Legislature(1993 - 1994)

02/16/1994 08:30 AM House FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
              HOUSE SPECIAL COMMITTEE ON FISHERIES                             
                        February 16, 1994                                      
                            8:30 a.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Representative Carl E. Moses, Chair                                          
  Representative Harley Olberg, Vice Chair                                     
  Representative Gail Phillips                                                 
  Representative Cliff Davidson                                                
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Representative Irene Nicholia                                                
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  Overview:  National Marine Fisheries Service Implementation                  
             of Halibut and Sablefish IFQ Program                              
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  PHILIP SMITH, Chief                                                          
  Restricted Access Management                                                 
  National Marine Fisheries Service                                            
  United States Department of Commerce                                         
  P.O. Box 21668                                                               
  Juneau, Alaska  99802                                                        
  Phone:  586-7334                                                             
  POSITION STATEMENT:  Provided overview of the halibut                        
                       and sablefish IFQ program                               
                                                                               
  CHERYL SUTTON, Legislative Aide                                              
  Representative Carl Moses                                                    
  State Capitol Building, Room 204                                             
  Juneau, Alaska  99801-1182                                                   
  Phone:  465-6848                                                             
  POSITION STATEMENT:  Inquired about the workshop schedule                    
                       for the division                                        
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 94-8, SIDE A                                                            
  Number 000                                                                   
                                                                               
  CHAIRMAN CARL MOSES called the meeting to order at 8:35 a.m.                 
  He noted the members in attendance and asked that MR. PHILIP                 
  SMITH to begin the overview.                                                 
                                                                               
                                                                               
  Number 020                                                                   
                                                                               
  MR. PHILIP SMITH, CHIEF, RESTRICTED ACCESS MANAGEMENT,                       
  NATIONAL MARINE FISHERIES SERVICE, UNITED STATES DEPARTMENT                  
  OF COMMERCE, advised members that he was hired to develop a                  
  new division within the Alaska Region to implement the IFQ                   
  program for Pacific halibut and sablefish.  As other forms                   
  of restricted access or limited entry emerge, implementation                 
  of those programs will fall under this division, also.                       
  There are about 7000 people in Alaska who will be eligible                   
  to receive an initial issuance of quota share; of that                       
  figure, about 80 percent are Alaskans.  There is an                          
  application period which began on January 17, 1994, and will                 
  conclude on July 15, 1994, for information and application                   
  forms.                                                                       
                                                                               
  MR. SMITH continued by noting that approximately 8,000 pre-                  
  application materials have been sent to potentially eligible                 
  people.  From the Department of Fish & Game fish ticket                      
  data, State Limited Entry Commission data, and from the                      
  National Marine Fisheries Service (NMFS) vessel file and                     
  permit file data, quota share can be approximated for each                   
  eligible fisherman.                                                          
                                                                               
  Number 103                                                                   
                                                                               
  MR. SMITH said that about 3,000 of the requests for                          
  applications have been returned.  Within two weeks, the                      
  formal applications should be issued for the halibut and                     
  sablefish fisheries.  Beginning in March, the division will                  
  start a series of workshops in major ports around the state.                 
  There is a toll free phone line, 1-800-304-4846, that people                 
  can call with questions about applying.  The appeals                         
  regulations are not yet finalized.                                           
                                                                               
  MR. SMITH advised members that in three to five years, there                 
  may be combines, or groups of fishermen working with                         
  processors, transportation and marketing firms.  The goal of                 
  the program is to put fresh product on the market for six to                 
  nine months of the year.  There is more opportunity to                       
  maximize the economic returns from the harvest under this                    
  scenario, and the intent is to supply the market with a                      
  constant supply of fresh seafood.  There has been a lot of                   
  criticism of the program, and currently there is a court                     
  case pending with the "Alliance against IFQ's".  The                         
  controversy is understandable, as the program is a rather                    
  significant change in fisheries management.  The program,                    
  however, has the potential to provide steady employment for                  
  20-30 people in the cold storage business for seven to eight                 
  months, somewhat steady employment for the skippers and                      
  their crews, and to see the value of the product double or                   
  triple.                                                                      
                                                                               
  Number 253                                                                   
                                                                               
  MR. SMITH advised members that the division is sensitive to                  
  the economies of coastal Alaska.  Outreach is very                           
  important, to ensure that people who may be eligible get                     
  their applications, and have their questions answered.                       
                                                                               
  Number 265                                                                   
                                                                               
  CHAIRMAN MOSES asked if there were questions.                                
                                                                               
  REPRESENTATIVE GAIL PHILLIPS asked about a letter from Mr.                   
  Smith, to Representative Hudson, dated January 27, 1994,                     
  regarding program amendments.  She then asked if anyone was                  
  considering significant changes to the program.                              
                                                                               
  MR. SMITH said that the statement in the letter is                           
  clarifying a point brought up by Representative Hudson,                      
  whereby an inquiry was made as to whether or not the                         
  legislature could alter the program through legislation.  In                 
  fact, the program is conducted under federal authority, and                  
  under the terms of the Magnuson Act and the Halibut Act, any                 
  program changes are initiated through the North Pacific                      
  Fisheries Management Council (NPFMC), not the Alaska                         
  Legislature.  He added that no one is considering major                      
  changes at this time.  Some fine tuning may be needed, but                   
  no proposals are available.  The issue of block restrictions                 
  are not yet finalized, for instance.                                         
                                                                               
  Number 312                                                                   
                                                                               
  REPRESENTATIVE PHILLIPS then asked about the lawsuit                         
  potentially delaying the March 1995 start up date.  She then                 
  asked about the marketing issue with cooperatives,                           
  specifically, who would be handling the marketing for the                    
  program.                                                                     
                                                                               
  MR. SMITH replied that he couldn't respond on the merits of                  
  the lawsuit, yet the lawsuit should not affect the                           
  operations of the office.  As a correction, there are two                    
  lawsuits pending, one with the Alliance Against IFQ's, the                   
  other with the Klawock Cooperative Association.  He added                    
  that the division was not handling the marketing; the amount                 
  of product desired from the program should be market driven.                 
                                                                               
                                                                               
  REPRESENTATIVE PHILLIPS then asked if ASMI was doing any                     
  marketing for the program.                                                   
                                                                               
  Number 360                                                                   
                                                                               
  MR. SMITH advised members that his office has not been doing                 
  any marketing, and to his knowledge, has not been meeting                    
  with the Alaska Seafood Marketing Institute (ASMI)                           
  officials.  He noted that the intent was not to have ASMI                    
  develop a market, but instead visit Safeway and similar                      
  stores, and negotiate a daily supply channel and price.                      
                                                                               
  REPRESENTATIVE CLIFF DAVIDSON inquired about the possible                    
  concentration of ownership of the Individual Fishing Quota                   
  shares.                                                                      
                                                                               
  Number 399                                                                   
                                                                               
  MR. SMITH replied that the current configuration of the                      
  fishing fleet was not working, and the intent to privatize                   
  the access to a public resource is meant to distribute those                 
  benefits.  Now, there is terrible overcapitalization in the                  
  race to fish such short openings; unfortunately, this method                 
  is terribly inefficient.  Goals of the program were                          
  developed to help eliminate the concentration of ownership.                  
  First, there was a cap of no more than one-half of one                       
  percent on the amount of quota that each person can hold for                 
  halibut and sablefish for the Gulf and Bering Sea.  The cap                  
  is no more than one percent in the waters of Southeast                       
  Alaska.                                                                      
                                                                               
  Number 439                                                                   
                                                                               
  MR. SMITH noted that another restriction is the allocation                   
  of quota share by vessel class.  Quota shares that are                       
  initially allocated to one vessel class are not transferable                 
  to another vessel class.  In addition, under the program,                    
  with the exception of Southeast, only people who receive                     
  their initial issuance of quota may hire skippers to fish                    
  that quota.  That quota share can then only be transferred                   
  to an individual, not a corporation or company.  Second                      
  generation quota share must only be fished by the people who                 
  hold it.  In Southeast, the restrictions are a bit more                      
  stringent.  Finally, there are block restrictions to ensure                  
  that quota share is not consolidated into a few number of                    
  holders.  He then noted that the division will carefully                     
  monitor any transfers.                                                       
                                                                               
  REPRESENTATIVE DAVIDSON asked where the division gets its                    
  funding to do the labor intensive `careful monitoring' of                    
  enforcement.                                                                 
                                                                               
  MR. SMITH replied that this division is currently funded at                  
  $1.2 million for the current federal fiscal year, and is                     
  anticipated at the same level for the next year.  The                        
  enforcement division has a request in for funding for a                      
  sufficient amount, plus the use of computers allows a few                    
  number of staff to monitor several thousand permits.  The                    
  incentive under the program, for fishermen to act as                         
  whistleblowers on other operations that are not following                    
  the rules, is very high.                                                     
                                                                               
  REPRESENTATIVE DAVIDSON noted the success of the Canadian                    
  quota system, yet asked if there was a method built in to                    
  abort the program if, after years down the road, the program                 
  does not seem to work.  He then asked if the privatization                   
  of the access wasn't more like privatizing the common                        
  property resource.                                                           
                                                                               
  Number 564                                                                   
                                                                               
  MR. SMITH replied that there was a lot of time put into                      
  developing the program.  At anytime, the North Pacific                       
  Fisheries Management Council can abort the program, the NMFS                 
  can request that the secretary abort the program, or                         
  Alaska's congressional delegation can delete the program's                   
  funding.  There are many routes to abolishing the program if                 
  it does not work.  To clarify the privatization, he added                    
  that actually, people with quota shares own the right, or                    
  privilege to harvest that amount of resource.                                
                                                                               
  Number 606                                                                   
                                                                               
  CHAIRMAN MOSES asked if there was a minimum of the initial                   
  quota.                                                                       
                                                                               
  MR. SMITH replied that the quota share is based on the                       
  number of pounds of resource harvested between 1984 and 1990                 
  for halibut, and 1985 and 1990 for sablefish, less the two                   
  least productive years.  That share is designated by                         
  management area and by vessel class.  The total allowable                    
  catch will rise and fall from year to year, depending upon                   
  biological considerations.                                                   
                                                                               
  TAPE 94-8, SIDE B                                                            
  Number 000                                                                   
                                                                               
  CHERYL SUTTON, LEGISLATIVE AIDE FOR REPRESENTATIVE MOSES,                    
  asked if the division had a list of the locations and times                  
  for the workshops, and inquired why there were no stops                      
  scheduled for the Aleutian Chain.  She then asked how the                    
  issue of fishermen who fished the 1984-1990 time span in a                   
  small vessel, yet now have a larger vessel will receive                      
  their quota share, since the vessel size has changed.                        
                                                                               
  MR. SMITH said the list would be available by the end of the                 
  week, and will be distributed to the areas of the meetings,                  
  as well as the fisheries committee.  The meeting schedule                    
  was first designed to visit communities where at least 100                   
  or more potentially eligible IFQ holders resided.  Although                  
  there are no workshops scheduled for the Aleutian Chain, the                 
  division will entertain adding a few stops for those                         
  fishermen, as well as teleconferencing the workshops.  The                   
  quota share will be issued in the vessel class that was last                 
  used in a groundfish fishery by the fisherman, prior to                      
  September 25, 1991.  If a person now has a larger vessel                     
  class, there may not be a match between the IFQ and the                      
  vessel.                                                                      
                                                                               
  MR. SMITH noted, in addition some exotic steps being taken                   
  by the program to limit the black market, or the high seas                   
  selling of fish.  The idea of primary ports, and hailing to                  
  the NMFS six hours before delivery, and a credit card system                 
  that will keep a running balance of the resource, as well as                 
  random boardings will all help to discourage inefficiencies                  
  in the program.  The last problem is high-grading, or                        
  throwing out less valuable small fish and only keeping the                   
  larger fish.  Economically, this is not sensible, and                        
  processors will notice if all fish in a catch are large.                     
  Lastly, there is no current plan for lapsing and reissuance                  
  of quota share.                                                              
                                                                               
  Number 280                                                                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN MOSES asked members and the public if there were                    
  further comments.  Hearing none, he adjourned the meeting at                 
  9:42 a.m.                                                                    

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