with wild stock. It is anadromous fish that is coming back to a remote release site. These fish are supposed to be harvested at a rate of 100 percent. Mr. McDougall explained that in Sitka, there is a remote release site that will have fish coming back this summer. He said, "I have paid for these fish when I arrive there. I will not have a market as I did not in 1994. I will not be able to sell to any of the traditional processors because they will have a processing glut like they did two years ago. I am also trying to be excluded from being able to access the roe. This is the only opportunity I have to make any money on these fish that I have been taxed to raise." Number 431 REPRESENTATIVE AUSTERMAN said he is a lifetime resident of Alaska, has been involved in the industry and understands the industry very well. He stated he totally supports the industry, but there becomes a limit in time when even the grocery store owner doesn't order in bananas anymore because nobody is buying them. Representative Austerman said he guesses that is what his point is on when he asked Mr. Lawler why we're still producing chums. MR. MCDOUGALL said he is glad Representative Austerman is asking him that question because he thinks that the issue there is still a great economic value here for the hatcheries and for the salmon at this point. He said he agrees with what Ms. Sutton stated earlier. Mr. McDougall said he thinks we are in very much of a crises now and that he hopes we can come out of it. Currently, there is great value in these fish, but it's not in the flesh, it's in the roe. He said the processors will buy a male chum salmon from him, they need to have access to the roe. There is great value there. Number 555 REPRESENTATIVE AUSTERMAN pointed out that a gallbladder of a brown bear has great value, but we don't raise brown bears to get their gallbladders and yet we're raising salmon to get their eggs. There is a little bit of a difference there, but there is some comparison. MR. MCDOUGALL said he thinks it was never intended that we were going to raise fish for eggs, but we've come to this crises in the marketplace and now we have an opportunity to extract something. He said he understands all the issues regarding the waste and he sympathizes with those things, but it is hard to listen to the commissioner and the Administration to say that it's going to be legal to take a salmon and grind it into fertilizer or fishmeal, but if we put it in the water then it becomes waste. The fishermen needs some help here. The industry needs help, he concluded. Number 653 CO-CHAIRMAN WILLIAMS said these hatcheries were put in when there was a demand for fish. Today the markets have gone because the farmed fish took over a lot of the market. Co-Chairman Williams said what we're trying to do today is help the fishermen through this short period of time so that the fishermen might adjust to the changing market. Co-Chairman Williams said about six years ago, humpies were going for about $1.05 per pound and the sockeye were going for $5 or $6 per pound. Number 710 REPRESENTATIVE BARNES said she would submit to the committee that there is no lack of a market for the fish as she knows there are people in Taiwan and China who are just dying to buy our fish. The problem is she can't find anybody to sell the fish to them. Number 742 JOHN GEORGE, Member, Territorial Sportsmen, came before the committee to give his testimony. He informed the committee he also sits on the Board of Directors for Douglas Island Pink and Chum (DIPAC). Mr. George explained the sports fishermen will support this bill because they support commercial fishermen making money and making a living. Right now, this is a good way to do it. Mr. George said DIPAC also needs to have a cost recovery and they would like to be able to do something with the chum salmon. For years, DIPAC has offered fish to food banks, Native organizations and anyone else that wants it. He said they have spent their own money to load fish into totes, ice them and loan trucks to people to distribute those fish. He said they were instrumental in starting Health Sea, Incorporated, in making salmon ham and salmon products out of dark chum. Mr. George said they utilize a lot of dark chum in that and some day maybe they can use it all, but currently, that market isn't big enough so that they can. In the mean time we need to do something with their cost recovery fish to make sure they get a cost recovery so they may continue paying on their loans from the state. He noted they have never missed a loan payment. They make the payments sometimes with their king salmon and silver salmon. He noted they are basically out of the pink salmon business. Mr. George explained 50 percent of the floor space in the DIPAC hatchery is utilized for raising king and coho salmon. He added 50 percent is designated to pink and chum salmon. Mr. George explained roe does not compete with fish. So if DIPAC were to dump all of its dark chums on the market, then they would be competing against the commercial fishermen who are also trying to sell fish. That's a problem. He said he has been told that there is no glut on world market. He said he differs with the testimony that came from the Yukon-Kuskokwim area that roe striping in Southeast has deteriorated their market. He said he believes that there is plenty of market if you can deliver a good product. Roe is a very sensitive market as you have to get it at the right stage, you have to take very good care of it. You have to get it striped and get it to where it's going. DIPAC does support CSHB 406(RES) from the standpoint that they will be able to harvest these dark chums and utilize the flesh that they can for whatever purpose they can. He noted he is proposing that they go on the internet. If somebody wants to come in and put in a fishmeal plant or anything else, they can have the fish. Number 1388 RICHARD LAUBER, Pacific Seafood Processors Association, was next to come before the committee. He said, "Let me bring this debate back to where I think it ought to be, and focus on the fact that what this legislation would do, and quite frankly my understanding what the department's regulation would do, is make a major major policy change in the state of Alaska. The state of Alaska has consistently had a policy in all areas of fish and game against wanton waste. We have statute after statute after statute on the books that opposes wanton waste. Certainly, while I'm not any expert in the game laws or the fowl laws - bird laws in this state, I understand that there are statutes, criminal penalties, etc., for wanton waste. I have personally - I have been involved in most of the legislation regarding fisheries. As you're aware there is a bill - legislation - a law regarding herring roe stripping. This was a monumental battle in this legislature and the reason for it was that many other reasons -- many other reasons that you heard today were voiced at that time. The legislature had repeatedly said, `No roe striping,' even though it had economic impacts, it made good sense in some cases, but `No roe striping.' Many of you are aware more recently of the pollack roe striping issue in the Gulf of Alaska and in the Bering Sea, but particularly in the Gulf of Alaska. Factory trawlers came in and found it economic to strip the roe and discard the carcasses. That was a battle that Alaska fought. In fact, the current governor was on the North Pacific Fishery Management Council at that time and that was a high water mark, apparently in his concern, because his resume on the internet includes the statement that he was a prime sponsor and supporter of no roe striping of pollack. The current law regarding salmon prohibits the waste of salmon. That law was originally passed in 1975 and was amended in 1984 to make it more specific. And that law basically, and portions of it are contained in this statute under another section that it must go to sale to a commercial buyer, must be consumed by human or domestic animals or must be used for scientific educational display purposes. And then it says that the commissioner, upon request, may authorize other uses of salmon that would be consistent with the maximum and wise use. Uses, I do not consider and I think that there is strong feeling, no doubt the Department of Law has spotted this, that you cannot consider throwing a product away as a use. Yes, Mr. Chairman, I'll try to speed up, but I - basically about the only one that testified today. I'd be happy to stop and then come back at a later time if you'd like me to do that." CO-CHAIRMAN WILLIAMS asked Mr. Lauber if he could speak to the current regulations. MR. LAUBER said, "I believe that the statute, which of course the regulations must be based upon, talks about uses and if you look at the three uses that are currently contained in the statute it states that a use would be by a commercial buyer, that it would be for human consumption or domestic use and/or by domestic animals or scientific educational or display purposes. It seems logical that there could be an interpretation, and I have all the great faith in the attorney generals office and their lawyers, but I have had to tell you and I'm sure, Mr. Chairman, you and other members have known many instances where the courts have not borne out the advise of the attorney generals office. So it's possible - just possible, remotely so, that this is not legally considered a use, and therefore, the commissioner would not be allowed to do that." Number 1307 CO-CHAIRMAN WILLIAMS said, "I have a couple of questions and we've been talking about what the fishermen are going to do. I think you just heard one of the fishermen up here saying that he takes the fish to the processors and the processors refuse to buy the fish. You might even talk a little bit about what Representative Barnes said here that there is a big demand in Asia or the process of looking at that market. Maybe you could talk a little bit about what's going on." MR. LAUBER said, "The bill - the substitute, as I understand it, would allow hatcheries and fishermen that receive permits to fish in terminal harvest areas. To hold this bill out as a great beneficial bill for fishermen of the state of Alaska I think would be doing a disservice because it would be a limited number of fishermen that would be able to participate in the terminal harvest area and, of course, the hatcheries. So basically, what this is a hatchery bill that would benefit and a bail out, if you like, of hatcheries." CO-CHAIRMAN WILLIAMS asked Mr. Lauber to talk about why the processors won't buy fish. MR. LAUBER said he believes all of this is market driven and the situation may get worse. He said you don't improve that situation by allowing hatcheries or a limited number of fishermen to go into a terminal harvest area and strip roe. When processors or anyone else buys salmon, they buy the whole salmon. The price of that is based on the flesh and on the eggs. If you allow someone to dump a lot of eggs on the roe market, it's bound to have an affect on the overall price of salmon. So in the interest of helping the fishermen, this legislation likely will hurt the bulk of the fishermen because the fishermen will likely receive a very price for chum and pink salmon. This will drive the overall price further down which is going to hurt the vast majority of them. It may help a few fishermen, but the bulk of fishermen it will hurt. It may help a few fishermen in the areas where there are hatcheries where they can roe strip. He said there was testimony from Fairbanks and there are many other places where there will be no market for their fish because of the availability of cheap roe and chum salmon from the hatchery area. This will exasperate that problem. Number 1474 CO-CHAIRMAN WILLIAMS said, "I don't think that the a -- and I may be wrong, you're the processor expert in this area, but the fish that are caught on the Yukon there is a lot of problems we have as you know in getting that fish to the marketplace and the cost is part of the factor in that fish. I know as far as selling timber in Ketchikan and (indisc.) you remember when the spruce mill was operating there and we were (indisc.) drying the timber in that area and we had to market it outside of Alaska and it just cost too much..." MR. LAUBER said, "I understand that, Mr. Chairman, they have other problems, but when you have roe technicians that leave those processors on the Yukon and up and down those rivers and go to the hatchery sites or places that are using hatchery fish for roe, the person that is processing those fish up there has no market and, therefore, since they have no market then the fishermen have no market. So it has an impact. It's a demonstrated impact and that's before the impact of this legislation which would be monumental. Number 1530 CO-CHAIRMAN WILLIAMS asked Mr. Lauber to talk a little bit about why they aren't marketing overseas. He noted Representative Barnes said there is a big market in Asia. MR. LAUBER said he thinks that Asia is a market. He said Asia is a market for light fleshed chum salmon. Unfortunately, the problem is that between us and that market there happens to be a large hatchery area of Japan and they raise chum salmon. They are shipping some chum salmon to China. Their shipping costs are much lower than a buyer in Alaska would have. They have a competitive edge. Mr. Lauber said he thinks that in the future, there is a market for those chums in Asia. Mr. Lauber said, "If you set a policy that allows people to make money at striping the roe, you're going to hurt that market - the development of that market because those people are not going to be forced to find these other sources. And that's what we should be doing, we should be taking this product off of the market to improve the price to the fishermen who catch it in the common property resource, not by allowing people to strip the roe, hurt the market, hurt the fishermen that are in the common property resource and hurt the processors who are trying to survive in order to buy all kinds of salmon, not just these chums and pink salmon that are largely spawned in hatcheries. We have a very very crucial situation, Mr. Chairman, in this state today. The largest employer in the state is the seafood industry and I can tell you the processors are in dyer straights, as you are aware - you've read in the papers about people going bankrupt, people not opening canneries. It is going to be a very difficult situation and this is not going to help us, and it won't help us with the fishermen that we're desperately trying to buy fish from." Number 1634 CO-CHAIRMAN WILLIAMS said, "I'd like to make a comment though that 1995 salmon roe for pink and chum, statewide, weight was 416,025 and the processors were the largest of that and then the Yukon was the rest. Thank you Your Honor." MR. LAUBER said, "Could I add just one statement and that is there was a statement made earlier regarding the vote of this committee and the legislature - the House of Representatives on that. I would like to go on the record to the fact that there was no testimony in opposition to that bill at that particular time. There were various reasons for it. Most of them had to do with the conflict in timing that people not being in the capital at the time and there was opposition in the other body, but I wanted to put that in the record that the legislators that voted for that did not have the benefit of those speaking in opposition to the legislation." Number 1712 GEOFF BULLOCK, United Southeast Alaska Gillnetters, came before the committee to give his testimony. He said this isn't an issue on hatcheries so much as it is an issue on the fishermen. There are problems out there and everybody would admit that, but to say to the fishermen "You're not gunna be allowed to continue to make a living like you have the previous one or two years," is unfair. It's a shame, it's tragic and it's too bad that there is going to be a large number of fishermen, not a large industry, who are going to be curtailed in the way they make a living based on the money they pay into those fish. Number 1800 KATHRYN HANSEN, Commercial Gillnetter, came before the committee members to give her testimony. She said she and her husband both have limited entry gillnet permits. Ms. Hansen said one of the things that she hasn't heard is that there are 41 fishermen who have been doing marketing of their own fish out of 465 permits. That is less than 10 percent. Those 41 people bring the price up to those who are fishing fish in the round for the processors. She said because they are able to market their fish and go after roe, the processors have to pay the fishermen closer to a fair price. Ms. Hansen said she doesn't want to have to put in the work to market fish, clean fish and take care of the roe. She said she would much rather go out catch fish and sell them to a processor. If the processors don't have any competition, the fishermen won't get any kind of price for the fish. Ms. Hansen said by being able to market and process roe, it's the one guarantee that those few guys out there that are doing it keeps the price up so that they can almost make a living. There being no further testimony, the bill was held.