Legislature(2003 - 2004)

04/23/2003 08:39 AM House FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                         April 23, 2003                                                                                         
                           8:39 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Paul Seaton, Chair                                                                                               
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Cheryll Heinze                                                                                                   
Representative Dan Ogg                                                                                                          
Representative Ralph Samuels                                                                                                    
Representative Ethan Berkowitz                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 25                                                                                                   
Supporting Alaska's independent commercial fishermen and                                                                        
Alaska's fish processing industry and opposing the establishment                                                                
of processor quota shares.                                                                                                      
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HJR 25                                                                                                                  
SHORT TITLE:COMMERCIAL FISHING & PROCESSOR SHARES                                                                               
SPONSOR(S): REPRESENTATIVE(S)SEATON                                                                                             
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/16/03     1008       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/16/03     1008       (H)        FSH, STA, RES                                                                                
04/16/03     1008       (H)        REFERRED TO FISHERIES                                                                        
04/22/03     1058       (H)        COSPONSOR REMOVED: HEINZE                                                                    
04/23/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
TAMMY SCHRADER                                                                                                                  
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
WALTER TELLMAN                                                                                                                  
Unalaska Fisherman's Association                                                                                                
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
BOB STORRS, Vice President                                                                                                      
Unalaska Native Fisherman's Association                                                                                         
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
BOB NEHUS                                                                                                                       
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support HJR 25.                                                                               
                                                                                                                                
KEN DUCKETT                                                                                                                     
United Southeast Alaska Gillnetters Association                                                                                 
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
KEITH GAIN, City Council Member                                                                                                 
City of Seldovia                                                                                                                
Seldovia, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
FRANK KELTY                                                                                                                     
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
                                                                                                                                
DON GRAVES, Research and Development Manager                                                                                    
UniSea, Inc.;                                                                                                                   
City Council Member, City of Unalaska                                                                                           
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
                                                                                                                                
PHILLIP LESTENKOF, City Council Member                                                                                          
City of Saint Paul                                                                                                              
Saint Paul, Alaska                                                                                                              
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
                                                                                                                                
SIMEON SWETZOF, Jr., Mayor                                                                                                      
City of Saint Paul                                                                                                              
Saint Paul, Alaska                                                                                                              
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
                                                                                                                                
STEVE MINOR, Public Relations/Fisheries Consultant                                                                              
City of Saint Paul;                                                                                                             
Central Bering Sea Fishermen's Association (CBSFA)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
                                                                                                                                
JOSEPH CHILDERS, Director                                                                                                       
Western Gulf of Alaska Fishermen's Association;                                                                                 
Board Member, United Fishermen of Alaska (UFA);                                                                                 
National Committee Issues Chairman                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
                                                                                                                                
JOHN GARNER, Executive Director                                                                                                 
North Pacific Crab Association;                                                                                                 
Owner, Northwest Seafoods Company                                                                                               
Seattle, Washington                                                                                                             
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
                                                                                                                                
LINDA KOZAK                                                                                                                     
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HJR 25                                                                             
                                                                                                                                
DAVID POLUSHKIN                                                                                                                 
K-Bay Fishing Association                                                                                                       
Willow, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
GORDON BLUE                                                                                                                     
C.R.A.B. Group                                                                                                                  
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
BUCK LAUKITIS, President                                                                                                        
North Pacific Fishing Association                                                                                               
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
JOE MACINKO                                                                                                                     
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-25, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  PAUL   SEATON  called  the  House   Special  Committee  on                                                             
Fisheries meeting to order at  8:39 a.m.  Representatives Seaton,                                                               
Heinze,  Ogg, and  Samuels were  present  at the  call to  order.                                                               
Representatives Wilson and Berkowitz arrived as the meeting was                                                                 
in progress.                                                                                                                    
                                                                                                                                
HJR 25-COMMERCIAL FISHING & PROCESSOR SHARES                                                                                  
                                                                                                                                
Number 0065                                                                                                                     
                                                                                                                                
CHAIR SEATON announced  that the only order of  business would be                                                               
HOUSE JOINT  RESOLUTION NO.  25, Supporting  Alaska's independent                                                               
commercial fishermen  and Alaska's  fish processing  industry and                                                               
opposing the establishment of processor quota shares.                                                                           
                                                                                                                                
Number 0116                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG moved to adopt Amendment 1, which read                                                                       
[original punctuation provided]:                                                                                                
                                                                                                                                
     Page 1, line 2,                                                                                                            
     After  the words  "processor quota  shares" insert  the                                                                    
     following                                                                                                                  
                                                                                                                                
     in    the   Bering    Sea    Aleutian   Islands    crab                                                                  
     rationalization plan.                                                                                                    
                                                                                                                                
     Page 2, line 2,                                                                                                            
     After the word "area" Delete the following                                                                               
                                                                                                                                
     and is currently developing  a rationalization plan for                                                                  
     the Gulf of Alaska groundfish stocks                                                                                     
                                                                                                                                
     Page 2, line 7 insert the following Whereas                                                                              
                                                                                                                                
     Whereas  to mitigate  the  affects  of Processor  Quota                                                                  
     Shares  the  council  has   adopted  port  of  delivery                                                                  
     restrictions    and    federal   binding    arbitration                                                                  
     amendments,  which on  their own  may create  financial                                                                  
     hardship on commercial fishermen; and                                                                                    
                                                                                                                                
     Page 2, line 18,                                                                                                           
     After the  words "processor quota "shares."  insert the                                                                    
     following and re-punctuate.                                                                                                
                                                                                                                                
     port  of  delivery  restrictions  and  federal  binding                                                                  
     arbitration  in the  Bering Sea/Aleutians  Islands crab                                                                  
     plan.                                                                                                                    
                                                                                                                                
Number 0145                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS objected for purposes of discussion.                                                                     
                                                                                                                                
REPRESENTATIVE  OGG explained  that  Amendment 1  is designed  to                                                               
focus the resolution  so it reflects what has passed  most of the                                                               
hurdles of the North Pacific  Fishery Management Council (NPFMC).                                                               
He added that there will be  a hearing with a select committee on                                                               
this plan  in the U.S. Capitol  in the near future.   Amendment 1                                                               
changes the  language within the  resolution to clearly  focus on                                                               
the Bering Sea and Aleutian Islands crab rationalization plan.                                                                  
                                                                                                                                
Number 0468                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS offered a  friendly amendment to Amendment                                                               
1, on page 2, line 2, to add a semicolon after "area".                                                                          
                                                                                                                                
CHAIR SEATON questioned its necessity.                                                                                          
                                                                                                                                
REPRESENTATIVE  SAMUELS  withdrew  his friendly  amendment.    He                                                               
asked about  the portion of  Amendment 1  that refers to  page 2,                                                               
line 18.   He suggested  it expands  the scope of  the resolution                                                               
and isn't on one topic.                                                                                                         
                                                                                                                                
CHAIR  SEATON offered  his  belief  that it  is  one  topic.   He                                                               
explained that the  language refers to elements  of the processor                                                               
quota share section.                                                                                                            
                                                                                                                                
REPRESENTATIVE OGG  said there  were discussions  about including                                                               
the elements of  the crab rationalization plan,  but the decision                                                               
was made to leave  those out of the amendment.   He said if Chair                                                               
Seaton believes  including them will  enhance the clarity  of the                                                               
resolution, he doesn't have a problem with adding them back in.                                                                 
                                                                                                                                
CHAIR SEATON said a committee  substitute will be provided so the                                                               
members can review [the changes].                                                                                               
                                                                                                                                
REPRESENTATIVE SAMUELS  told the members he  doesn't believe that                                                               
portion of the amendment should  be included because the point of                                                               
the  resolution  is  to  address the  issue  of  processor  quota                                                               
shares.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  OGG commented  that there  are other  elements of                                                               
the plan that are of concern.                                                                                                   
                                                                                                                                
REPRESENTATIVE SAMUELS asked if the  other elements are under the                                                               
umbrella of this resolution.  If  not, then he believes there are                                                               
three different subjects being dealt with in this resolution.                                                                   
                                                                                                                                
CHAIR SEATON asked Representative Ogg  if he would agree to leave                                                               
[page 2, line 18] out of the amendment.                                                                                         
                                                                                                                                
REPRESENTATIVE  OGG  responded  that   he  does  not  agree  with                                                               
removing this portion of the amendment.                                                                                         
                                                                                                                                
Number 0689                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS   told  the  members  he   maintains  his                                                               
objection to the second two  portions of Amendment 1, relating to                                                               
page  2,  lines 7  and  18.   He  explained  that  the first  two                                                               
sections  of  the  amendment  seem  to  clarify  the  resolution;                                                               
however, the second two sections seem  to expand it.  He asked if                                                               
the amendment  could be split in  two, since he had  no objection                                                               
to the first two parts of Amendment 1.                                                                                          
                                                                                                                                
REPRESENTATIVE OGG  asked Representative Samuels if  changing the                                                               
title of the resolution would eliminate his concerns.                                                                           
                                                                                                                                
REPRESENTATIVE SAMUELS responded that  if [the resolution] is all                                                               
about processor quota  shares, then he believes it  is better not                                                               
to get  into the details of  the issue.  If  the resolution isn't                                                               
about  the  processor  quota  shares,   then  this  part  of  the                                                               
amendment really  is expanding the  scope of the resolution.   He                                                               
told the members he has a problem with that.                                                                                    
                                                                                                                                
REPRESENTATIVE  OGG   offered  his  understanding   that  binding                                                               
arbitration  is  part  of  the crab  rationalization  plan.    He                                                               
explained  that  the binding  arbitration  element  is a  default                                                               
result  of the  processor  quota shares;  because once  processor                                                               
quota shares was  addressed, there was a need  to address binding                                                               
arbitration and  port delivery restrictions  as part of  the plan                                                               
itself.                                                                                                                         
                                                                                                                                
CHAIR  SEATON suggested  that  Amendment 1  be  divided into  two                                                               
amendments.                                                                                                                     
                                                                                                                                
REPRESENTATIVE HEINZE said she needs  clarification of the Bering                                                               
Sea   Aleutian  Islands   crab  rationalization   plan  and   the                                                               
rationalization plan for the Gulf of Alaska groundfish.                                                                         
                                                                                                                                
Number 0960                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG  moved to divide  Amendment 1, with  the first                                                               
two sections  as [new] Amendment  1, and the second  two sections                                                               
as Amendment 2.  [No objection  was stated, and it was treated as                                                               
two amendments.]                                                                                                                
                                                                                                                                
CHAIR  SEATON  asked  if  the   members  wished  to  adopt  [new]                                                               
Amendment 1.                                                                                                                    
                                                                                                                                
REPRESENTATIVE HEINZE  said she'd like clarification  on the plan                                                               
before moving forward.                                                                                                          
                                                                                                                                
Number 1093                                                                                                                     
                                                                                                                                
[Chair Seaton handed the gavel to Vice Chair Wilson.]                                                                           
                                                                                                                                
CHAIR  SEATON,  sponsor,  explained  that HJR  25  addresses  the                                                               
Bering Sea  Aleutian Island crab  [rationalization] plan  and the                                                               
elements  that establish  processor quota  shares.   [The concept                                                               
of] processor quota  shares is new and  different; it establishes                                                               
that  fishermen will  have to  deliver their  product to  certain                                                               
named  processors.   Furthermore, 90  percent of  the fishermen's                                                               
catch  would  have to  be  delivered  to  these processors.    He                                                               
reiterated that this is a  drastic change because these fishermen                                                               
will be told where to sell their private property or product.                                                                   
                                                                                                                                
CHAIR  SEATON said  the Aleutian  Islands crab  [rationalization]                                                               
plan  started  a  number  of  years ago  with  fishermen  on  the                                                               
downswing  of the  crab fisheries.    It was  thought that  there                                                               
should be a change in  the structure of management and harvesting                                                               
of fish so  it would be more economical, stretch  the season out,                                                               
and accomplish some  conservation goals that can  be attempted by                                                               
a longer-duration in the season.                                                                                                
                                                                                                                                
Number 1220                                                                                                                     
                                                                                                                                
CHAIR SEATON explained that the  plan was modeled slightly on the                                                               
halibut and  sablefish IFQ [individual  fishery quota] plan.   He                                                               
said one thing  that happened with halibut and  sablefish is that                                                               
once the plan went into effect,  the object of the plan was being                                                               
fulfilled, which  was to  deliver fish  in a  way that  made them                                                               
more  valuable.   The  result  was  that  there  was a  shift  in                                                               
delivery ports to areas that were  on the road system; the season                                                               
lasted eight months instead of a  few days; the price of fish was                                                               
up; and there was a lot more  fresh fish on the market.  Although                                                               
the  halibut and  sablefish plan  succeeded in  accomplishing the                                                               
goal of creating more value in  the fish, it also shifted some of                                                               
the ways in which fish were delivered.                                                                                          
                                                                                                                                
CHAIR SEATON said  one problem identified with a  long season was                                                               
that processors  didn't need the  large plants originally  used -                                                               
there was  no need to handle  a glut of  fish at one time.   This                                                               
led to  "stranded capital" because  a smaller plant  could handle                                                               
the fishery stretched  out over time.   Processors were concerned                                                               
about tying  up capital in  those plants  and wanted some  way to                                                               
have  that  capital compensated.    Chair  Seaton commented  that                                                               
almost  everyone agrees  that it  is  a problem.   However,  most                                                               
agree that  if there  is stranded capital,  then there  [needs to                                                               
be] compensation  for that capital,  the process moves on  in the                                                               
free enterprise system, and everyone is competitive.                                                                            
                                                                                                                                
CHAIR  SEATON suggested  that this  is a  two-quota system.   One                                                               
quota  is  for fishermen  that  catch  a  resource owned  by  all                                                               
[Alaskans]  and deliver  it.    This is  a  mechanism to  control                                                               
resource  harvest, he  commented.   The second  is for  specified                                                               
processors who  process the fish.   He explained that  this would                                                               
tremendously distort  the free-enterprise system because  now the                                                               
fishermen cannot sell their product to whomever they wish.                                                                      
                                                                                                                                
CHAIR SEATON said in the  Bering Sea plan, processor quota shares                                                               
were setup for processors, based  on the historic amount [of fish                                                               
processed].   Fishermen would  have to take  their fish  to these                                                               
particular processors,  based on those  percentages.  He  said 90                                                               
percent  of  the  fish  would   have  to  go  to  those  existing                                                               
processors.   However,  the first  element of  the plan  was that                                                               
processors that  have quotas  can process the  fish at  any plant                                                               
they wish.  Chair Seaton told  the members that this plan doesn't                                                               
create  the  same stability  in  the  communities that  would  be                                                               
expected  [historically],  because  the  processors  can  shuffle                                                               
where the fishermen  have to take their fish.   For example, if a                                                               
processor  has a  plant  in Adak  and in  Unalaska,  it could  be                                                               
decided  that the  fishermen will  have to  run to  Adak to  sell                                                               
their fish,  a 1,000 mile  run from  the fishing grounds.   There                                                               
would be  nothing [fishermen or  communities] could do  about it,                                                               
he added.                                                                                                                       
                                                                                                                                
Number 1399                                                                                                                     
                                                                                                                                
CHAIR SEATON  pointed out that  this [plan] creates  a distortion                                                               
if this is the  only place a fisherman can sell  his fish.  Where                                                               
does  price competition  come  into [the  plan]?   One  processor                                                               
cannot gain  any more fish by  raising his price.   He reiterated                                                               
that it  does not matter  how much  the processor pays,  there is                                                               
only  so much  product coming  to  them.   So as  a result  price                                                               
competition between  processors goes away.   This is  how binding                                                               
arbitration became an  element of the plan, and what  it means is                                                               
that a fisherman  would have to sign a contract  with a processor                                                               
before the fisherman  knows what the price is.   If the fisherman                                                               
and the  processor could not agree  on a price, then  the federal                                                               
government would come  in, look at the expenses  of both parties,                                                               
and set  a price.   The fishermen would  be bound to  that price.                                                               
Chair Seaton explained that part of  the problem then is that the                                                               
fishermen could  not refuse to fish  and in fact would  be forced                                                               
to  fish  whether or  not  it  is  economically beneficial.    He                                                               
explained  that if  the  fisherman  did not  fish  for the  price                                                               
offered, then  he/she could be  sued for  loss of profits  by the                                                               
processor.                                                                                                                      
                                                                                                                                
Number 1548                                                                                                                     
                                                                                                                                
CHAIR  SEATON reiterated  that the  result  of this  plan is  the                                                               
total distortion of the free market  system.  He used the analogy                                                               
of  a farmer  who would  have  to sell  all his  grain to  Archer                                                               
Daniels  Midland [Company].    If  a farmer  did  not sell  their                                                               
product to them, then the farmer  could be sued by Archer Daniels                                                               
Midland  [Company] because  they  lost profit  on  the grain  the                                                               
farmer did not  harvest because it was  not economically feasible                                                               
at the price that was offered.                                                                                                  
                                                                                                                                
CHAIR SEATON  went on  to say that  these are just  a few  of the                                                               
intricacies that have  come out.  He told the  members of another                                                               
problem  where there  is a  line  [or barrier  drawn] across  the                                                               
middle  of Bristol  Bay [and  an agreement]  which says  any fish                                                               
that were historically delivered North  of [that line] have to be                                                               
delivered North  of that line  or [if the fish  were historically                                                               
deliver  South of  that line,  must be  delivered] South  of that                                                               
line.  This creates a lot  of artificial barriers and there is no                                                               
impetus  for  product  development  because the  price  does  not                                                               
change.                                                                                                                         
                                                                                                                                
Number 1640                                                                                                                     
                                                                                                                                
CHAIR  SEATON said  part of  the problem  with this  structure of                                                               
providing processor quota  shares allows for a  lot of anti-trust                                                               
manipulation,   even  with   binding  arbitration   because  most                                                               
processors  are  set up  with  a  number of  sub-corporations  or                                                               
partners.    He  explained  that   a  company  could  sell  their                                                               
processing   quota  shares   to   someone   else,  even   another                                                               
corporation  that the  company controls,  then lease  it back  to                                                               
operate the business.  By  doing this, the processor has inflated                                                               
their cost  structure.  He pointed  out that this is  just one of                                                               
the simple mechanisms  of inflating the processor's  costs.  When                                                               
the   company  goes   into  binding   arbitration  the   [federal                                                               
government] looks  at the  cost structure  and the  processor has                                                               
this huge  lease amount,  so the fishermen's  price could  end up                                                               
being less, Chair Seaton said.                                                                                                  
                                                                                                                                
CHAIR SEATON  told the members that  this is one of  the problems                                                               
that no  one has been able  to figure out.   The entire structure                                                               
is basically a top-down controlled  economy, which is a structure                                                               
that  is not  found in  the  United States.   He  said this  plan                                                               
provides  that  independent  businessmen/businesswomen  are  told                                                               
where  they can  sell their  product.   Chair  Seaton noted  that                                                               
there   are  a   few  exceptions   with  "high   tech"  products,                                                               
particularly with  the U.S. Department  of Defense;  for example,                                                               
atomic  bombs and  cruise missiles  cannot  be sold  on the  open                                                               
market; they must be sold to  the Department of Defense.  He said                                                               
other than  a few  exceptions, private  business people  can sell                                                               
their product  to whomever  they want and  wherever there  is the                                                               
best deal.   He pointed  out that processor quota  shares totally                                                               
changes that practice.                                                                                                          
                                                                                                                                
CHAIR  SEATON   summarized  his  comments  by   saying  that  the                                                               
fishermen tried  a rationalization  plan, a longer  harvest plan,                                                               
and  now almost  all  of  the fishermen  oppose  this  plan.   He                                                               
commented  that there  will  be  a lot  of  testimony today  from                                                               
individuals who  are represented by  the C.R.A.B. Group  which is                                                               
made up of  104 vessels.  Chair Seaton told  the members that the                                                               
plan has been  so distorted with the processor  quota shares that                                                               
the fishermen definitely  do not support it  anymore because they                                                               
lose  control  of   their  future  and  their   ability  to  make                                                               
decisions.   He  asked  the members  to look  at  the letters  of                                                               
support on HJR 25.                                                                                                              
                                                                                                                                
Number 1796                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS told the members  that he has trouble with                                                               
this legislation  on many  levels.   He said  once the  number of                                                               
fishermen  who are  allowed to  fish is  limited the  entire free                                                               
market concept has  gone anyway.  Representative  Samuels said he                                                               
believes that  in a true free  market everyone fishes.   When the                                                               
quota  goes from  200 million  pounds to  20 million  pounds, the                                                               
little guys will  all go bankrupt and the market  place will take                                                               
care of too much capacity in the market.                                                                                        
                                                                                                                                
Number 1839                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS  commented that  the biggest  problem that                                                               
he  has   with  this  is   that  the  [North   Pacific  Fisheries                                                               
Management]  Council has  been dealing  with  these [issues]  for                                                               
years.  He asked if anyone  can related to a compromised position                                                               
that comes out  of a group like  that.  He told  the members that                                                               
he  believes  this must  have  been  a  painful process  for  the                                                               
[NPFMC].  He said he cannot  imagine having the same meetings the                                                               
members  are having  now, only  having it  for year,  after year,                                                               
after year.  He explained that  the legislature should be able to                                                               
relate to this  because whatever is done is a  compromise and the                                                               
members always get beat up on issues.                                                                                           
                                                                                                                                
Number 1879                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS  pointed  out  that  everyone  that  will                                                               
testify before  the committee  today, probably  already testified                                                               
before the NPFMC.   He said he believes that  it is disheartening                                                               
to  the  [NPFMC]  because  if  there  is  no  agreement,  then  a                                                               
government agency will end up making  the decisions.  He told the                                                               
members he  does not  believe anyone  wants a  bureaucracy making                                                               
decisions when there can be some say on who is on the [NPFMC].                                                                  
                                                                                                                                
CHAIR  SEATON  acknowledged  that   NPFMC  worked  to  develop  a                                                               
structure of fisheries management.   However, the legislature has                                                               
a different  prospective, in  that our efforts  are on  behalf of                                                               
Alaskan  communities.   Chair Seaton  commented that  the federal                                                               
government  does  provides  management  at  the  200-mile  limit;                                                               
however, it  often defers  to the Alaska  Department of  Fish and                                                               
Game to  do the technical  management.  When the  regulations are                                                               
done  by the  federal government  it can  have huge  impacts upon                                                               
Alaskan  coastal  communities,  fishermen,  and  residents.    He                                                               
reiterated  his  comments  by  saying  that  the  legislature  is                                                               
considering  this  issue from  a  different  prospective.   Chair                                                               
Seaton  pointed  out  that  there are  many  resolutions  in  the                                                               
members'  packets  from  Alaskan   coastal  communities  who  are                                                               
extremely worried about this issue.   He said while this may be a                                                               
federal  management  plan,  it  has  direct  effects  on  Alaskan                                                               
coastal towns.                                                                                                                  
                                                                                                                                
Number 2009                                                                                                                     
                                                                                                                                
CHAIR  SEATON explained  that  this resolution  is  not meant  to                                                               
recreate  the management  plan,  but to  point  out that  certain                                                               
elements  of  the  management  plan  are  going  to  have  severe                                                               
economic impacts  upon Alaskans,  Alaskan fishermen,  and Alaskan                                                               
coastal towns.   He said he believes it is  the legislature's job                                                               
to bring  forth those  considerations.  He  pointed out  that the                                                               
NPFMC  is an  advisory group  to the  Secretary of  Commerce, and                                                               
does not have the last word on  this plan.  Chair Seaton told the                                                               
members that Senator Ted Stevens  will be conducting a hearing in                                                               
May.   This  resolution  is  [meant] to  provide  input to  those                                                               
hearings,  as  well  as, Alaska's  other  delegation  members  in                                                               
Congress, [by] letting them know  our concerns on this element of                                                               
the  plan, the  way it  works,  and the  effect it  will have  on                                                               
Alaskans and Alaskan communities, he said.                                                                                      
                                                                                                                                
CHAIR SEATON told  the members he believes it is  the role of the                                                               
legislature to  comment when  federal actions  are going  to have                                                               
severe  impacts upon  coastal  Alaska.   He  reiterated that  the                                                               
legislature and  the [NPFMC]  missions are  different, and  it is                                                               
not the intent  of this resolution for the  Alaska Legislature to                                                               
rewrite the  rationalization plan.   He told the members  that he                                                               
is sure  there will be  a lot  of testimony today  expressing the                                                               
dramatic impact this plan will have on Alaskans.                                                                                
                                                                                                                                
Number 2140                                                                                                                     
                                                                                                                                
CHAIR SEATON  pointed out that 46  percent of the crab  in Alaska                                                               
will be  allocated to foreign  owned companies.   Here is  a plan                                                               
that will  set forth  a vast  quantity of  our fish  into foreign                                                               
controlled countries.   This was  not the intent of  the Magnuson                                                               
Act  [Magnuson-Stevens Fishery  Conservation and  Management Act]                                                               
when a 200-mile limit was established.                                                                                          
                                                                                                                                
Number 2199                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HEINZE  asked if  the  anti-trust  laws apply  to                                                               
processors.                                                                                                                     
                                                                                                                                
CHAIR   SEATON  replied   that  issue   is  being   addressed  in                                                               
Washington,  D.C.   Processors  would probably  have  to have  an                                                               
anti-trust exemption because this [plan]  would form a cartel, he                                                               
said.   Chair Seaton  told members  that 90  percent of  the crab                                                               
will go  to six processors.   These processors will  forever own,                                                               
90 percent  of all the crab  that is produced in  the Bering Sea.                                                               
He pointed  out that it  does not  matter who produces  the crab,                                                               
these processors will  own them because the crab will  have to be                                                               
sold to them.   Because of this,  it will be necessary  to get an                                                               
anti-trust exemption  and that is  why Congress must act  on this                                                               
plan.                                                                                                                           
                                                                                                                                
Number 2260                                                                                                                     
                                                                                                                                
REPRESENTATIVE SAMUELS  said he  assumes it  is the  same problem                                                               
with fishermen.   The  number of fishermen  and crew  shares have                                                               
been limited.   There is the same capitalization  problem in that                                                               
the fishermen  need to  limit the number  of boats  because these                                                               
are expensive  pieces of  machinery, and  the fishermen  have the                                                               
same problem that the processors have  once the plant and or crab                                                               
boat is built and it is not  used, then the owners are stuck with                                                               
it.  With the  rise and fall of the price of the  product it is a                                                               
problem.   Representative Samuels  reiterated his  original point                                                               
that the NPFMC has already looked at all of these issues.                                                                       
                                                                                                                                
CHAIR SEATON responded  that there is quite  a difference between                                                               
[the fishermen  and the processors].   There is a  buy-back plan,                                                               
where there  is a $100-million  loan that the fishermen  will pay                                                               
back over time to buy out some  of the capital and remove it from                                                               
the fleet.   He told  the members that it  still comes down  to a                                                               
public  resource,  in  which  there is  an  efficient  design  to                                                               
harvest.   When  discussing processor  quota shares  it is  not a                                                               
public resource, it is a  restriction of people's ability to sell                                                               
their product in  a competitive market system.   He compared this                                                               
to  a five-year  plan in  Russia.   It is  very interesting  when                                                               
looked at from another perspective outside  of a crab plan.  This                                                               
is a structure where someone is  told where and to whom they have                                                               
to sell their product at a state set arbitrated price.                                                                          
                                                                                                                                
REPRESENTATIVE  SAMUELS replied  that  this  plan eliminates  his                                                               
ability to  go fishing  at all.   He pointed out  that this  is a                                                               
shift, but the fishermen are doing  the same thing to the rest of                                                               
Alaskans who are not [commercial]  fishermen.  He reiterated that                                                               
he can no longer  go crabbing.  So the same  argument can be made                                                               
on having any plan whatsoever.                                                                                                  
                                                                                                                                
VICE CHAIR WILSON  announced that the committee  will take public                                                               
testimony on HJR 25.                                                                                                            
                                                                                                                                
Number 2412                                                                                                                     
                                                                                                                                
TAMMY SCHRADER  testified in  support of  HJR 25.   She  told the                                                               
members that  she is  a small-boat halibut  fisherman, and  is in                                                               
full support  of HJR  25, which  opposes processor  quota shares.                                                               
The reason  she opposes processor  quota shares is that  she does                                                               
not believe it is a good  precedent to change the anti-trust laws                                                               
of the nation.   She went on to say it will  upset the balance of                                                               
power between  the processors and  the fishermen.  She  asked the                                                               
name of the legislator who spoke about the [NPFMC] process.                                                                     
                                                                                                                                
VICE CHAIR WILSON replied that it was Representative Samuels.                                                                   
                                                                                                                                
MS.  SCHRADER  commented  that   she  would  like  Representative                                                               
Samuels  to know  that  she  does not  agree  with the  council's                                                               
[NPFMC] process on this issue.   She pointed out that the council                                                               
[NPFMC] is  composed of members  who have potential  conflicts of                                                               
interest and she  does not feel that her voice  was heard in this                                                               
process.   The council [NPFMC]  members are  political appointees                                                               
versus  legislators  who are  elected  officials.   Ms.  Schrader                                                               
explained  that she  could  not  afford to  go  to every  council                                                               
[NPFMC] meeting  that covered every  nuance that may come  out of                                                               
these meetings.   She said  as elected officials it  is important                                                               
legislators  hear  the  concerns   of  the  communities  and  she                                                               
believes it  is their  responsibility to go  back to  the council                                                               
[NPFMC] and  say look,  the people who  elected us  are concerned                                                               
about this,  and tell  them to  take another  look.   The council                                                               
[NPFMC] process is broken on this issue.                                                                                        
                                                                                                                                
Number 2539                                                                                                                     
                                                                                                                                
VICE CHAIR  WILSON announced  that there are  over 30  people who                                                               
have signed up to testify, and  time is limited, so she explained                                                               
that she would be limiting testimony to one and a half minutes.                                                                 
                                                                                                                                
Number 2577                                                                                                                     
                                                                                                                                
WALTER  TELLMAN, Unalaska  Fisherman's Association,  testified in                                                               
support of HJR 25.   He told the members that  he supports HJR 25                                                               
because  free enterprise  is an  important  concept to  maintain.                                                               
There are  many family  members in the  Aleut community  who have                                                               
children that  would like to earn  a living off of  the resources                                                               
of  the region  and  would like  to see  that  door remain  open.                                                               
Unalaska is not a CDQ [community development quota] community.                                                                  
                                                                                                                                
Number 2624                                                                                                                     
                                                                                                                                
BOB   STORRS,  Vice   President,   Unalaska  Native   Fisherman's                                                               
Association testified in support of HJR  25.  He told the members                                                               
that he is  a small boat fishermen, and has  crab fished for many                                                               
years.  He told the members that  it is important for the them to                                                               
know that there is only one  active fisherman on the NPFMC.  From                                                               
the very beginning  the processor industry said there  would be a                                                               
"poison pill", any rationalization  program would have to include                                                               
a processor  quota system or  the processors would not  allow the                                                               
plan to get through, he said.                                                                                                   
                                                                                                                                
Number 2700                                                                                                                     
                                                                                                                                
MR.  STORRS said  the Alaska  Native Fisherman's  Association has                                                               
been involved from  the very beginning, and he  wants the members                                                               
to understand that this is way  more than settling on a price for                                                               
fish, it  changes the  whole fabric  of the  communities forever.                                                               
For example,  there are three  people who wanted to  testify from                                                               
the community today,  who cannot.  One was told  by the processor                                                               
not to do  so because he/she has a contract  where they catch and                                                               
sell  bait to  that company.   Another  one has  a small  freezer                                                               
long-liner and was told that if  he dared to actively oppose this                                                               
[plan], the  market for his cod  might be eliminated.   The third                                                               
is a  person who works  for a union  that has close  dealing with                                                               
processors  and could  not compromise  his position  there.   Mr.                                                               
Storrs pointed out  that this [plan] reaches right  into the very                                                               
fabric of  the community.   It  is important  to note  that these                                                               
fishermen  would be  the only  people  in the  United States  who                                                               
would not be covered by  the anti-trust legislation and would not                                                               
be able to  remain a cooperative that was  initially formed seven                                                               
years  ago.   [The  cooperative]  would  be functionally  illegal                                                               
because  there can  be  no  cooperative if  federal  law says  90                                                               
percent of  the members'  product has to  go to  the competition.                                                               
This policy  takes a huge  step back to  the old days  of company                                                               
towns  [during]  territorial days.    Mr.  Storrs summarized  his                                                               
comments by  saying he is  opposed to the processor  quota shares                                                               
policy.                                                                                                                         
                                                                                                                                
Number 2765                                                                                                                     
                                                                                                                                
BOB NEHUS testified in support HJR  25.  He told the members that                                                               
he is fisherman from Unalaska  and is opposed the rationalization                                                               
plan for  processor quota shares  for crab.  Mr.  Nehus explained                                                               
that  it  would  not  only  establish a  precedent  in  the  crab                                                               
industry,  but it  could spread  statewide into  other fisheries,                                                               
and perhaps, nationwide.                                                                                                        
                                                                                                                                
Number 2786                                                                                                                     
                                                                                                                                
JANICE KRUKOFF  testified in  support of  HJR 25.   She  told the                                                               
members  that while  she is  not a  fisherman, she  is a  44 year                                                               
resident  of  Unalaska  and  has   two  children.    Ms.  Krukoff                                                               
expressed  her support  of  HJR  25 and  opposition  to the  crab                                                               
rationalization plan.  She said her  boys, who are under 14 years                                                               
old, should  have the opportunity  to crab fish and  she believes                                                               
this plan would be a detriment to their future.                                                                                 
                                                                                                                                
Number 2814                                                                                                                     
                                                                                                                                
KEN  DUCKETT, United  Southeast  Alaska Gillnetters  Association,                                                               
testified in  support of HJR  25.  He  told the members  that the                                                               
association  is  opposed  to  the  processor  [quota]  shares  in                                                               
principle.   He  said  the association  fears  that with  current                                                               
stress in the salmon industry,  if this plan is established, some                                                               
form of reorganization  may occur.  Mr. Duckett  told the members                                                               
that if the  plan is approved for the Bering  Sea crab [fishery],                                                               
it may become applicable to  other fisheries, and the association                                                               
does not want  that to happen.  He reiterated  his support of HJR
25.                                                                                                                             
                                                                                                                                
Number 2874                                                                                                                     
                                                                                                                                
KEITH GAIN, City  Council Member, City of  Seldovia, testified in                                                               
support  of  HJR 25.    He  told  the  members that  Seldovia  is                                                               
particularly interested  in this plan  as it may set  a precedent                                                               
for  other management  decisions.   This kind  of plan  has never                                                               
been done before  for a lot of good reasons.   The two-pie system                                                               
is not supported  by communities.  It was brought  about by power                                                               
lobbying from the  canneries, he said.  These are  the same kinds                                                               
of  issues that  brought  about  statehood.   Mr.  Gain told  the                                                               
members  that  the residents  of  Seldovia  opposes any  kind  of                                                               
cartel having a stranglehold on the state's fisheries.                                                                          
                                                                                                                                
Number 2928                                                                                                                     
                                                                                                                                
FRANK  KELTY testified  in opposition  to HJR  25.   He told  the                                                               
members  that  he  is  a   former  20-year  elected  official  of                                                               
Unalaska,  and worked  in the  seafood industry  30 years  in the                                                               
community.   He  said he  believes this  resolution is  very one-                                                               
sided and does  not make mention of the millions  of dollars that                                                               
the  processing industry  sends  into the  general  fund for  the                                                               
State  of  Alaska  through  fisheries   taxes.    Nor  does  this                                                               
resolution  make  any  mention  of the  millions  of  dollars  of                                                               
revenue that  is generated in  property and sales taxes  that are                                                               
paid  to local  fishery dependent  communities by  the processing                                                               
sector, he said.   Mr. Kelty told the members  he believes if the                                                               
government is  going to give  away the public resources,  then it                                                               
should be  given away  to everyone  that is invested  in it.   In                                                               
Unalaska and other  Bering Sea communities where the  bulk of the                                                               
crab is processed, 85 percent  is processed in communities in the                                                               
Bering Sea.   He said he  doubts there are very  many resolutions                                                               
opposing  this plan  [from communities]  in the  Bering Sea  area                                                               
such as  Saint Paul,  Saint George, and  Unalaska.   He suggested                                                               
that  the committee  has a  lot of  resolutions from  communities                                                               
that are not  heavily involved in the crab fisheries.   Mr. Kelty                                                               
summarized his  comments by saying  that he does not  support the                                                               
resolution because  he believes  there needs to  be consideration                                                               
for the  investment that has been  made in the crab  industry [by                                                               
processors].                                                                                                                    
                                                                                                                                
MR. KELTY  read what  Chairman Benton sent  to Congress  when the                                                               
plan was adopted:                                                                                                               
                                                                                                                                
     The adoption of the  council of processing quota shares                                                                    
     as a  fundamental part of  the program is  probably the                                                                    
     most  controversial aspect  of the  program.   However,                                                                    
     the  council believes  as  reflected  in the  unanimous                                                                    
     vote of 11  to 0 that the crab fisheries  of the Bering                                                                    
     Sea  and  Aleutian  Islands  requires  this  innovative                                                                    
     comprehensive   management    approach   to   adamantly                                                                    
     recognize   and   protect    the   interests   of   all                                                                    
     participants.   It  recognizes  all  components of  the                                                                    
     fishery as  a balanced  linked system, rather  than the                                                                    
     individual  competing  opponent.    It may  not  be  an                                                                    
     appropriate model for other fisheries  in the nation or                                                                    
     other  fisheries in  the North  Pacific and  it is  not                                                                    
     intended to be a template for other fisheries.                                                                             
                                                                                                                                
TAPE 03-25, SIDE B                                                                                                            
Number 2991                                                                                                                     
                                                                                                                                
DON  GRAVES,  Research  and  Development  Manager,  UniSea,  Inc.                                                               
("UniSea"), City  Council Member, City of  Unalaska, testified in                                                               
opposition to  HJR 25.  He  told the members that  UniSea employs                                                               
700 year-round  people in Unalaska.   Their community  has passed                                                               
resolutions  supporting crab  rationalization [plan],  and as  an                                                               
individual, he  said he  supports what  the NPFMC  has done.   He                                                               
said he believes  it is in the best interest  of Unalaska to move                                                               
the  plan  forward.   Mr.  Graves  told  the  members that  as  a                                                               
research  and development  manager  for UniSea  he  has seen  the                                                               
benefits of cooperation between  the fishermen and the processors                                                               
to increase  the value and move  the product forward to  a retail                                                               
market, and  process the raw material  here in Alaska.   This has                                                               
created more  jobs and that in  turn creates more revenues  and a                                                               
tax base for the state.                                                                                                         
                                                                                                                                
MR. GRAVES  said there was  a person who testified  earlier about                                                               
concerns  on delivering  to some  of the  plants.   One of  those                                                               
people  who  testified  against  the  crab  rationalization  plan                                                               
delivered  to  his plant  this  morning,  and  there will  be  no                                                               
ramifications  against that  person.   He told  the members  that                                                               
these  businesses in  Unalaska  support a  lot,  and without  the                                                               
vested interest of both parties,  the community does not have the                                                               
resources or the ability to  make investments to improve products                                                               
and create more jobs.                                                                                                           
                                                                                                                                
Number 2838                                                                                                                     
                                                                                                                                
STEVEN STUBBE  testified in opposition  to HJR  25.  He  told the                                                               
members that he has been  a resident of Dutch Harbor/Unalaska for                                                               
the  past 20  years,  has worked  as a  processor,  and has  some                                                               
involvement in the  fishing industry.  He said he  worked for one                                                               
of  the smaller  crab  operations, and  he  strongly opposes  any                                                               
resolution  that  would preclude  processors  from  some kind  of                                                               
protection  in  this  plan.     It  was  mentioned  earlier  that                                                               
rationalization was  patterned after IFQs.   He said he  does not                                                               
believe that is true, and thinks  some of it might have come from                                                               
the  IFQs program  and  also  the American  Fisheries  Act.   Mr.                                                               
Stubbe  said with  reference  to  the IFQ  fisheries  that he  no                                                               
longer  participates  in  the longline  halibut  fishery  because                                                               
outside interests,  such as brokers,  have taken control.   These                                                               
brokers do  not pay taxes  in this  state, do not  have employees                                                               
who  work in  this  community,  and the  money  goes  out of  the                                                               
community and  out of the  state of Alaska.   Mr. Stubbe  said he                                                               
finds  it  hard to  believe  that  the  legislature is  going  to                                                               
unravel a program that was brought  to the council [NPFMC] by the                                                               
State of Alaska itself, and passed  unanimously.  There is a huge                                                               
tax  base in  this community  and  some of  the best  facilities,                                                               
schools, and community centers have  been generated by people who                                                               
have made  huge investments in  Unalaska, whether the  company is                                                               
[owned by  citizens of  the United  States] on  not.   Mr. Stubbe                                                               
pointed out that the NPFMC has  spent years trying to protect the                                                               
communities,   the  harvesters,   and  the   processors.     This                                                               
resolution would  only serve to  delay the progress of  a fishery                                                               
that  cannot even  be  managed by  the State  of  Alaska at  this                                                               
point.  Mr. Stubbe summarized  his comments by saying the members                                                               
need to better educate themselves before objecting to the plan.                                                                 
                                                                                                                                
Number 2715                                                                                                                     
                                                                                                                                
PHILLIP  LESTENKOF,  City Council  Member,  City  of Saint  Paul,                                                               
testified in opposition to HJR 25.   He told the members that for                                                               
the  last three  years  he  and Mayor  Simeon  Swetzof have  been                                                               
attending the North Pacific  Fishery Management Council meetings,                                                               
as the  council worked on  the crab rationalization program.   He                                                               
said as  a councilman, local  halibut fisherman,  and participant                                                               
of  the  local CDQ  group,  he  does not  support  HJR  25.   Mr.                                                               
Lestenkof told  the members  that the  Pribilof Islands  of Saint                                                               
Paul  and Saint  George  are unique  because  of their  strategic                                                               
location to  the Bering Sea opilio  crab fishery.  Over  20 years                                                               
ago the  Pribilof Island lost  their main stay economy  which was                                                               
the  harvesting of  the northern  fur seals  for commercial  pelt                                                               
sales.   When that was  terminated by the federal  government the                                                               
Pribilof Islands  developed their harbors, and  it only succeeded                                                               
because of  the community's strategic  location to  the fisheries                                                               
resource.  He  said he wants to make it  clear that the community                                                               
is  not being  threatened by  processors and  that the  community                                                               
views this plan  from their own perspective.  He  said because of                                                               
the  processors  investments  and   operations  in  the  Pribilof                                                               
Islands the communities are able  to exist.  Mr. Lestenkof closed                                                               
his comments by saying he does not support HJR 25.                                                                              
                                                                                                                                
Number 2560                                                                                                                     
                                                                                                                                
SIMEON  SWETZOF, JR.,  Mayor, City  of Saint  Paul, testified  in                                                               
opposition to  HJR 25.   He  said he agrees  with all  the points                                                               
that Mr. Lestenkof  mentioned.  Mayor Swetzof  explained that for                                                               
those who have not been  attending all the [NPFMC] meetings, this                                                               
has been a  very long process, and a  difficult, painful process.                                                               
When the  crab market went  under, the city applied  for disaster                                                               
relief,  funds were  received  last year,  but  nothing has  been                                                               
received  this  year.   He  said  the  community wants  the  crab                                                               
rationalization  [debate] to  end.   Mayor  Swetzof reminded  the                                                               
members  that  they need  to  pay  very  close attention  to  the                                                               
communities in the other parts  of the state that depend entirely                                                               
on halibut and crab fisheries.                                                                                                  
                                                                                                                                
Number 2425                                                                                                                     
                                                                                                                                
STEVE  MINOR,  Public  Relations/Fisheries  Consultant,  City  of                                                               
Saint  Paul  and  Central   Bering  Sea  Fishermen's  Association                                                               
(CBSFA), testified in opposition to HJR  25.  He told the members                                                               
that this  process has been going  on at the council  [NPFMC] for                                                               
four years.   There have been three economists,  over 1,000 pages                                                               
of analysis, six  working groups, and [many]  committees of which                                                               
he has  served on  a majority  of them.   The meetings  have been                                                               
held  in Kodiak,  Dutch Harbor,  Anchorage,  Sitka, and  Seattle,                                                               
numerous times,  so there has  been access  to the hearings.   It                                                               
has been a  very open, comprehensive, and extensive  process.  He                                                               
pointed  out that  85 percent  of the  economy in  Saint Paul  is                                                               
based on the  crab fishery.  Mr. Minor apologized  that there was                                                               
no  testimony before  the  legislature sooner,  but  it had  been                                                               
viewed as a council [NPFMC] issue  and he invested time and money                                                               
there.   It was never imagined  that this issue would  be brought                                                               
to the state  legislature.  He reiterated that the  issue is very                                                               
comprehensive and complex.                                                                                                      
                                                                                                                                
MR. MINOR said he wanted  to refocus the discussion by addressing                                                               
some of  Chair Seaton's  comments.  He  explained that  there are                                                               
two types  of coastal fisheries dependent  communities in Alaska.                                                               
There are  those that  rely heavily  on harvesters,  like Kodiak,                                                               
which has  over 80 boats  in the  crab fisheries, and  those that                                                               
depend heavily on processing activities  like Dutch Harbor, Saint                                                               
Paul,  and  Saint  George.    He pointed  out  that  these  three                                                               
communities account for over 80  percent of the opilio processing                                                               
activities.  He asked the members  to understand that this is not                                                               
salmon,  cod,  or halibut,  it  is  crab  which is  very  capital                                                               
intensive,  and  landings  intensive,  because so  much  must  be                                                               
invested  in  a  crab  plant  and crab  harvesting.    Mr.  Minor                                                               
commented  that  most  of  the   letters  of  support  [for  this                                                               
resolution] are from non-crab communities.                                                                                      
                                                                                                                                
Number 2287                                                                                                                     
                                                                                                                                
MR.  MINOR summarized  by saying  that processor  quota [shares],                                                               
which seems  to be  the main  concern, was  designed over  a long                                                               
period  of time  as the  best community  protection measure.   He                                                               
explained  that  process  quotas  will be  issued  and  are  then                                                               
restricted  to the  communities where  it earns  that quota.   He                                                               
pointed  out that  one  mistake  that Chair  Seaton  made in  his                                                               
statement  is that  the quotas  can be  moved.   It cannot.   Mr.                                                               
Minor  explained  that in  the  first  two years  the  processors                                                               
cannot move their  quotas between communities at all.   After the                                                               
first  two years,  the only  movement that  is allowed  is intra-                                                               
company  transfers.   He said  he  believes there  are less  than                                                               
three  companies that  can  take  advantage of  that.   Under  no                                                               
circumstances will the  quota be allowed to leave  the regions in                                                               
which it was earned.  He said if  a processor does not want to do                                                               
business in  a particular town  any more, that  community through                                                               
its CDQ  group or nonprofit entity  can buy that quota  from that                                                               
processor to  keep it in  the town.   Mr. Minor told  the members                                                               
that  processor quotas  were designed  as a  community protection                                                               
mechanism  by the  communities that  are most  dependent on  this                                                               
resource.  He  said he has not  seen that fact brought  up in the                                                               
discussion today.   Mr. Minor closed his comments  by saying that                                                               
if the committee  votes to support HJR 25 the  members are saying                                                               
that the committee  is in agreement with stripping  away the only                                                               
community protections  that have  logically been built  into this                                                               
program.                                                                                                                        
                                                                                                                                
Number 2268                                                                                                                     
                                                                                                                                
JOSEPH  CHILDERS, Director,  Western  Gulf  of Alaska  Fishermen;                                                               
Board  Member,   United  Fishermen  of  Alaska   (UFA);  National                                                               
Committee  Issues Chairman,  testified in  opposition to  HJR 25.                                                               
He said  he wants to make  it clear that he  is representing only                                                               
the Western Gulf of Alaska Fishermen  in his testimony today.  He                                                               
told the members  that the fishermen in his  group typically fish                                                               
in 58-foot vessels;  they harvest fish in  purse seine fisheries,                                                               
troll  fisheries, pot  fisheries, and  longline fisheries.   They                                                               
harvest  fish from  the squid  fishery off  of Windy  Bay to  the                                                               
troll fisheries in  Adak.  Mr. Childers said his  group has solid                                                               
support for the North Pacific Fishery Management Council.                                                                       
                                                                                                                                
MR.  CHILDERS  said it  is  an  extremely open,  accessible,  and                                                               
excruciatingly thorough  process.   He said  to try  to thumbnail                                                               
the crab process  plan in an hour, day, week,  month, or year, is                                                               
impossible.   He  told the  members  that he  has attended  every                                                               
council  [NPFMC]  meeting  for  the last  five  years;  he  began                                                               
attending  just  prior  to the  implementation  of  the  American                                                               
Fisheries Act.   Mr. Childers  explained that he sat  through the                                                               
processor debates  on pollock  and crab fisheries.   In  all that                                                               
time, this  is the first  testimony he  has ever given  about the                                                               
crab plan.   It has  been very thoroughly  investigated including                                                               
three sets  of economists,  one from the  State of  Alaska, NPFMC                                                               
economists, and private  economists.  Every type  of analysis has                                                               
been done on this issue.  He  urged the members to read the final                                                               
report, which  is over  500 pages  long.   Mr. Childers  told the                                                               
members that  to think that  the members could debate  this issue                                                               
today  without reading  the report  is impossible.   He  said the                                                               
council  [NPFMC]  process  should   not  be  jeopardized  in  any                                                               
flippant  way.   The  process has  included the  Magnuson-Stevens                                                               
Fishery   Conservation  and   Management  Act,   the  appointment                                                               
processes, and public process.   It has tremendous value.  Alaska                                                               
has  the  strongest  fisheries  in  the  world  today,  the  most                                                               
dynamic, adaptive management programs,  and in large part [NPFMC]                                                               
is responsible for the system, he said.                                                                                         
                                                                                                                                
Number 2070                                                                                                                     
                                                                                                                                
MR. CHILDERS  summarized his  comments by  saying rationalization                                                               
of  public resources  is a  tremendously complicated  subject and                                                               
very emotional because it is  in effect the privatization [of the                                                               
resource].   When  there are  quota shares,  and distribution  of                                                               
public  resources, that  creates wealth  and there  are very  few                                                               
things  that bring  up  a lot  of  controversy when  [government]                                                               
starts distributing  the public wealth  to people.  He  said that                                                               
is what is going on here.   Quota shares are not about harvesting                                                               
fish; it  is about accessing the  wealth of the fishery.   It can                                                               
be done by  giving the shares to the harvester  or the processor,                                                               
but that is  what is happening here.  What  is being rationalized                                                               
is the  wealth of the  fishery.   Mr. Childers told  members that                                                               
the  communities need  to be  central to  that.   The communities                                                               
need  to  be far  more  responsible  because  they are  far  more                                                               
dependent than the harvesters or the  processors.  He said if the                                                               
wealth of the fishery  is going to be given away,  do not give it                                                               
all to one group because no one has the moral high grown.                                                                       
                                                                                                                                
Number 2057                                                                                                                     
                                                                                                                                
JOHN GARNER, Executive Director,  North Pacific Crab Association;                                                               
Owner,  Northwest Seafoods,  testified in  opposition to  HJR 25.                                                               
He  told   the  members  that  North   Pacific  Crab  Association                                                               
represents about 85  percent of the crab  purchased and processed                                                               
in the Bering Sea.  Mr. Garner added  that he is also an owner of                                                               
Northwest Seafoods, which  has shore plants in  Ketchikan, two in                                                               
Petersburg,  Cordova,  Chignik,   and  floating  processors  that                                                               
operate primarily in the Bering Sea  area, one of which is in the                                                               
crab fishery.   He shared that  he has been fishing  since he was                                                               
13  years old,  was  a fisherman  for many  years,  and became  a                                                               
processor.                                                                                                                      
                                                                                                                                
MR. GARNER  told members that he  wants to echo what  the members                                                               
have already heard.   This is a systemic  approach to rationalize                                                               
the  fishery, and  [the  plan]  attempts to  address  all of  the                                                               
concerns and direction  from Congress in terms  of developing the                                                               
plan,  he  said.   That  direction  was to  include  communities,                                                               
harvesters,  and   processors  to  develop  a   plan  that  would                                                               
eliminate the  race for fish, the  deaths that go along  with the                                                               
race  that  currently occurs,  and  conservation  concerns.   Mr.                                                               
Garner commented that  the members are aware that  the [NPFMC] is                                                               
composed of 11 voting members -  6 are from Alaska, and the chair                                                               
is from Alaska.  This plan  was put forward by the representative                                                               
from the State of Alaska, and  was voted on unanimously.  He said                                                               
he  supports that  exhaustive process.   The  processors are  not                                                               
saying that the fisheries need  to be rationalized.  He commented                                                               
that  he  believes  that  is  a decision  for  the  Secretary  of                                                               
Commerce and the NPFMC.   However, what the processors are saying                                                               
is that  they stood  at Dutch  Harbor and  Saint Paul  Island and                                                               
made investments like everyone else did.                                                                                        
                                                                                                                                
Number 1898                                                                                                                     
                                                                                                                                
MR. GARNER  summarized his  comments by saying  that if  there is                                                               
going to be  a change in the way those  investments are deployed,                                                               
he  believes  the  processors  should be  considered.    He  told                                                               
members  he  would  send  them  a copy  of  the  opinion  of  the                                                               
Congressional  Research  Service  which reviewed  the  anti-trust                                                               
implications  of the  proposed plan.   It  addresses many  of the                                                               
concerns  that  have been  articulated  here  and identifies  the                                                               
number of circumstances  where a regulated industry  of this type                                                               
of market share allocation has occurred.   It makes it very clear                                                               
that  there is  no  anti-trust exemption  with  respect to  price                                                               
activities, he said.                                                                                                            
                                                                                                                                
CHAIR  SEATON  asked those  that  are  on-line who  have  written                                                               
testimony to please send it to the committee.                                                                                   
                                                                                                                                
Number 1865                                                                                                                     
                                                                                                                                
LINDA KOZAK  testified in support  of HJR  25.  She  told members                                                               
that she is a lifelong Alaskan,  has fished salmon in Bristol Bay                                                               
all of her  life, and works with crabbers who  fish in the Bering                                                               
Sea Aleutian  Islands.  Ms. Kozak  pointed out that the  issue of                                                               
processor shares  has been  rejected in every  other part  of the                                                               
country with the exception of Alaska.   The NPFMC was required by                                                               
congressional  law   to  analyze  rationalization  in   the  crab                                                               
fisheries and  to prepare a  report for Congress.   They prepared                                                               
and submitted the report to  Congress last summer, and the action                                                               
[NPFMC] took on the preferred  alternative is not final action by                                                               
the council,  but simply a  preferred alternative to  be included                                                               
in the report, she said.                                                                                                        
                                                                                                                                
MS.  KOZAK  pointed out  that  Congress  must take  two  specific                                                               
actions  for the  council  [NPFMC]  plan to  go  forward.   Those                                                               
[points]  include addressing  the processor  share quota  and the                                                               
community-landing  requirement.   She  said  it  is important  to                                                               
recognized that the NPFMC has  not taken final action; therefore,                                                               
it  is  really appropriate  for  the  legislature  to look  at  a                                                               
resolution and  make a finding  in regard to  the appropriateness                                                               
of  processor shares  in the  state of  Alaska, and  whether this                                                               
should be established as a  precedent nationwide.  Ms. Kozak read                                                               
the following text from [page 155]  a portion of a report done by                                                               
the  National  Academy of  Sciences  that  studied the  issue  of                                                               
processor shares:                                                                                                               
                                                                                                                                
     The  committee was  not  convinced,  however, that  the                                                                    
     solution  to   the  perceived  problems  lies   in  the                                                                    
     allocation  of  either  the  harvesting  or  processing                                                                    
     quota shares to processors.                                                                                                
                                                                                                                                
MS.  KOZAK read  another portion  of  the report  from page  205,                                                               
saying,  "Nor  did the  committee  find  a compelling  reason  to                                                               
establish  a separate,  complementary processor  quota system  or                                                               
two-pie system."   She summarized by saying she  supports HJR 25.                                                               
She pointed out that if there  were processor shares in the sable                                                               
fish and  halibut fisheries,  the raw  fish tax  to the  State of                                                               
Alaska would  be substantially  less because  the price  would be                                                               
substantially lower.                                                                                                            
                                                                                                                                
Number 1718                                                                                                                     
                                                                                                                                
DAVID POLUSHKIN, K-Bay Fishing  Association, testified in support                                                               
of  HJR  25.    He  told the  members  that  the  association  is                                                               
primarily a  small-boat fleet, under  50 feet [in length].   Most                                                               
of the  comments that he wished  to make have already  been made,                                                               
he said.   Mr. Polushkin reiterated that  the association members                                                               
support HJR 25.                                                                                                                 
                                                                                                                                
Number 1690                                                                                                                     
                                                                                                                                
GORDON BLUE, C.R.A.B. Group, testified in  support of HJR 25.  He                                                               
told the members  that the group includes  sports membership, but                                                               
most of  the members  are independent  crab vessel  [owners] that                                                               
harvest crab  in the  Bering Sea.   Mr. Blue  said its  group has                                                               
also been involved in the NPFMC  process, and found that the real                                                               
problem that manifests  with processing of quota  shares that has                                                               
not  been  touched on  is  that  in  trying to  establish  [quota                                                               
shares]  NPFMC  has  wrestled  for  a  year  to  arrive  at  some                                                               
solutions.   The council  [NPFMC] promised  last June  that there                                                               
would  be protection  for the  harvesters from  the imbalance  in                                                               
bargaining  power that  was created  by processors  quota shares.                                                               
He  said  NPFMC promised  that  they  would protect  communities.                                                               
Then  the council  [NPFMC] spent  the next  year, actually  up to                                                               
this month, in  a committee process of which the  group took part                                                               
in, trying to work  out how to do that and  it has not succeeded,                                                               
he said.                                                                                                                        
                                                                                                                                
Number 1592                                                                                                                     
                                                                                                                                
MR.  BLUE said  the  NPFMC  came up  with  a binding  arbitration                                                               
method which would  require harvesters to sign  a contract before                                                               
they know what the price might be.   He pointed out that once the                                                               
arbitration  was  concluded  the  harvesters would  be  bound  to                                                               
deliver no-matter-what at  that price.  It was  important to note                                                               
that there were  no harvester organizations that came  out of the                                                               
NPFMC meeting  in support  of this  plan, he  said.   However, he                                                               
understands that some organizations  are trying to negotiate some                                                               
changes.  Mr.  Blue said the lack  of support is due  to the fact                                                               
that the processors  have too much power under  this plan because                                                               
the processing quota  shares are market allocation to  only a few                                                               
companies.   That marketing allocation stays  with the processor.                                                               
He said  he heard  testimony from  communities in  Western Alaska                                                               
who feel  they have  been protected by  the NPFMC's  actions, but                                                               
what the members  have not heard from people  who understand that                                                               
the council's  [NPFMC] plan  does no  such thing.   There  are so                                                               
many  loopholes in  the  council's [NPFMC]  plan  that allow  for                                                               
processors to move  their quotas that there is  no protection for                                                               
these  communities.   Under this  plan  [these communities]  very                                                               
likely will find themselves bereft  of any processing activity in                                                               
the very near term  and will be unable to get it  back.  Mr. Blue                                                               
summarized  his  comments  by   saying  that  the  group  opposes                                                               
processing quotas  because of the distortions  that it introduces                                                               
into the market economy.                                                                                                        
                                                                                                                                
Number 1466                                                                                                                     
                                                                                                                                
BUCK  LAUKITIS,  President,  North  Pacific  Fishing  Association                                                               
(NPFA), testified  in support of HJR  25.  He told  the committee                                                               
that NPFA members include Bering  Sea crabbers, halibut and sable                                                               
fish  longliners, Gulf  of  Alaska  ground fishermen,  fixed-gear                                                               
harvesters, fishermen  who catch and  process their own  fish for                                                               
export  markets, and  salmon fishermen.   Mr.  Lukitis reiterated                                                               
their  strong  support  for  HJR 25,  and  strong  opposition  to                                                               
processor shares  in any Alaska  fishery.  North  Pacific Fishing                                                               
Association submitted a resolution to  the committee and he hopes                                                               
the members  have had a chance  to review it.   He commented that                                                               
NPFA and  many people in communities  see corporate consolidation                                                               
of  the fisheries  and the  drive-by national  food companies  to                                                               
control  Alaska's  fishery  resource   management,  and  in  turn                                                               
control  fishermen  in  coastal  communities as  the  number  one                                                               
threat they  face.  Mr.  Lukitis told members that  the fishermen                                                               
want the  full protection of  federal anti-trust laws.   The fish                                                               
dock in  Homer is thriving  because of healthy  competition among                                                               
halibut and sable fish buyers.                                                                                                  
                                                                                                                                
Number 1411                                                                                                                     
                                                                                                                                
MR.  LUKITIS  told  the  members  that there  has  never  been  a                                                               
coherent  rational  justification  given  for  processor  shares,                                                               
except that processors  wanted them, and were and  are willing to                                                               
hold  any  fishery  rationalization process  hostage  unless  the                                                               
processors got what they wanted.   He said "PQS" [processor quota                                                               
shares]  in  the  crab  plant  are an  artifact  of  the  Knowles                                                               
Administration.   The  PQS are  under consideration  for Gulf  of                                                               
Alaska groundfish and  salmon rationalization now.   He said many                                                               
pointed  out that  the economic  analysis known  as the  Matulich                                                               
Study used by the State of  Alaska and paid for by the processors                                                               
to  justify this  aberrant  plan  which necessitates  eliminating                                                               
protections under federal anti-trust laws is seriously flawed.                                                                  
                                                                                                                                
MR. LUKITIS  summarized his comments  by saying that  the General                                                               
Accounting Office  (GAO) in  Washington, D.C.,  came to  the same                                                               
conclusion  that  the  Matulich  [Study]  analysis  is  seriously                                                               
flawed.     He  emphasized  earlier  statements   concerning  the                                                               
National  Academy of  Science's  view that  "found no  compelling                                                               
reason    to   establish    separate   complimentary    processor                                                               
assistance."  In  conclusion, he said he  supports the resolution                                                               
and believes it is important, not  only for the crab fishery, but                                                               
for the Gulf  of Alaska groundfish rationalization as  well.  Mr.                                                               
Lukitis  closed by  saying NPFA  supports the  resolution without                                                               
amendments.                                                                                                                     
                                                                                                                                
Number 1309                                                                                                                     
                                                                                                                                
JOE MACINKO testified in support of  HJR 25.  He told the members                                                               
he is  a 20-year resident  of Alaska and a  commercial fisherman.                                                               
He  said  he supports  the  resolution,  but not  the  amendments                                                               
because they serve  to confuse the issue.   Processor shares will                                                               
facilitate  the export  of money  as low  value fish  out of  the                                                               
state.   It  will cost  the state  and communities  jobs and  tax                                                               
revenues.   He  pointed out  that crab,  pollock, and  salmon are                                                               
already  being sent  to Thailand  and  China to  avoid state  and                                                               
local taxes.   Mr. Macinko commented that there has  been an 11-0                                                               
vote for processor  shares by the NPFMC and it  has been referred                                                               
to as  a compromise,  but he  said he believes  it is  more power                                                               
politics.   None  of  the people  who voted  for  that plan  were                                                               
subject  to the  processor share  provision,  he said.   The  CDQ                                                               
groups  got their  portion  of the  resource  increased from  7.5                                                               
percent  to  10 percent,  and  they  are  allowed to  sell  their                                                               
product to  the highest  bidder.   He compared  this vote  to the                                                               
[legislature's]  fixing   Alaska's  fiscal  problems   by  taxing                                                               
everyone except  those that live  in the district  represented by                                                               
the legislator  who is voting.   Mr. Macinko told the  members he                                                               
does not think  this is good public policy.   He urged members to                                                               
please stand up for those in their communities.                                                                                 
                                                                                                                                
[HJR 25 was held over.]                                                                                                         
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special  Committee   on  Fisheries   meeting  was   adjourned  at                                                               
10:00 a.m.                                                                                                                      

Document Name Date/Time Subjects