Legislature(2001 - 2002)
04/29/2002 02:13 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 206-LIMITED ENTRY FOR COMM. FISHERIES
MS. MARY MCDOWELL, Commissioner at the Commercial Fisheries Entry
Commission (CFEC), gave the following description of the origins
of HB 206. In 1996 the Legislature enacted a moratorium on the
entry of new vessels into the Korean hair crab fishery and in
1997 to the scallop fishery. As part of the Korean hair crab
moratorium bill, the Legislature included a provision directing
CFEC to work with the Department of Law to draft legislation that
would create a vessel-based limited entry program. In response to
that legislative mandate, HB 206 was drafted and introduced last
year by the House Resources Committee at CFEC's request.
MS. MCDOWELL said in its directive, the Legislature asked that
statutory language be developed to create a vessel-based program
that could be used in fisheries in which limitation to the
current, existing program would not effectively meet the purposes
of the Limited Entry Act: conservation of the resource and
protection of the economic viability of the fishery. In doing
that, the Legislature recognized that certain fisheries do need
limitation, but that the characteristics of those fisheries make
them ill-suited to CFEC's existing program and recognized that
the state needs a tool to handle those fisheries. HB 206 was
initially introduced as generic legislation as the Legislature
directed. It contained a new framework of a program better suited
to certain fisheries that CFEC could apply. However, the House
passed version of the bill was narrowed down so that it now
restricts the use of this program to only the scallop and hair
crab fisheries, the two fisheries placed under moratorium.
Members of the public expressed concern in the House committees
about giving generic authority to limit fisheries under this new
method, which diverges considerably from traditional limited
entry. HB 206 was amended to create the new program and authorize
its use in the two fisheries only. She explained that the program
does not limit those fisheries; it would be an alternative
available for CFEC's use if it does limit those fisheries.
MS. MCDOWELL pointed out the current limited entry program has
been in place for nearly 30 years and has been used to limit
nearly 65 fisheries. Its design is based on an owner-operator
model, which is characteristic of most fisheries. Those fisheries
are relatively small and tend to have single owners who invest in
their boats and equipment and operate them. Limited entry permits
are issued only to individuals, not to the vessels or
partnerships. However, in recent years, CFEC has been faced with
the need to handle fisheries that have evolved in a different
way, the hair crab and scallop fisheries being two of them. They
have different ownership and participation patterns and are
difficult to limit under CFEC's existing program. HB 206 contains
a modified approach that can be used in fisheries that are
characterized by larger, more expensive vessels, which are rarely
owned by one person. Skippers are often hired to run them and
they fish further offshore. If that fishery was limited using
the current limited entry program, there is a possibility that
the number of participants would increase because of the number
of skippers per boat. If the only two choices were open access to
the fishery or limitation, it's possible there would be enough
risk to the resource that managers would opt to close the fishery
rather than endanger the resource, resulting in a loss of jobs
and taxes.
CFEC also sees this as a fairness issue. In the existing limited
entry program, the person who has invested in the fishing
operation is the one who is likely to be "grandfathered" in. In
the scallop and hair crab fisheries, investors have purchased and
maintained vessels and hired skippers. The Legislature must
decide who should get the fishing privileges that go with that
vessel in the future. The Legislature recognized these problems
when it enacted the two moratoria because both fisheries are
vessel based. The hair crab moratorium ends in 2003 and the
scallop moratorium ends in 2004. CFEC needs to have a tool to
limit the hair crab fishery next year so passage of HB 206 this
session is important.
2:19 p.m.
CHAIRMAN TAYLOR noted that Senator Therriault joined the
committee.
MS. MCDOWELL said that passage of HB 206 will not effect the
existing limited entry program, which will continue to be CFEC's
primary method of limiting fisheries in the future. And, even if
HB 206 had passed as generic legislation, it contains a default
provision to CFEC's regular program unless CFEC could determine
that limitation would not be effective. The House-passed version
simply creates a tool that would be available to CFEC in just two
fisheries. She noted CFEC strongly supports maintaining the
traditional person or gear operator based limited entry system as
its primary program and recognizes that this legislation does
authorize an exception to the fundamental premise of that
existing program. HB 206 is a departure from CFEC's existing
program and it presents a policy call for the Legislature to
make. She stated CFEC believes this legislation is responsive to
the Legislature's directive and presents a pragmatic approach to
dealing with the evolving nature of Alaska's fisheries and that
CFEC is faced with having to limit a few fisheries that do not
fit the model that works well in other fisheries. CFEC supports
this legislation.
SENATOR THERRIAULT asked Ms. McDowell to explain why the two
fisheries do not fit the existing model.
MS. MCDOWELL explained that the ownership and participation
arrangements in the two fisheries differ from the traditional
fisheries, which tend to be owner-operator fisheries. In the
traditional fisheries, one person or a family owns the vessel and
runs it. In the larger boat fisheries, the vessels are large and
expensive and tend to be owned by partnerships or corporations
and several skippers are hired to run them on a rotating basis.
SENATOR COWDERY asked Ms. McDowell to elaborate on the
eligibility period.
MS. MCDOWELL said that would be determined through the regulatory
process when CFEC puts forth a proposal on how it will limit a
given fishery. Usually, CFEC looks at four years immediately
preceding a limitation. Because these fisheries have been closed
for several years, the issue is more complicated.
SENATOR THERRIAULT asked if the sale of permits would be similar
to limited entry permits.
MS. MCDOWELL said it would be very similar to the limited entry
permits. The permits would be a use privilege that would be under
the control of the state. Transfers would have be requested of
the Commission and authorized and they would trade on the open
market so when the owner sells the vessel, the fishing privileges
would be sold with it.
SENATOR THERRIAULT asked if the initial permits would be issued
or sold.
MS. MCDOWELL said they would issue a permit and grandfathered in.
SENATOR THERRIAULT asked if the permits will have a tremendous
value.
MS. MCDOWELL said they would take on the open market value.
CHAIRMAN TAYLOR announced that he would take teleconference
testimony. Due to the number of participants, he asked that
testimony be limited to two minutes.
MS. TERESSA KANDIANUS informed members that she and her husband
own a scallop vessel named the Provider. She has reviewed some of
the correspondence sent to the committee regarding the number of
skippers. The Provider has had five different skippers on it
since 1996. She noted there are a lot of on-board processing
issues with DEC. DEC processing and wastewater permits are
required regardless of whether or not the fish are frozen on-
board and vessels must have 100 percent observer coverage. Those
requirements are not economically feasible for smaller vessels to
comply with. In one respect, it is a large boat, offshore fishery
that requires a boat that can handle rough weather, and it
requires a lot of permitting not required of a smaller "mom and
pop" operation.
MR. JASON TANDLER, testifying from Kodiak, said he has been a
year-round fisherman for 26 years. He is a former scallop permit
holder and vessel owner captain who is now denied access to the
scallop fishery. He is adamantly opposed to HB 206 as this bill
will not only enable but will guide CFEC to make unconstitutional
and unfair laws, specifically giving rights to harvest scallops
to a very few select out-of-state boat owners. Traditionally,
that privilege has gone to the permitholder operator, for
instance in the salmon fishery. HB 206 will set the stage for
other fisheries to follow this precedent. By giving vessels the
exclusive rights to the fishery, the need to pay an experienced
local crew fair wages is eliminated. By either returning the
scallop fishery to open access or giving the permitholder
operator the rights to fish instead of the boat owner, the state
can eliminate the monopoly and economic hardship that has been
created by the present and proposed continuation of having the
boat owner possessing exclusive rights to a public resource. He
stated:
His boat will by no means lose its actual value, and if
he's willing to offer a competitive opportunity to
utilize his already rigged and proven vessel in the
scallop fishery, undoubtedly his boat is selected by a
permitholder to continue to fish. Should the owner be
unwilling to be economically competitive, then he can
buy a permit in another fishery the same as you or I.
At least a fair situation is created where the
economics dictate that the proverbial pie is split up a
little more evenly. As a veteran, long time year round
fisherman, I maintain that the scallop resource is
dramatically underutilized. Some of the areas already
being harvested, such as Prince William Sound and
Kodiak, could withstand a significant increase and
effort. Many areas now permanently closed, for instance
most of the bays and near shores of the Alaska
Peninsula mainland and the Shelikof Island areas,
should be open. At a time when both the state and
fishing industry are in financial trouble, we need to
approach this very valuable resource on a level where
Alaska and its local residents realize some of the
profits available. This upcoming season, the state
scallop fishery will be a one-boat fishery, this boat
being a large out-of-state factory boat delivering its
catch to foreign [indisc.] or going back to Washington
with its catch. Let's put our state waters back into
our state's residents' hands. Thank you.
MR. PAUL SEATON, a commercial fisherman from Homer, said HB 206
raises the philosophical debate for corporate ownership of
limited entry permits. He noted he is not referring to the
offshore scallop fleet that already has federal limited entry
permits, he is referring to state licenses only. He stated that
Ms. McDowell testified that HB 206 will apply to only a few non-
owner operated fisheries, however the tanner crab fisheries, the
state water sea cod fisheries and others also fit the description
of non-owner operated. The only addition that would be needed to
add these fisheries to the list, once this philosophical debate
is over, would be a simple statutory change. If HB 206 is
enacted, approximately 75 percent of the owner corporations in
the hair crab fleet would be outside corporations. He said he is
opposed to HB 206. He noted the constitutional amendment allowing
for the Limited Entry Act would not have passed if corporations
would be able to buy or be issued entry permits.
MR. SEATON noted a second judicial issue is the Magnuson Stevens
Act. Section 303 authorizes the terms under which the North
Pacific Fisheries Management Council (NPFMC) can implement the
fisheries management plans, and Section 304 restricts the
Secretary from doing any management plans that include a limited
access program. The state uses that same authority to extend its
jurisdiction so he believes the state would be overstepping its
bounds if it tried to put limited access of state origins into
federal waters.
MR. LEONARD HERZOG, part-owner of a crab boat in Homer, said the
hair crab fishery takes place in deep waters in the Bering Sea,
outside of state waters. About 20 boats are involved in the
fishery. The fishery consists of large vessels that go through
different ownership and skipper provisions. It would be
problematic to issue a permit to a skipper. He and his partner
bought their boat with the privilege of fishing hair crab. He
stated:
The idea that whatever we do here has to transfer to
small boat fisheries in the Gulf I don't think is
correct. At the last Board of Fish meeting, most of the
tanner crab fisheries in the Gulf were made super
exclusive and it was the intent of the Board to try to
keep those boats small and owner-operated. However, in
the Bering Sea the situation is different where most of
the investments are over $1 million and the boats are
owned, in our case, by a corporation with two Anchorage
owners and one other case is by Yellow [indisc.]. So I
think it is a tool the state recognizes is necessary,
you know, for the hair crab fishery and I don't see any
detriment to non-Alaskans or Alaskans. Thank you.
CHAIRMAN TAYLOR took public testimony from those present.
MR. JOHN WINTHER, a life long Petersburg resident who has been
involved in the fisheries since 1964, said he is part owner of
three vessels that participate in the cod fishery and the owner
of another vessel that participates in the hair crab fishery. He
said the hair crab fishery, when the moratorium is lifted in
2003, will be the only fishery that would not be limited. The
NPFMC has put all ground fisheries, and is currently putting all
crab fisheries, under a limited entry system. If this moratorium
is allowed to expire, it will be the only open access fishery in
the Bering Sea so that anyone not included in the current system
under federal management will get involved in it. The hair crab
fishery is very small, with quotas ranging from 1 to 3 or 4
million pounds. It is currently in a down cycle so very little
fishing is going on. This fishery is the only crab fishery where
every single crab is brought to shore and processed in Alaska. No
catcher-processors are involved. Alaska receives its fish tax
from every pound of this crab. The fishery provides about two
months of employment in St. Paul, where most of the crab is
delivered. He agreed with Mr. Herzog that this fishery occurs in
the middle of the Bering Sea and requires large boats and major
investments. He noted he has had three or four skippers run his
boat during the hair crab fishery and, under the current system,
four more licenses would be required. This fishery cannot take a
multitude of licenses. While a member of the NPFMC from 1983-
1989, he learned a lot about fisheries management plans and
believes HB 206 is "the way to go."
MR. JOE KYLE told members he also speaks as an ex-member of the
NPFMC and someone who has worked on the moratoria that were
established for the Korean hair crab and scallop fishery. He said
The Norton Sound CDQ group and the St. Paul CDQ group are
invested in the Korean hair crab fishery and they have testified
at previous hearings that they support HB 206. He said the Korean
hair crab fishery is the only crab fishery in the state for which
the NPFMC delegated limited entry authority to the state. The
NPFMC delegated crab management to the state but it retained the
exclusive right to limit those fisheries, except for the Korean
hair crab fishery. He said he believes it is good to give CFEC a
tool to use to limit this fishery if necessary. He emphasized
that he has participated in numerous limited entry decisions on
the NPFMC and every one would always get "a crawl stuck in our
throat" over the equity issue. But, after the issue was debated,
sometimes for years, having to limit the fishery was the only
thing standing in the end. While the NPFMC did not like
conveying equity interest, the fishery would be lost if it was
not done because of conservation issues.
MR. KYLE said he believes Representative Scalzi did an
extraordinary job of carrying HB 206 on the House side. He tried
to fix the bill many times to pacify the legitimate concerns of
some but the goal post keeps moving. He said he personally
believes that enough is enough and that CFEC needs this tool. He
noted that Mr. Seaton expressed concern about the precedent that
HB 206 will create because to apply it to other fisheries would
only take a statutory fix. He believes that is an oxymoron
because he has never seen a simple statutory fix to any fishery
issue.
There being no further testimony, SENATOR COWDERY moved CSHB
206(RLS) from committee with individual recommendations and its
zero fiscal note.
CHAIRMAN TAYLOR announced that without objection, CSHB 206(RLS)
would move from committee.
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