Legislature(2001 - 2002)

02/13/2002 01:00 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 288-LIMITED ENTRY BUY-BACK PROGRAM                                                                                         
[Contains discussion of HB 286]                                                                                                 
Number 0010                                                                                                                     
CO-CHAIR  SCALZI  announced  that  the first  order  of  business                                                               
before  the committee  would  be HOUSE  BILL NO.  288,   "An  Act                                                               
relating to  commercial fisheries  limited entry  permit buy-back                                                               
Number 0094                                                                                                                     
REPRESENTATIVE  SCALZI  moved  to adopt  the  proposed  committee                                                               
substitute,  version  22-LS1108\L,  Utermohle, 02/13/02,  as  the                                                               
working  document.   There  being  no  objection, Version  L  was                                                               
before the committee.                                                                                                           
Number 0276                                                                                                                     
MARY   McDOWELL,   Commissioner,   Commercial   Fisheries   Entry                                                               
Commission (CFEC),  Alaska Department  of Fish and  Game (ADF&G),                                                               
informed the  committee that  the addition of  Sections 1,  3, 4,                                                               
and  7  is to  make  other  sections  of  the limited  entry  law                                                               
consistent with  a change  that HB 288  makes to  [AS 16.43.]320.                                                               
She explained that  under HB 288 only  transferable limited entry                                                               
permits  are eligible  for a  buy-back program  under state  buy-                                                               
back.   In addition, current  law allows  nontransferable permits                                                               
to be bought out.                                                                                                               
MS. McDOWELL indicated  it was discovered during  the drafting of                                                               
[Version L] that the other  references to nontransferability need                                                               
to be  cleaned up.  Section  2 adds specific language  to clarify                                                               
that  the  permit holder  may  voluntarily  relinquish a  permit.                                                               
Currently,  the Limited  Entry  Act specifies  that  a permit  is                                                               
forfeited  to  the state  if  the  permit  holder fails  to  make                                                               
his/her  annual renewal  fee payment  for two  consecutive years.                                                               
She  explained that  most  people who  want  to relinquish  their                                                               
permits stop  making renewal  payments, and  after two  years the                                                               
permit is relinquished.                                                                                                         
Number 0389                                                                                                                     
MS. McDOWELL said  there are occasions when a person  may want to                                                               
relinquish his/her  permit immediately,  and those  requests have                                                               
always been  honored.  She indicated  since this is likely  to be                                                               
used more  frequently, there  should be  a provision  that allows                                                               
voluntary  relinquishment.     She   suggested  this  may   be  a                                                               
cornerstone for  some of  the buy-back programs  and some  of the                                                               
other fleet-consolidation  programs that  are anticipated  in the                                                               
future.   The final change  in [Version  L] adds a  definition of                                                               
"optimum number" to  the definition section of  the Limited Entry                                                               
Act;  current  law speaks  only  to  an  optimum number  and  the                                                               
standards for establishing one.                                                                                                 
MS.  McDOWELL   explained  that  the  implication   is  that  the                                                               
commission must  choose one number,  which is deemed  the optimum                                                               
number of  permits in  a given  fishery for  all time.   However,                                                               
that  standard  doesn't  seem to  recognize  the  variability  in                                                               
factors that  go into  making that  determination:   fish prices,                                                               
harvest  levels,  the  cost of  harvesting,  and  other  overhead                                                               
expenses that fluctuate  from year to year and over  time.  Since                                                               
all of those  variables affect what constitutes the  ability of a                                                               
fisherman  to make  a reasonable  rate  of economic  return in  a                                                               
fishery  and  the number  of  permits  it  takes to  harvest  the                                                               
allowable commercial take  in a fishery, those  are the standards                                                               
that have to be  used to set an optimum number.   If any variable                                                               
changes significantly,  the optimum  number of participants  in a                                                               
fishery would also vary.                                                                                                        
MS.  McDOWELL  suggested it  would  be  much more  reasonable  to                                                               
require the commission to determine  the optimum-number range and                                                               
set the parameters - a  more reasonable standard.  She reiterated                                                               
that this would  add an ability to set a  number range, which the                                                               
commission  thinks would  make  the  optimum-number process  more                                                               
meaningful and  less subject to  challenge.  She stated  that the                                                               
commission fully supports [Version L].                                                                                          
Number 0591                                                                                                                     
REPRESENTATIVE  STEVENS suggested  the word  "optimum" means  the                                                               
best, the ideal; therefore, it's  not an optimum specific number,                                                               
but an ideal range of numbers.                                                                                                  
MS.  McDOWELL concurred,  adding that  standards in  AS 16.43.290                                                               
set forth  the determining [factors].   She explained that  it is                                                               
what  would create  a  reasonable return  to  a fisherman,  avoid                                                               
economic distress,  and keep enough  fishermen "in the  water" to                                                               
harvest the allowable take and  so forth.  Currently, the statute                                                               
allows one  number that meets  all of  those criteria.   She said                                                               
due  to  the fact  that  those  [criteria] vary,  the  commission                                                               
thinks the foregoing would make more sense.                                                                                     
REPRESENTATIVE  STEVENS suggested  that  optimum  means the  very                                                               
most;  therefore,  the  very  most  and  the  range  would  be  a                                                               
contradiction   of   words.      He  asked   Ms.   McDowell   for                                                               
MS. MCDOWELL  said under  statute, the  word "maximum  number" is                                                               
what  is  used in  setting  a  limitation.   She  explained  that                                                               
optimum-number  provisions   presume  that  once  a   fishery  is                                                               
limited, a  study is performed  on the conditions in  the fishery                                                               
and set at the optimum number  - not meaning most, but under this                                                               
circumstance, meaning  the best number  for that fishery  to meet                                                               
the standard set out in [AS  16.43.]290.  She said then [CFEC] is                                                               
obligated under that statute; however,  without this bill, [CFEC]                                                               
would be  obligated to  kick into the  state buy-back  program if                                                               
the optimum  number were lower  than the number already  issued -                                                               
"if the  optimum number shows  that there are not  enough permits                                                               
in the fishery."                                                                                                                
CO-CHAIR SCALZI, speaking as the  sponsor of HB 288, suggested it                                                               
is  difficult   because  when  [optimum]   is  applied   to  this                                                               
[provision]  it  has  a  different definition  than  if  it  were                                                               
applied  to maximum  sustained  yield.   He  said  they are  both                                                               
subjective, but [ADF&G] doesn't  have the authority to [determine                                                               
the  definition] of  optimum; it  would be  up to  the courts  to                                                               
decide that, if it were ever challenged.                                                                                        
Number 0774                                                                                                                     
REPRESENTATIVE  McGUIRE suggested  that  in  interpreting law,  a                                                               
judge may  refer to the actual  definition.  She referred  to the                                                               
American  Heritage Dictionary  of  the English  Language for  the                                                             
definition  of optimum  and read,  "Optimum is  the best  or most                                                               
favorable  condition,   degree,  or   amount  for   a  particular                                                               
situation; the most favorable or advantageous."                                                                                 
Number 0842                                                                                                                     
GERALD (JERRY)  McCUNE, Lobbyist  for United Fishermen  of Alaska                                                               
(UFA), informed  the committee  that UFA  supports HB  288, which                                                               
allows each  [individual] fishery to  decide whether it  wants to                                                               
use this option.   As the bill is written,  it allows the [permit                                                               
holder] to  get an optimum number  and look at it  to see whether                                                               
it  is satisfactory.    It creates  an option  for  a fishery  to                                                               
institute a state buy-back; however,  it also gives the [fishery]                                                               
an option to get out anytime.                                                                                                   
MR. McCUNE said under the  old statute, once the [fishery] orders                                                               
an  optimum  number,  it  is   almost  locked  into  a  buy-back.                                                               
Therefore,  [HB 288]  cleans  this  up and  gives  the fleets  an                                                               
option that all of the permit holders  can look at to see if they                                                               
want to use this option for  their particular fishery.  He stated                                                               
that UFA supports  [legislation] that gives fleets  the choice to                                                               
be more  viable and  more efficient  in their  area; this  is one                                                               
option available  for people to  pick from and  consider, whether                                                               
it will fit their fishery or not.                                                                                               
CO-CHAIR  SCALZI said  HB 288  and HB  286 are  for consolidation                                                               
purposes.   He referred  to a  picture that he  said was  a good,                                                               
graphic example of  a fishery in Bristol  Bay.  He said  a 25- to                                                               
50-percent reduction  in gear and  effort there  would [maximize]                                                               
some of the fisheries currently before the committee.                                                                           
Number 0980                                                                                                                     
REPRESENTATIVE FATE  asked what will prevent  this situation from                                                               
continuing if it is a voluntary  option; also, why would a person                                                               
volunteer  to  relinquish  a  permit  or  sell  it  back  to  the                                                               
CO-CHAIR  SCALZI said  statutes allow  that to  happen now;  in a                                                               
buy-back of  permits, also purchased  must be the boat,  net, and                                                               
all of  the equipment - a  cumbersome and expensive process.   He                                                               
said HB  288 would  streamline the  current process  available to                                                               
the fishing  industry.   He said  there has  not been  a buy-back                                                               
program from  the inception of  limited entry because of  some of                                                               
these  [issues].   He  said  the  hope  is  that fleets  want  to                                                               
consolidate  and [maximize];  HB 288  may help  by [streamlining]                                                               
the process.   He said the  language that allowed the  program to                                                               
buy back  the boats,  gear, and  so forth  had been  removed from                                                               
statute; only the permits may be  bought back.  He explained that                                                               
because  the program  is voluntary,  it does  not stop  boats and                                                               
gear from  being sold as a  package; the decision is  left to the                                                               
seller.   However,  HB  288  alleviates the  burden  if just  the                                                               
permit is sold.                                                                                                                 
REPRESENTATIVE FATE suggested that HB  288 is directed toward the                                                               
big fleets  and the blue-water fishery.   He asked whether  it is                                                               
also going to be applicable to the fisheries along rivers.                                                                      
CO-CHAIR SCALZI said  yes; it is applicable to  any limited entry                                                               
fishery in the state.                                                                                                           
Number 1194                                                                                                                     
SUE  ASPELUND,  Executive  Director, Cordova  District  Fishermen                                                               
United  (CDFU),  testified  via teleconference.    She  told  the                                                               
committee  CDFU views  this legislation  as "clean-up"  language.                                                               
Furthermore,  CDFU appreciates  the effort  to make  the buy-back                                                               
provision more flexible  and responsive to the  changing needs of                                                               
the salmon  industry.  She said  she was excited to  see that the                                                               
proposed committee  substitute (CS)  [Version L] provides  for an                                                               
optimum  range  rather than  a  fixed  number.   The  range  more                                                               
accurately reflects  the variability  that occurs in  any seafood                                                               
harvest.  She  urged the committee's support in  [moving out] the                                                               
proposed CS.                                                                                                                    
CO-CHAIR SCALZI  noted that Kathy  Hansen had presented  a letter                                                               
of support from the Southeast  Alaska Fishermen's Alliance to the                                                               
committee; the  Alaska Trollers Association had  also presented a                                                               
letter of support.                                                                                                              
Number 1270                                                                                                                     
REPRESENTATIVE  FATE  moved  to  report  CSHB  288  [version  22-                                                               
LS1108\L, Utermohle,  2/13/02] out  of committee  with individual                                                               
recommendations and a zero fiscal note.                                                                                         
Number 1321                                                                                                                     
CO-CHAIR SCALZI said  his intent would be to bring  HB 288 to the                                                               
floor  at  the  same  time  as  HB  286.    He  said  he  thought                                                               
consolidation, staffing, and  so forth fit into  one category and                                                               
should be heard at the same time.                                                                                               
CO-CHAIR SCALZI asked  if there was any objection  to the motion.                                                               
There  being no  objection, CSHB  288(RES) was  moved out  of the                                                               
House Resources Standing Committee.                                                                                             
HB 286-OWNERSHIP OF MORE THAN ONE FISHERY PERMIT                                                                              
[Contains discussion of HB 288]                                                                                                 
Number 1351                                                                                                                     
CO-CHAIR SCALZI announced that the  next order of business before                                                               
the committee  would be HOUSE  BILL NO.  286, "An Act  allowing a                                                               
person to hold more than  one commercial fishing entry permit for                                                               
a fishery;  relating to the  power of  the Board of  Fisheries to                                                               
establish fishing  periods and areas for  subgroups of commercial                                                               
fishing  permits and  commercial  fishing permit  holders and  to                                                               
establish limits on  the amount of fishing gear that  may be used                                                               
by certain  commercial fishing permit holders;  and providing for                                                               
an effective date."                                                                                                             
Number 1355                                                                                                                     
[There was a motion to adopt  CSHB 286(FSH), but that version was                                                               
already before the committee.]                                                                                                  
CO-CHAIR SCALZI, speaking  as the sponsor of HB  286, pointed out                                                               
that  the bill  has  been changed  from a  "stacking"  bill to  a                                                               
"consolidation" bill.   He explained that there  was concern that                                                               
giving   too  much   latitude  at   this  early   stage  of   the                                                               
revitalization of fisheries to the  Board of Fisheries may result                                                               
in some  unnecessary harm, although  well-intended by  the board.                                                               
He  referred to  the "Chignik  proposal" in  which the  board was                                                               
trying  help  the industry  benefit  but  may have  inadvertently                                                               
caused some downstream problems.                                                                                                
CO-CHAIR SCALZI  reported that United  Fishermen of  Alaska (UFA)                                                               
didn't  wish to  move forward  with the  stacking provision,  but                                                               
felt  HB  286  was  important  for  consolidation  reasons.    He                                                               
explained  that it  doesn't  require a  buy-back  permit to  take                                                               
place, which  requires optimum numbers  and the  state's entering                                                               
into the  buy-back program and  administering it.  He  said [CSHB
286(FSH)] would allow an individual in  an area to hold more than                                                               
one permit.   Aside from  the statutory language, there  would be                                                               
no other  cumbersome regulations included.   It also  would allow                                                               
fishermen  to form  associations  within their  gear  group in  a                                                               
limited  entry   area;  therefore,   the  fishermen   can  assess                                                               
themselves a  tax.  He  indicated this would provide  the fishing                                                               
industry  the  tools  to  modify  their  business  practices,  be                                                               
innovative, and be more self-sufficient.                                                                                        
Number 1599                                                                                                                     
REPRESENTATIVE  KERTTULA asked  how  HB 286  corresponds with  HB
CO-CHAIR SCALZI  explained that sometimes  a buy-back  plan would                                                               
work in  one area, whereas  it may not  work in another;  this is                                                               
the  situation with  HB 286.   He  indicated that  if a  group of                                                               
people owned  permits, they could  purchase an  additional permit                                                               
without having  to formulate a  large buy-back program.   He said                                                               
the incentive for a person  to [purchase an additional permit] is                                                               
questionable because  it would require  one boat to be  taken out                                                               
of the water.   He added that there is  a distinction between the                                                               
two programs.                                                                                                                   
REPRESENTATIVE KERTTULA  asked if the  two can be  used together;                                                               
more specifically, can  a [person] take a  consolidation and then                                                               
have a buy-back?                                                                                                                
CO-CHAIR SCALZI said yes; a buy-back  plan is voluntary.  He said                                                               
in the instance  that a [person] owned two permits  and there was                                                               
a buy-back  plan allowed, that  [person] could choose to  keep or                                                               
sell both [permits].                                                                                                            
Number 1706                                                                                                                     
BRUCE    WALLACE,    Commercial    Fisherman,    testified    via                                                               
teleconference.    He  told  the  committee  he  appreciates  the                                                               
simplicity  [consolidation]   allows  and  would   support  that.                                                               
However, if the  stacking component isn't there,  and the ability                                                               
to modify the  fleet regardless of where it might  be located and                                                               
how the [modification] might be  done, it probably diminishes the                                                               
basic property that he supports,  although he does support the CS                                                               
[CSHB 288(FSH)].                                                                                                                
Number 1765                                                                                                                     
RUDY  JOHANSEN  testified  via   teleconference.    He  told  the                                                               
committee that  he supports the  testimony given by  Mr. Wallace.                                                               
He said he thought that  the stacking program should provide more                                                               
to gain  than just a  permit; in addition,  he would like  to see                                                               
something that [promotes] the fishery.                                                                                          
Number 1799                                                                                                                     
BRENNON  EAGLE  testified  via   teleconference.    He  told  the                                                               
committee he  would like  them to  consider adding  the Southeast                                                               
pot shrimp fishery,  allowing it some of the same  tools that the                                                               
salmon  fishery  would   be  allowed.    He  said   a  number  of                                                               
individuals  in the  [Southeast pod  shrimp fishery]  have talked                                                               
about wanting to do some  type of consolidation or [maximization]                                                               
ever  since  limited  entry  became  available  five  years  ago;                                                               
however, they  didn't have a  "vehicle" to do  it.  He  said this                                                               
would be the exact vehicle needed.                                                                                              
CO-CHAIR SCALZI said  initially HB 286 was  not discriminatory to                                                               
other  fisheries;   however,  since  the  UFA   board  met,  they                                                               
requested  it be  modified to  just salmon  fisheries.   He added                                                               
that he  supports the concept  of [adding other  fisheries]; this                                                               
is something that the committee  would be considering in the next                                                               
few weeks.   He remarked that the committee needs  to ensure that                                                               
there is consolidated support across all group users.                                                                           
Number 1886                                                                                                                     
ALAN REEVES testified via teleconference.   He told the committee                                                               
he agreed with Mr. Eagle's testimony.   He said he thought any of                                                               
the  tools  could be  beneficial,  although  the [permit  holder]                                                               
doesn't have  to use them.   He commented  that he would  like to                                                               
see the Dungeness [crab] fishery be  added.  He explained that he                                                               
had been in  this fishery for 20 years, and  has seen the fishery                                                               
go from  relaxed to really aggressive.   He said he'd  also heard                                                               
many  discussions on  trying to  solve some  of the  overcrowding                                                               
issues; therefore, he thinks this  would be beneficial to have HB
286 as a tool.                                                                                                                  
MR.  REEVES explained  that when  the  fisheries were  originally                                                               
divided  up  amongst  all  of the  fishermen,  the  division  was                                                               
according  to high  abundance,  the  top amount  of  pots in  the                                                               
fishery - fishermen actually participating  at the time.  He said                                                               
possibly because of a high  abundance and a high price, fishermen                                                               
might have  survived during that  time; however, now that  it has                                                               
become a high  abundance and a low price with  the same amount of                                                               
permits,  it is  [difficult] to  survive; consequently,  it is  a                                                               
"starvation" effect.   He  said he would  applaud any  tools that                                                               
can be used to fix the fisheries and get them healthy again.                                                                    
Number 2014                                                                                                                     
DAVID  BEDFORD,  Executive  Director,  Southeast  Alaska  Seiners                                                               
Association  (SASA);  and  Member,  Board  of  Directors,  United                                                               
Fishermen  of Alaska  (UFA), informed  the committee  that he  is                                                               
licensed to practice  law in Alaska.  He said  he believes HB 286                                                               
is of great importance to  the commercial fishermen in Alaska; in                                                               
addition, [SASA] had a great deal  to do with the current form of                                                               
HB 286.  He  told the committee that these are  hard times in the                                                               
commercial salmon  fisheries in Alaska; consequently,  in Bristol                                                               
Bay  permits are  currently selling  for one-tenth  of the  value                                                               
they sold for ten years ago.   The price the permit commands is a                                                               
benchmark  for  the value  that  people  think the  fishery  will                                                               
produce in  the future; over  [the past] ten years,  the estimate                                                               
of that value has dropped to 10 cents on the dollar.                                                                            
MR. BEDFORD said  this year in Southeast Alaska  dozens of purse-                                                               
seine vessels won't have markets; they  will be tied to the dock,                                                               
and each  vessel employs five people.   Hundreds of jobs  will be                                                               
lost in small  communities that cannot afford to  lose those jobs                                                               
because there's  no market  for the fish.   Fishermen  around the                                                               
state see  the value  of the fish  that they  harvest plummeting.                                                               
He explained  that sockeye salmon  in Bristol Bay,  which brought                                                               
over a dollar a pound ten years  ago, brought 40 cents a pound in                                                               
2002.   He  said in  Southeast Alaska,  pink salmon  sold for  33                                                               
cents a pound in the mid-1980s;  this year, the price is expected                                                               
to be approximately 10 cents a pound or less.                                                                                   
Number 2125                                                                                                                     
MR. BEDFORD  said these  sorts of facts  underscore the  kinds of                                                               
concerns that  commercial fishermen have  for the state  of their                                                               
industry.    However, the  problem  is  not just  for  commercial                                                               
fishermen,  but also  for  coastal communities  and  Alaska as  a                                                               
whole.  The  commercial fishing industry is  the largest private-                                                               
sector employer in the state.   In many coastal communities, over                                                               
50-percent  of  the basic  private-sector  employment  is in  the                                                               
commercial fisheries.  He suggested  that as the salmon fisheries                                                               
go either  up or down,  so goes the  economy in those  regions of                                                               
the state.   He  said HB  286 is  part of  commercial fishermen's                                                               
efforts to structure a program to  help themselves in the face of                                                               
difficult times,  not asking for  money but offering  some simple                                                               
tools through legislation  to allow fishermen to  deal with these                                                               
MR. BEDFORD  suggested the solution is  conceptually very simple:                                                               
if there are fewer  fish and a lower price, then  one way to deal                                                               
with this  is by having  fewer nets in  the water -  reducing the                                                               
number of fishermen.  He offered  Bristol Bay as an example where                                                               
there was  high production  in the early  1990s that  has dropped                                                               
off; it is  still a substantial, harvestable surplus  but not the                                                               
huge bounty  of prior years.   He suggested [reducing  the number                                                               
of  fishermen] would  assist fishermen  in  getting a  reasonable                                                               
rate of return on their capital investment.                                                                                     
MR.  BEDFORD said  in developing  HB 286,  SASA had  a number  of                                                               
concepts in  mind.   Primarily, SASA  felt that  fishermen should                                                               
bear the primary responsibility  for dealing with these problems;                                                               
therefore,  SASA  believes  the  proposed  consolidation  program                                                               
should be  voluntary and regional,  and that the programs  put in                                                               
place should be accountable to the fishermen and to Alaska.                                                                     
Number 2225                                                                                                                     
MR. BEDFORD  offered an overview  of [CSHB 286(FSH)].   It allows                                                               
fishermen  to  hold   two  permits  for  the   purpose  of  fleet                                                               
consolidation.   It makes no  other changes to the  limited entry                                                               
laws; the  idea is to  make this a  low-impact program.   It also                                                               
allows  fishermen  to  set  up   a  nonprofit  association  -  an                                                               
association  under  existing  law,  such as  a  (c)(5)  nonprofit                                                               
corporation -  and proceed  from there.   It allows  fishermen to                                                               
vote on whether to tax  themselves to pay for consolidation, with                                                               
a two-thirds majority required - not  of those voting, but of all                                                               
permit holders - before a levy  can be assessed.  In addition, it                                                               
establishes  administrative procedures  to protect  the interests                                                               
of fishermen and of the state.                                                                                                  
MR. BEDFORD said  in regard to responsibility,  fishermen want to                                                               
set  up a  consolidation program  in  which they  would bear  the                                                               
upfront costs.   If fishermen establish  a nonprofit association,                                                               
then  they will  pay to  do that;  they will  bear the  burden of                                                               
communicating  to the  people of  the fishery  what they  have in                                                               
mind and trying to persuade them to  vote in order to have a two-                                                               
thirds majority.  Subsequently,  through a consolidation program,                                                               
fishermen would  have the choice  of assessing themselves  to pay                                                               
for it,  if the tax  is supported by  two-thirds of those  in the                                                               
fishery.   Fishermen would  tax themselves and  then use  that to                                                               
accomplish  their  objectives;  they  will then  monitor  and  be                                                               
responsible for administering the program.                                                                                      
MR.  BEDFORD explained  that the  two-thirds-majority requirement                                                               
for the assessment was put into  place because it was felt a high                                                               
bar was appropriate  before assessing people this  [type] of tax.                                                               
The program  is voluntary  not only at  the outset;  anytime they                                                               
feel the  program isn't  operating to  their [advantage],  if 25-                                                               
percent  of them  petition, then  another vote  will be  held and                                                               
they can vote to repeal the  assessment, should they choose to do                                                               
Number 2370                                                                                                                     
MR. BEDFORD  said in regard  to the program's being  regional, it                                                               
was felt that  it was really important that  people have autonomy                                                               
in this; thus  they have control over their local  interests.  In                                                               
each region of the state,  each particular fishery should conduct                                                               
it's  own program.   For  example, Southeast  Alaska has  a seine                                                               
fishery, troll fishery,  and gillnet fishery; each  would have to                                                               
speak  for itself,  and no  other fishery  could impose  anything                                                               
upon  it.   Similarly, should  the gillnet  fishery decide  to do                                                               
something, that bears  no implication for the  gillnet fishery in                                                               
Prince William Sound, Cook Inlet, or Kodiak.                                                                                    
MR.  BEDFORD said  accountability  is  the bulk  of  HB 286;  the                                                               
substantive part of that is a  couple of paragraphs, but the bulk                                                               
of it  is that  a vote  will be  set up  that kind  of "sidebars"                                                               
where they  have to be  on that.  An  association will be  set up                                                               
that [allocates] responsibility; in  addition, an annual business                                                               
plan is [required] and an annual  report of their activities.  He                                                               
said  these  things  will  be  provided to  the  members  of  the                                                               
organization and all  of the fishermen, and to the  state so that                                                               
it  is available  to the  public.   He  recommended HB  286 as  a                                                               
really good step forward in trying a solution.                                                                                  
Number 2474                                                                                                                     
REPRESENTATIVE  KERTTULA asked  how the  permits will  flow -  in                                                               
particular, in relationship to the buy-back at the same time.                                                                   
MR. BEDFORD said it depends  on that particular group's decision.                                                               
He  indicated if  there are  more  permits than  the fishery  can                                                               
support,  then   they  could  collect  an   assessment  from  the                                                               
fishermen and possibly extinguish some permits.                                                                                 
MR. BEDFORD offered another approach:   collect an assessment and                                                               
contract with  people who hold a  second permit to not  fish that                                                               
permit.  He  indicated that doing so would pull  a certain number                                                               
of permits  out; consequently, if a  lot of fish start  coming in                                                               
and a whole bunch  of money is made, it's of  more value to those                                                               
people  to sell  that permit  than to  retain it.   He  suggested                                                               
there would  be a free-market  control on how many  permits would                                                               
be  able to  be  pulled  out; however,  if  the fisheries  really                                                               
bottomed out, permits could be  bought or contracts could be made                                                               
cheaply.  He  indicated if the fishery is  going better, however,                                                               
then the permits  are going to be sold because  they are going to                                                               
be worth a lot of money.                                                                                                        
REPRESENTATIVE KERTTULA  asked Mr.  Bedford if  that puts  him at                                                               
the stead of the Commercial  Fisheries Entry Commission (CFEC) in                                                               
making decisions on how many permits should be issued.                                                                          
Number 2586                                                                                                                     
MR. BEDFORD said no.  T He  said they are going to tax themselves                                                               
and then use that to  accomplish their objectives; they will then                                                               
monitor  and  be  responsible for  administering  the  program.he                                                               
ultimate authority  for that  lies with CFEC.   He  indicated the                                                               
supreme court had ruled on a  case that there cannot be a fishery                                                               
that is too exclusive.  He said  any fishery that is going to put                                                               
this type of  program together is going to have  to "bear that in                                                               
the  back  of  their  minds."     He  suggested  that  commercial                                                               
fishermen aren't afraid  of being too exclusive right  now; a lot                                                               
of permits aren't  being fished because there is no  money in the                                                               
MR. BEDFORD  said some  of the elements  in determining  how many                                                               
permits are  out there  include economic  viability; if  it isn't                                                               
economically  viable, then  it's not  an immediate  concern.   He                                                               
remarked that the  people he works for would love  to see the day                                                               
when  there are  not enough  permits out  there because  too much                                                               
money is being  made; however, they don't think that  is going to                                                               
happen soon.  He added that  there is a constitutional sidebar on                                                               
REPRESENTATIVE KERTTULA  asked if  CFEC determines the  number of                                                               
permits issued.                                                                                                                 
MR. BEDFORD said  there is a process by which  CFEC can determine                                                               
the  optimum number;  however, CFEC  doesn't  determine any  more                                                               
than "we" would  on how many permits to fish.   He indicated CFEC                                                               
does not designate a specific  number of permits for fishing, but                                                               
discloses the  number of permits out  there.  He said  that would                                                               
not  change under  HB 286.   He  cited the  Kodiak fishery  as an                                                               
example of the current economics:   50 percent of the purse-seine                                                               
permits are  pieces of  paper in somebody's  filing cabinet.   He                                                               
said  that is  a response  to economic  circumstances.   He added                                                               
that [HB  286] is a slightly  different way of doing  exactly the                                                               
same thing; it gives people  more control instead of just flowing                                                               
with the immediate market circumstance.                                                                                         
REPRESENTATIVE KERTTULA asked  where the money goes  in the event                                                               
that a  fisherman "goes  in," there's not  an optimal  [number of                                                               
permits],  there  is  an association,  there  is  a  consolidated                                                               
permit, CFEC does a buy-back,  and in the interim the association                                                               
MR. BEDFORD  said there is  a possibility that  some associations                                                               
would collect an assessment and then  loan money to people to buy                                                               
a second permit.  He said  he doesn't know exactly how they would                                                               
deal with those kinds of circumstances.                                                                                         
REPRESENTATIVE KERTTULA asked Mr. Bedford  if he would leave that                                                               
to the association.                                                                                                             
MR. BEDFORD said  he thought [CFEC] would have to  deal with that                                                               
on an individual basis and figure  out what sort of program makes                                                               
sense to  them.  In  terms of the  interface between the  sort of                                                               
private  program and  the CFEC  buy-back program,  he said  first                                                               
off,  the  CFEC program  is  fairly  cumbersome and  requires  an                                                               
initial  assessment of  what the  optimum number  is.   There are                                                               
political  steps  involved,  such  as  an  appropriation  to  the                                                               
department.   In addition,  it requires  resources, which  is the                                                               
initial impediment.                                                                                                             
MR.  BEDFORD explained  that there  is a  lengthy review  process                                                               
followed by setting up a  buy-back program; however, there is the                                                               
problem of how to fund it.   He suggested CFEC would come back to                                                               
the  [legislature] at  that point.   He  said if  it's a  private                                                               
consolidation  program,  then  what  is the  motivation  for  the                                                               
fishermen to  go to CFEC?   If [fishermen] are running  a program                                                               
that is at a reasonable level, then  why go to CFEC at that point                                                               
and ask for an optimum-number study  in a buy-back?  He indicated                                                               
CFEC may question why those  scarce resources should be allocated                                                               
to [that fisherman] as opposed to somebody else.                                                                                
Number 2765                                                                                                                     
REPRESENTATIVE  KERTTULA said  one  of the  "sidebars" she  would                                                               
suggest to  any association is  that if an individual  has gotten                                                               
consolidation and possibly  even received money - and  in the end                                                               
that person  is going to  try to get rid  of the second  permit -                                                               
then that  money needs to go  back to the association.   She said                                                               
this isn't included in [HB 286].                                                                                                
Number 2795                                                                                                                     
MR.  BEDFORD remarked  that  one thing  he  finds so  fascinating                                                               
about HB 286 is that it  is so infinitely flexible.  He indicated                                                               
that any  one possibility opens up  all kinds of other  ends, and                                                               
that people's creative efforts result in really excellent ideas.                                                                
Number 2814                                                                                                                     
CO-CHAIR SCALZI said [CSHB 286(FSH)]  is radically different from                                                               
the original draft  because of the stacking  provisions that were                                                               
removed.   He indicated that in  addition to the good,  there are                                                               
downstream  effects  that can't  be  foreseen.   He  referred  to                                                               
earlier  testimony  about expanding  HB  286  to [include]  other                                                               
fisheries.   He  said UFA's  position is  to only  include salmon                                                               
this year; however,  he would like to hold HB  286 to give people                                                               
an opportunity  to work with  UFA and [SASA]  to see if  there is                                                               
that much  concern about  expanding [HB  286] to  other fisheries                                                               
throughout the state.  He  indicated the importance of completing                                                               
HB 286 this year.  He asked Mr. Bedford for his view.                                                                           
MR.  BEDFORD remarked  that  it is  tremendous  flattery to  hear                                                               
people say  that they would like  to take advantage of  [HB 286].                                                               
He explained that  when UFA reviewed this, members  felt this was                                                               
a  workable and  advantageous program  for the  salmon fisheries;                                                               
however, they  didn't feel they were  in a position to  speak for                                                               
[other fisheries].   He said he didn't know whether  HB 286 could                                                               
be  [amended] to  include  a single  Dungeness  [crab] or  shrimp                                                               
fishery, although it  might be possible.  He said  the reason the                                                               
bill was drawn narrowly was  because they thought their expertise                                                               
was narrow.                                                                                                                     
CO-CHAIR SCALZI  said that is  why there were no  other fisheries                                                               
added to this; in addition,  he wouldn't support writing the bill                                                               
for a  specific fishery.   He indicated  the bill  should blanket                                                               
all limited entry permits.                                                                                                      
TAPE 02-7, SIDE B                                                                                                               
Number 2960                                                                                                                     
GORDY WILLIAMS, Legislative Liaison,  Office of the Commissioner,                                                               
Alaska  Department  of  Fish  and   Game  (ADF&G),  informed  the                                                               
committee  that ADF&G  supports both  industry and  government in                                                               
getting  the kinds  of tools  they may  need to  address changing                                                               
circumstances in the  salmon fisheries; HB 286 is a  step in that                                                               
direction.   He  said the  bill  is permissive  in nature,  which                                                               
allows  individuals or  groups of  individuals to  make decisions                                                               
for themselves and for their  fishery; that's important because a                                                               
one-size-fits-all  doesn't necessarily  work  with management  or                                                               
allocation in the state.                                                                                                        
MR.  WILLIAMS referred  to Co-Chair  Scalzi's intent  to hold  HB
286.  He  said ADF&G would continue to work  with the sponsor and                                                               
some interested  parties on some  specific issues that  relate to                                                               
the department  and address those  in the interim.   He indicated                                                               
he would  be available to answer  questions the next time  HB 286                                                               
is heard.                                                                                                                       
Number 2920                                                                                                                     
CO-CHAIR  SCALZI   reflected  on  Mr.  Williams'   comment  about                                                               
expanding  HB 286  to include  all  fisheries.   He indicated  he                                                               
would like ADF&G to consider expanding the bill.                                                                                
Number 2903                                                                                                                     
GERALD (JERRY)  McCUNE, Lobbyist  for United Fishermen  of Alaska                                                               
(UFA), told  the committee  that owning more  than one  permit is                                                               
not going  to fit every  fishery; however,  it would be  a viable                                                               
option for  a small setnet  fishery.   The fishery would  have to                                                               
decide economically whether buying somebody  out of that site and                                                               
holding on to  that permit would foster gaining more  income.  He                                                               
said [HB  286] would  work in fisheries  where the  permit prices                                                               
are  currently  very low,  which  are  fully allocated  fisheries                                                               
where all  of the  permits are  fishing.   He suggested  [HB 286]                                                               
would not  work very well  if there  are many dormant  permits or                                                               
where it is  dictated by the market how many  people fish, but it                                                               
is  an  option to  use.    He said  the  difference  is that  the                                                               
voluntary one goes through the state.                                                                                           
MR. McCUNE suggested  that even if CFEC comes up  with an optimum                                                               
number, some  individual could challenge  the number and  take it                                                               
to  court.   He indicated  he wasn't  deterred by  the Johns  [v.                                                             
Commercial  Fisheries  Entry  Comm'n]  case.   He  said  this  is                                                             
because there are  people not fishing; furthermore,  the way some                                                               
of the fisheries  are currently structured makes  it difficult to                                                               
make a  profit.   He added  that if that  point is  reached, then                                                               
"we"  are doing  something positive.   He  explained that  UFA is                                                               
trying  to  ensure  that  regional  fishermen  can  choose  these                                                               
options to use as tools in their particular fishery.                                                                            
MR. McCUNE said taking  the net out of the water  is a good thing                                                               
anytime for  anybody in any fishery;  consequently, this provides                                                               
more for everybody.   He indicated that a  fisherman would remove                                                               
a  net  for himself  as  well  as  the  other fishermen  in  that                                                               
fishery.   The  decision  has  to be  made  by  the fisherman  of                                                               
whether  to hold  that permit.   He  said the  intent is  to make                                                               
fleets more  efficient and  more viable, to  get the  quality up,                                                               
and to  [fulfill] consumer demands.   He  remarked that it  is no                                                               
longer  a "headed-and-gutted"  market,  but is  either frozen  or                                                               
fresh fillets; farmed fish is dictating the market.                                                                             
Number 2785                                                                                                                     
MR. McCUNE said in addition  to making fleets efficient, [HB 286]                                                               
would ensure  better quality  and possibly  cut costs  in between                                                               
the canneries.   He indicated UFA's primary intention  is to make                                                               
the harvesters  healthy statewide.   He  remarked that  not every                                                               
fishery  is  going  to  be healthy  overnight  because  some  are                                                               
waiting for  better returns  than they had  before.   He remarked                                                               
that it's always a cycle, whether there are good returns or not.                                                                
MR. McCUNE  said he knows  that some people were  disappointed in                                                               
not having  incentives and stacking permits;  however, UFA didn't                                                               
want to  move into  a whole  bunch of  options and  ranges, which                                                               
would require  going to the  Board of Fisheries  to do that.   He                                                               
remarked  that he  thinks  this needs  to be  done  over so  many                                                               
years.   He'd told the  UFA board it  would be about  a five-year                                                               
[process] to  go through all of  the options and put  the options                                                               
on the table.  He said the  next round would be coming this fall,                                                               
and this  is a  good option  to move forward.   He  indicated UFA                                                               
would  be  talking  about  other   options  and  including  other                                                               
fishermen in the discussion.                                                                                                    
MR. McCUNE encouraged committee members  to call him anytime with                                                               
questions, concerns,  or comments.  He  also encouraged fishermen                                                               
to  contact him  to talk  about [current  activities].   He added                                                               
that UFA  is trying to  be responsible  to everybody and  to make                                                               
the  best  options  available  to  the  entire  state  and  every                                                               
Number 2700                                                                                                                     
REPRESENTATIVE McGUIRE applauded UFA's  efforts.  She said having                                                               
too  many nets  in the  water has  been a  problem that  has been                                                               
increasing yearly.  She said she  thought it was "neat" to see an                                                               
interested  group take  initiative  and come  to the  legislature                                                               
with some  solutions and  ways to  try to "go  down that  road on                                                               
your own and experiment."                                                                                                       
MR.  McCUNE   remarked  that  fishermen  are   very  independent;                                                               
therefore, they are  trying to come up with  solutions that don't                                                               
require state money  and that they can institute  themselves.  He                                                               
added  that fishermen  can make  those choices  as to  whether to                                                               
assess themselves in  a particular fishery.  He said  if it was a                                                               
small fishery,  then it would be  an easy talk; however,  in some                                                               
other fisheries  that are  fully allocated  or where  the permits                                                               
are not fishing,  currently half are not fishing;  they are going                                                               
to  have to  get  together  and figure  out  the  best course  of                                                               
action.  He said he thought [HB  286] would force a lot of people                                                               
to get together  and start discussing their fishery  and the best                                                               
options for each fishery across the state.                                                                                      
CO-CHAIR  SCALZI  reiterated  that  he would  like  to  see  what                                                               
dialogue is generated  by other members contacting  UFA in regard                                                               
to opening HB 286 up to other fisheries.                                                                                        
MR. McCUNE  indicated the dialogue  is currently  being generated                                                               
and that he would get back to the committee.                                                                                    
Number 2594                                                                                                                     
SUE  ASPELUND,  Executive  Director, Cordova  District  Fishermen                                                               
United (CDFU),  testified via teleconference.   She  informed the                                                               
committee that  passage of  HB 286  would provide  fishermen with                                                               
one of the simplest and most  immediate tools to take gear out of                                                               
the  water  in  distressed  fisheries.   She  remarked  that  the                                                               
fishing  industry needs  "a variety  of  tools in  the box"  that                                                               
provide  the  ability  to pursue  structural  changes  that  they                                                               
believe are  necessary for the  fishing industry  to successfully                                                               
compete in  the global marketplace.   However,  the legislature's                                                               
support is  needed for those  efforts to address the  concerns of                                                               
the fishing  industry.   She added  that [CDFU]  would appreciate                                                               
the legislature's support on [HB 286].                                                                                          
Number 2500                                                                                                                     
CO-CHAIR  SCALZI  indicated HB  286  would  be held  for  further                                                               

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