Legislature(2013 - 2014)CAPITOL 120

01/28/2014 10:00 AM House FISHERIES


Download Mp3. <- Right click and save file as

Audio Topic
10:04:23 AM Start
10:04:40 AM HB177
11:06:21 AM Overview: Alaska Department of Fish & Game - Division of Commercial Fisheries
11:51:38 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Dept. of Fish & Game, Commercial TELECONFERENCED
Fishing Division
+ HB 177 COMMERCIAL FISHING LOANS TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                        January 28, 2014                                                                                        
                           10:04 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Paul Seaton, Chair                                                                                               
Representative Eric Feige                                                                                                       
Representative Lynn Gattis                                                                                                      
Representative Bob Herron                                                                                                       
Representative Craig Johnson                                                                                                    
Representative Kurt Olson                                                                                                       
Representative Jonathan Kreiss-Tomkins                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 177                                                                                                              
"An Act relating to interest rates on loans from the commercial                                                                 
fishing revolving loan fund and the community quota entity                                                                      
revolving loan fund; and providing for an effective date."                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
OVERVIEW:  ALASKA DEPARTMENT OF FISH & GAME - DIVISION OF                                                                       
COMMERCIAL FISHERIES                                                                                                            
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 177                                                                                                                  
SHORT TITLE: COMMERCIAL FISHING LOANS                                                                                           
SPONSOR(s): REPRESENTATIVE(s) EDGMON                                                                                            
                                                                                                                                
03/20/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/20/13       (H)       FSH, FIN                                                                                               
04/02/13       (H)       FSH AT 10:00 AM CAPITOL 120                                                                            
04/02/13       (H)       Heard & Held                                                                                           
04/02/13       (H)       MINUTE (FSH)                                                                                           
01/28/14       (H)       FSH AT 10:00 AM CAPITOL 120                                                                            
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE BRYCE EDGMON                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As sponsor, presented a review of HB 177.                                                                
                                                                                                                                
TIM CLARK, Staff                                                                                                                
Representative Bryce Edgmon                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided aspects  of the slide  presentation                                                            
during the  hearing on HB 177,  on behalf of  Representative Bryce                                                              
Edgmon, sponsor.                                                                                                                
                                                                                                                                
JOSEPH JACOBSON, Director                                                                                                       
Division of Economic Development                                                                                                
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Responded to questions on HB 177.                                                                        
                                                                                                                                
JIM ANDERSEN, Lending/Collection Manager                                                                                        
Financing Section                                                                                                               
Division of Economic Development                                                                                                
Department of Commerce, Community & Economic Development                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Responded to questions on HB 177.                                                                        
                                                                                                                                
JEFF REGNART, Director                                                                                                          
Division of Commercial Fisheries                                                                                                
Alaska Department of Fish & Game (ADF&G)                                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Presented  the  ADF&G  overview   of  the                                                            
Division of Commercial Fisheries.                                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:04:23 AM                                                                                                                   
                                                                                                                                
CHAIR  PAUL   SEATON  called  the   House  Special   Committee  on                                                            
Fisheries  meeting  to  order  at   10:04  a.m.    Representatives                                                              
Seaton, Kreiss-Tompkins,  Olson, Feige,  and Johnson  were present                                                              
at the call to  order.  Representatives Gattis  and Herron arrived                                                              
as the meeting was in progress.                                                                                                 
                                                                                                                                
                HB 177-COMMERCIAL FISHING LOANS                                                                             
                                                                                                                                
10:04:40 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON announced  that the first order of  business would be                                                              
HOUSE BILL  NO. 177, "An Act  relating to interest rates  on loans                                                              
from  the   commercial  fishing   revolving  loan  fund   and  the                                                              
community quota entity  revolving loan fund; and  providing for an                                                              
effective date."                                                                                                                
                                                                                                                                
10:05:57 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  BRYCE EDGMON,  Alaska  State  Legislature, used  a                                                              
slide  presentation to  refresh the  committee's understanding  of                                                              
the bill, which had been held in committee over the interim.                                                                    
                                                                                                                                
10:06:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FEIGE  moved  to   adopt  the  proposed  committee                                                              
substitute  (CS)   for  HB  177,  labeled   28-LS0607\O,  Bullard,                                                              
3/26/13, as the  working draft.  Without objection,  Version O was                                                              
before the committee.                                                                                                           
                                                                                                                                
10:07:10 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EDGMON projected  slide  1 and  explained that  HB
177  restores  the   ability  for  the  Department   of  Commerce,                                                              
Community,   and  Economic   Development   (DCCED),  Division   of                                                              
Economic Development,  to offer  incentivizing interest  rates for                                                              
loan programs  within the Commercial  Fishing Revolving  Loan Fund                                                              
(CFRLF),  a measure altered  in 2010  with the  passage of  HB 20.                                                              
The bill  will allow  fisherman, working  in a volatile  industry,                                                              
the  ability  to  procure  loans  for  the  purpose  of  upgrading                                                              
vessels and  gear to enhance  product quality and  repower vessels                                                              
with fuel  efficient propulsion and  generator class engines.   He                                                              
explained that  these types  of loans can  be difficult  to secure                                                              
and  are  often  denied  by  commercial  lending  agencies.    The                                                              
purpose of  HB 177 is to  provide low-cost loans  as encouragement                                                              
for   Alaskan   fishermen   to    improve   the   efficiency   and                                                              
profitability  of their businesses.   He  emphasized that  many of                                                              
these  businesses are  small "mom  and  pop" operations,  existing                                                              
throughout  all of  Alaska.  Access  to a  state-run loan  program                                                              
providing  favorable   interest  rates  and  terms   is  important                                                              
support  for  Alaskans  whose  livelihoods   are  dependent  on  a                                                              
fluctuating fishing  industry.  He  said the bill  stipulates that                                                              
such loans  be offered at 2 percent  below the prime rate,  with a                                                              
floor of  3 percent.  Additionally,  a technical fix  ensures that                                                              
income earned on  investments of the Community  Quota Entity (CQE)                                                              
Revolving Loan  Fund, revolves back  into the fund, as  opposed to                                                              
the CFRLF, as a whole.                                                                                                          
                                                                                                                                
10:10:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EDGMON   pointed  out  that  the   revolving  loan                                                              
program  is comprised  of six sections,  labeled  A through  F, as                                                              
detailed on  the second slide.   He explained that Sections  A and                                                              
B are primarily  pertinent to HB  177, addressing the crux  of the                                                              
CFRLF.   Aspects  of  the sections  are  tailored to  specifically                                                              
assist  fishermen  starting  up  in  the  industry,  with  limited                                                              
access to funding  sources, as well as to provide  support for the                                                              
established  producers  who  may  have  other loan  options.    He                                                              
stated  that Section  B  allows  loans up  to  $200,000 for  entry                                                              
permits, or  a maximum  of $100,000 for  vessel purchase  and gear                                                              
upgrades  including product  quality improvement  and engine  fuel                                                              
efficiency.     An  established   fisherman  whose   business  has                                                              
progressed and  acquired an appropriate  credit history,  could be                                                              
eligible for  the Section A  options of  loans up to  $300,000 for                                                              
entry  permits or  vessel and  gear upgrades  specific to  product                                                              
quality  improvement  and  engine  fuel efficiency.    He  briefly                                                              
noted  that the  remaining sections  address a  variety of  loans,                                                              
and  underscored that  they are  not in  play with  regards to  HB
177.     The   sponsor  emphasized   the  residency   requirements                                                              
indicated  on  slide  4, paraphrasing  the  language,  which  read                                                              
[original punctuation provided]:                                                                                                
                                                                                                                                
     Section A                                                                                                                  
                                                                                                                                
     Must  have  been  a  state  resident  for  a  continuous                                                                   
     period  of  two  years  immediately  preceding  date  of                                                                   
     application.                                                                                                               
                                                                                                                                
     Must  have possessed  a  commercial  fishing license  or                                                                   
     permit for the  year preceding the loan  application and                                                                   
     for any two years of the past five years.                                                                                  
                                                                                                                                
     Also, must  have participated in those  fisheries during                                                                   
     those periods.                                                                                                             
                                                                                                                                
     Must not be past due on any child support obligations.                                                                     
                                                                                                                                
     Section B                                                                                                                  
                                                                                                                                
     Must  have  been  a  state  resident  for  a  continuous                                                                   
     period  of  two  years  immediately  preceding  date  of                                                                   
     application.                                                                                                               
                                                                                                                                
     Must be  ineligible for  financing through a  commercial                                                                   
     bank or  through the Commercial Fishing  and Agriculture                                                                   
     Bank (CFAB).                                                                                                               
                                                                                                                                
     Must   lack   employment    opportunities   other   than                                                                   
     commercial  fishing in  area  of residence,  or must  be                                                                   
     economically  dependent  on   commercial  fishing  as  a                                                                   
     livelihood and as a traditional way of life.                                                                               
                                                                                                                                
     Must not be past due on any child support obligations.                                                                     
                                                                                                                                
10:12:34 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EDGMON  referred  to  slide five  to  compare  the                                                              
current prime interest  rates with what would be  allowed under HB
177.   He explained that  the revolving  loan program has  been in                                                              
operation  since   the  1970s  and   is  considered   integral  to                                                              
supporting  Alaskan  fishermen.   Characterized  as  an  extremely                                                              
successfully  program,  it  has   also  incentivized  generational                                                              
continuance/ownership in the fishing fleet.                                                                                     
                                                                                                                                
10:15:14 AM                                                                                                                   
                                                                                                                                
TIM  CLARK,  Staff,  Representative  Bryce  Edgmon,  Alaska  State                                                              
Legislature, continued  with the slide presentation,  paraphrasing                                                              
from slide 6,  titled "Technical Fix:  The Community  Quota Entity                                                              
Revolving   Loan   Fund,"   which   read   [original   punctuation                                                              
provided]:                                                                                                                      
                                                                                                                                
     Section 6  of HB 177  establishes that income  earned on                                                                   
     investments  of  the Community  Quota  Entity  Revolving                                                                   
     Loan Fund rolls  back into the fund - a feature  that is                                                                   
     absent in current statute.                                                                                                 
                                                                                                                                
     This section also  allows monies in the fund  to be used                                                                   
     for  administering the  CQE  loan program  (in the  same                                                                   
     way  that  CFRLF  earnings  are  used  to  pay  for  its                                                                   
     programs' administrative costs).                                                                                           
                                                                                                                                
MR.  CLARK emphasized  that  the administrative  costs  associated                                                              
with the CFRLF  have been, and continue to be,  entirely satisfied                                                              
through   the  recovery   and  income   activity   of  this   very                                                              
successful, self-sustaining program.                                                                                            
                                                                                                                                
10:16:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTIS  asked where earned income  generated by the                                                              
fund  has  been  deposited,  if  it  is  not  being  returned  and                                                              
incorporated back into the program.                                                                                             
                                                                                                                                
REPRESENTATIVE  EDGMON responded  that,  in past  years, not  only                                                              
have  all administrative  costs been  covered but  the success  of                                                              
the program  has allowed  contributions of  overflow income  to be                                                              
deposited  to  the state's  general  fund.    He deferred  to  the                                                              
department for an update on current practices.                                                                                  
                                                                                                                                
REPRESENTATIVE  EDGMON pointed out  that the department  requested                                                              
introduction of this  bill and the legislation  is fully supported                                                              
by the agency.                                                                                                                  
                                                                                                                                
10:18:26 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FEIGE  asked  if  the  program  is  restricted  to                                                              
Alaskans residents.                                                                                                             
                                                                                                                                
REPRESENTATIVE EDGMON  said yes, and  he stressed that  it carries                                                              
a two-year residency requirement prior to making application.                                                                   
                                                                                                                                
10:19:08 AM                                                                                                                   
                                                                                                                                
SENATOR OLSON asked about the fiscal note.                                                                                      
                                                                                                                                
MR. CLARK  answered that  there is a  fiscal note, which  reflects                                                              
reduced income  to the fund due  to the lower interest  rates that                                                              
would go  into effect.  However,  he emphasized, the fund  is more                                                              
than  solvent  and  producing profits  since  1985,  requiring  no                                                              
state appropriation.                                                                                                            
                                                                                                                                
10:20:51 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EDGMON  offered  that  it would  be  important  to                                                              
understand the impact  of the bill on commercial  lending agencies                                                              
and whether there  is an unfair undermining of  the private sector                                                              
by allowing  the state to offer  low interest loans.   However, as                                                              
pointed out, commercial  agencies are not eager to  make high risk                                                              
loans, which is  the nature of the volatile fishing  industry.  He                                                              
cited  the   difficulty  of   obtaining  private  sector   fishing                                                              
industry  loans  in contrast  to  the  productive history  of  the                                                              
state-funded program.                                                                                                           
                                                                                                                                
REPRESENTATIVE  FEIGE noted  the state loan  prerequisite  for the                                                              
applicant to  be turned down by  a commercial lender.   Expressing                                                              
concern  for  the  process,  he  said it  could  be  possible  for                                                              
someone  to solicit  a  denial  letter from  a  bank  in order  to                                                              
qualify  for the  state program.   He  noted his  support for  the                                                              
intent  of  HB 177  and  the  need  to also  support  the  banking                                                              
industry.   He asked  about applicants  gaming  the system  and if                                                              
there needs  to be amendments or  regulations to ensure  the state                                                              
does not issue loans obtained through devious actions.                                                                          
                                                                                                                                
REPRESENTATIVE  EDGMON said  that there are  no specific  examples                                                              
of anyone  entering the  state system  via underhanded  means, and                                                              
he  offered an  anecdotal story  to  typify how  fishermen in  his                                                              
district have utilized  the program.  Further, he  said that loans                                                              
from  the  fund  average  $46,000, providing  a  term  savings  of                                                              
$6,000,  which may  represent a  significant make-or-break  amount                                                              
to a small business fisherman.                                                                                                  
                                                                                                                                
REPRESENTATIVE FEIGE  agreed that  not all applicants  are looking                                                              
for an  easy means  to enter  the program,  and he suggested  that                                                              
the  banking industry  may  bring  forward specific  testimony  to                                                              
reflect that side of the issue, and validate such concerns.                                                                     
                                                                                                                                
10:27:18 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON  said DCCED  would explain how  the specifics  of the                                                              
application process  are handled and noted that a  number of young                                                              
fishermen,  without  a  loan  history   or  sufficient  assets  to                                                              
satisfy commercial  lenders, are particularly served  by the state                                                              
loan program.                                                                                                                   
                                                                                                                                
REPRESENTATIVE EDGMON  added that any business activity  in Alaska                                                              
has a  higher cost than  in the contiguous  United States,  and he                                                              
underscored the  need for the state  to offer incentives  to small                                                              
business owners.                                                                                                                
                                                                                                                                
REPRESENTATIVE  GATTIS  offered  her personal  experience  with  a                                                              
similar  state  program,  the  Agricultural  Revolving  Loan  Fund                                                              
(ARLF) and  said it can  be difficult to  qualify.   She testified                                                              
that   small   businesses,  including   fisherman   and   farmers,                                                              
typically have difficulty obtaining commercial loans.                                                                           
                                                                                                                                
10:31:32 AM                                                                                                                   
                                                                                                                                
JOSEPH  JACOBSON,  Director,  Division  of  Economic  Development,                                                              
Department  of  Commerce,  Community,  and  Economic  Development,                                                              
said  Alaska's global  quality  improvement  marketing effort  has                                                              
required  fisherman to  upgrade  equipment and  practices to  keep                                                              
pace.   Maximizing  product value  is  essential, he  underscored.                                                              
He then  addressed Representative  Feige's concern for  a turndown                                                              
statement and  said that private  sector lending  institutions are                                                              
contacted to verify  the validity of a CFRLF  applicant's claim of                                                              
loan denial.                                                                                                                    
                                                                                                                                
10:34:32 AM                                                                                                                   
                                                                                                                                
JIM  ANDERSEN,  Lending/Collection   Manager,  Financing  Section,                                                              
Division  of Economic  Development, DCCED,  assured the  committee                                                              
that due  diligence is  given to every  applicant that  presents a                                                              
turndown  letter;  legitimacy is  verified  and loan  denials  are                                                              
substantiated.   In follow-up, he indicated that  the verification                                                              
process   is  required   by   statute,  included   in   department                                                              
regulation, and followed as standard policy.                                                                                    
                                                                                                                                
10:36:25 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS   asked  how  frequently  fraud  is                                                              
attempted among  applicants and  whether it  is a common  practice                                                              
to solicit  denial letters  from banks in  order to qualify  for a                                                              
state-funded loan.                                                                                                              
                                                                                                                                
MR.  ANDERSEN   responded  that   lenders  have  reportedly   been                                                              
solicited for  denial letters.   He pointed out, however,  that if                                                              
the   applicant   meets   the  commercial   terms,   the   private                                                              
institution has the first opportunity to provide the loan.                                                                      
                                                                                                                                
10:37:57 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   JOHNSON  opined   that  the   CFRLF  is   treated                                                              
differently  than  the  CQE,  and he  asked  for  an  explanation,                                                              
specifically that there  is no floor for the  community quota fund                                                              
but there is for the revolving loans.                                                                                           
                                                                                                                                
MR. ANDERSEN  explained that the CQE  fund is subject to  the same                                                              
statutes as  govern the  CFRLF and does  have the same  structural                                                              
parameters:   a ceiling no  higher than  10.5 percent and  a floor                                                              
which is  currently prime  interest rate plus  1 percent  and cost                                                              
of funds.                                                                                                                       
                                                                                                                                
REPRESENTATIVE JOHNSON  noted that the cost of funds  to the state                                                              
seems to disappear in HB 177.                                                                                                   
                                                                                                                                
MR. ANDERSEN  responded that the  cost of funds aspect  is handled                                                              
differently  between the  CFRLF and  the CQE.   An alternate  loan                                                              
structure  is in place  in the  CFRLF to  allow for the  incentive                                                              
program.   For further clarification,  he explained how  two years                                                              
ago,  changes  to   the  program  removed  the   3  percent  floor                                                              
requirement [HB  20, 26th Alaska State Legislature],  replacing it                                                              
with cost of funds  language, and HB 177 reinstates  the 3 percent                                                              
floor.                                                                                                                          
                                                                                                                                
CHAIR SEATON  recalled that 3 percent  was determined as  the base                                                              
requirement to cover the department's administrative costs.                                                                     
                                                                                                                                
10:41:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE JOHNSON  asked for assurance  that HB 177  will not                                                              
jeopardize  the  funds future  through  lack of  appropriate  cost                                                              
recovery.  He  reminded members that solvency came  up in previous                                                              
bill versions and cautioned that it is an important point.                                                                      
                                                                                                                                
CHAIR SEATON  indicated that the  requirement to recoup  the prime                                                              
lending  rate plus  two percent,  with a floor  of three  percent,                                                              
provides the appropriate safe guard for the program.                                                                            
                                                                                                                                
REPRESENTATIVE  JOHNSON  asked what  has  changed  in the  program                                                              
that compels  the department to  request this bill be  brought for                                                              
consideration.                                                                                                                  
                                                                                                                                
MR.   JACOBSON  answered   that  the   bill  provides   additional                                                              
incentives.                                                                                                                     
                                                                                                                                
MR.  ANDERSEN added  that the  bill reinstalls  the interest  rate                                                              
structure  responsible  for  the  historic  monetary  success  and                                                              
solvency of the  program while restoring the incentive  aspects as                                                              
well.                                                                                                                           
                                                                                                                                
10:50:32 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FEIGE  expressed concern that the  principle of the                                                              
fund  be maintained  and  grown,  and he  stated  support for  the                                                              
legislation,  noting   that  the  default  rate   is  minimal  and                                                              
administrative costs appear to be in line for continued success.                                                                
                                                                                                                                
10:52:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE JOHNSON  stated support  for the repowering  of the                                                              
program  and said  he  had no  questions  regarding the  financial                                                              
quality  of the  fund.   He noted  the importance  for state  loan                                                              
programs to  be considered  equally and said  the solvency  of one                                                              
entity  should   not  jeopardize  another.    Some   programs  may                                                              
represent  a means  for communities  to  recoup waning  economies,                                                              
and  caution  should  be  taken   regarding  the  possibility  for                                                              
regional disparities, he finished.                                                                                              
                                                                                                                                
10:55:17 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON  said that  the quota program  refers to  the federal                                                              
quotas on halibut  and black cod, versus the  state fishing vessel                                                              
permits for individual  purchase.  These are  two separate issues,                                                              
and he acknowledged the distinction for the committee.                                                                          
                                                                                                                                
MR. JACOBSON  interjected  that HB 177  requires accrued  interest                                                              
be  returned  to   the  fund,  thus  strengthening   the  program;                                                              
functionally there  is no change from a borrowers  standpoint.  To                                                              
a follow-up question, he said that gains remain in the fund.                                                                    
                                                                                                                                
10:57:40 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   GATTIS  requested   a  graph   be  generated   to                                                              
illustrate fund  activity over  the last ten  years and  a similar                                                              
one projecting  expected  outcomes with and  without the  proposed                                                              
change.                                                                                                                         
                                                                                                                                
MR.  ANDERSEN said  there is  no concern  for loss  of revenue  or                                                              
fund  solvency,  rather the  bill  is  intended to  reinstall  the                                                              
program incentives that were altered two years ago.                                                                             
                                                                                                                                
REPRESENTATIVE  GATTIS   maintained  her  interest   in  a  visual                                                              
illustration of the fund.                                                                                                       
                                                                                                                                
10:59:32 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  OLSON requested  that a  representative from  CFAB                                                              
be available at a subsequent meeting.                                                                                           
                                                                                                                                
CHAIR SEATON  closed public  testimony and  announced HB  177 held                                                              
over.                                                                                                                           
                                                                                                                                
11:01:10 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 11:01 a.m. to 11:06 a.m.                                                                     
                                                                                                                                
^OVERVIEW:    Alaska Department  of  Fish  &  Game -  Division  of                                                              
Commercial Fisheries                                                                                                            
   OVERVIEW:  Alaska Department of Fish & Game - Division of                                                                
                      Commercial Fisheries                                                                                  
                                                                                                                                
11:06:21 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON announced  that the final order of  business would be                                                              
an overview from  the Alaska Department of Fish &  Game (ADF&G) of                                                              
the Division of Commercial Fisheries.                                                                                           
                                                                                                                                
11:06:34 AM                                                                                                                   
                                                                                                                                
JEFF REGNART, Director,  Division of Commercial  Fisheries, Alaska                                                              
Department of Fish  & Game, began the presentation  by reading the                                                              
mission  statement   of  the  division,  which   states  [original                                                              
punctuation provided]:                                                                                                          
                                                                                                                                
     Manage   subsistence,  commercial,   and  personal   use                                                                   
     fisheries  in the interest  of the  economy and  general                                                                   
     wellbeing  of  the  citizens of  the  state,  consistent                                                                   
     with  the  sustained  yield principal,  and  subject  to                                                                   
     allocations through public regulatory processes                                                                            
                                                                                                                                
MR.  REGNART  said the  division's  primary  responsibilities  are                                                              
[original punctuation provided]:                                                                                                
                                                                                                                                
     Manage   subsistence,  commercial,   and  personal   use                                                                   
     fisheries within state waters                                                                                              
                                                                                                                                
     Manage  shellfish species  and  some  groundfish out  to                                                                   
     200 miles                                                                                                                  
                                                                                                                                
     Conduct applied research on Alaska's aquatic resources                                                                     
                                                                                                                                
     Plan  and  permit  salmon   hatcheries  and  mariculture                                                                   
     operations                                                                                                                 
                                                                                                                                
     Negotiate  fishing  agreements  subject to  the  Pacific                                                                   
     Salmon Treaty and Alaska-Yukon Treaty                                                                                      
                                                                                                                                
     Coordinate  with  federal  and  international  fisheries                                                                   
     management agencies                                                                                                        
                                                                                                                                
11:08:08 AM                                                                                                                   
                                                                                                                                
MR.  REGNART said  the core  services included  in today's  report                                                              
are  harvest management;  stock assessment  and applied  research;                                                              
aquaculture   permitting;   and   customer  service   and   public                                                              
involvement.   He said the  harvest management practices  include:                                                              
supporting  the Board  of  Fisheries in  establishing  regulations                                                              
and  management  plans;  opening  and closing  fishing  areas  and                                                              
setting  fishing times;  collecting harvest  and biological  data;                                                              
and writing annual management reports to synthesize information.                                                                
                                                                                                                                
MR.  REGNART   expanded  on  the  harvest   management  component,                                                              
describing  how   the  in-season  practices  employ   a  cadre  of                                                              
managers  proximate   to  the  fisheries   who  utilize   a  broad                                                              
authority  to open  and close the  focus areas.   Applied  science                                                              
ensures  that  management  of Alaska's  fisheries  are  consistent                                                              
with the  sustained yield  principle, he  explained.   The managed                                                              
fisheries  range  from  the seine  fishing  efforts  of  Southeast                                                              
Alaska, extend  to the harvest areas  of the Aleutian  Islands, as                                                              
well as  north to the  Bering Sea crab  boats delegated  for state                                                              
management  by the federal  government, as  the range  exceeds the                                                              
three mile limit.                                                                                                               
                                                                                                                                
11:10:41 AM                                                                                                                   
                                                                                                                                
MR. REGNART  described stock  assessment and research  techniques,                                                              
which include:  Salmon Escapement  Enumeration via weirs,  towers,                                                              
sonar,   foot/aerial   surveys;    juvenile   salmon   estimation;                                                              
groundfish  and shellfish  surveys; herring  spawn deposition  and                                                              
hydro  acoustic   surveys;  aerial   surveys  for  herring;   dive                                                              
surveys; and biological, genetic, coded-wire tag sampling.                                                                      
                                                                                                                                
11:11:30 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FEIGE  asked about the enumeration  process and how                                                              
the department accounts for declines and surpluses.                                                                             
                                                                                                                                
MR. REGNART  responded  that a large  part of  the enumeration  is                                                              
following-up with studies to understand the fluctuations.                                                                       
                                                                                                                                
CHAIR SEATON announced  that a presentation on  the sonar programs                                                              
would come before the committee at a future meeting.                                                                            
                                                                                                                                
11:14:47 AM                                                                                                                   
                                                                                                                                
MR. REGNART  projected images to  illustrate a variety  of methods                                                              
used by  the division  to enumerate  managed species,  including a                                                              
variety  of  weirs  and  gill  nets for  adult  fish  as  well  as                                                              
pictures  of  means  used  to  survey  populations  of  shellfish,                                                              
octopus, and other species.                                                                                                     
                                                                                                                                
11:16:00 AM                                                                                                                   
                                                                                                                                
MR. REGNART reported  that aquaculture permitting  is also handled                                                              
by the division  for private nonprofit salmon  hatcheries, aquatic                                                              
shellfish hatcheries,  and aquatic  shellfish farms.   In response                                                              
to a  question from  Chair Seaton, Mr.  Regnart said  the division                                                              
permits shellfish  farms with consideration given  to the presence                                                              
or  absence  of a  species,  water  quality, site  selection,  and                                                              
whether the species will impact existing ocean life.                                                                            
                                                                                                                                
11:18:24 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FEIGE   mentioned  rearing  techniques   and  said                                                              
hatchery  facilities  can be  expensive.    He asked  whether  the                                                              
division  is  considering  how   to  minimize  cost  and  maximize                                                              
performance,  perhaps   through  methods  other   than  industrial                                                              
hatcheries, like incubator boxes.                                                                                               
                                                                                                                                
MR.  REGNART  concurred  that hatchery  facilities  are  a  costly                                                              
endeavor and  said support is  offered by the division  biologists                                                              
who  provide a  voice  of experience  to  user  groups working  on                                                              
species augmentation on a smaller scale.                                                                                        
                                                                                                                                
REPRESENTATIVE  FEIGE noted that  genetics are  also a  concern in                                                              
regards to hatcheries, and he asked about this issue.                                                                           
                                                                                                                                
MR.  REGNART   said  the  division   maintains  a   strict  policy                                                              
regarding  hatchery donor  stocks and genetic  diversity  in order                                                              
to   assure   sustainability   and   compatibility.      In-stream                                                              
incubation  boxes are not  a concern,  as the  eggs and  smolt are                                                              
maintained in the source stream.                                                                                                
                                                                                                                                
11:24:24 AM                                                                                                                   
                                                                                                                                
MR. REGNART reported  that salmon hatchery programs  are conducted                                                              
in partnership with  operators to increase salmon  harvests, while                                                              
protecting  wild   stocks.     Research  has  increased   consumer                                                              
confidence  in Alaskan  salmon by  assuring  the marketplace  that                                                              
these  products come  from  a sustainably  managed  program.   The                                                              
result  is  a   long-term  program  that  puts   more  dollars  in                                                              
fishermen's  pockets.    He said  that,  through  the  legislative                                                              
backed  hatchery/wild   research   project,  the  department   has                                                              
partnered  with hatchery  operators to study  the interactions  of                                                              
hatchery  stocks   with  wild  stocks  to   address  long-standing                                                              
questions  that   have  not  been   solved  through   the  current                                                              
technology  and information.   A  $3.5  million appropriation  was                                                              
provided  to  the  department specifically  for  this  effort,  he                                                              
said.   Along with  the appropriation  and cooperation  of private                                                              
non-profit  hatcheries,  the processors  purchasing  Alaskan  fish                                                              
contribute  $500,000   per  year  to  help  fund   this  long-term                                                              
project.                                                                                                                        
                                                                                                                                
11:26:57 AM                                                                                                                   
                                                                                                                                
MR.  REGNART said  the  division  maintains customer  service  and                                                              
public involvement  via a number  of avenues, which are  to design                                                              
and  maintain  division  website;   publish  brochures  and  other                                                              
informational  materials on  divisional  programs; produce  custom                                                              
reports  from fish  ticket and  other databases;  and develop  and                                                              
administer divisional  publication policies  and procedures.   Mr.                                                              
Regnart  said  laboratories  are maintained  to  handle  pathology                                                              
studies,  coded wire  tag  and otolith  aging,  and genetic  stock                                                              
identification.                                                                                                                 
                                                                                                                                
11:28:00 AM                                                                                                                   
                                                                                                                                
MR.   REGNART   described   the   data   processing   requirements                                                              
maintained by the  division, which include: fish  tickets systems;                                                              
e-Landing electronic  catch reporting system;  Internet-accessible                                                              
in-season   catch    and   escapement   databases;    geographical                                                              
information  system  (GIS)  databases;   Internet-accessible  news                                                              
release  database;  seafood  processor/buyer   intent  to  operate                                                              
system; commercial  Operator Annual Reports (COAR);  and databases                                                              
for biological data.                                                                                                            
                                                                                                                                
CHAIR   SEATON  referred   to  the   e-Landing  electronic   catch                                                              
reporting  system, recalling  difficulties  when  the program  was                                                              
first instituted, and he asked how the process is working.                                                                      
                                                                                                                                
MR. REGNART said that the ability to capture data now exists.                                                                   
                                                                                                                                
11:29:48 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FEIGE   addressed  the  topic  of   databases  for                                                              
biological  data   and  said  the  ability  for   transmission  of                                                              
paperless reports  now exists.   He  asked whether the  department                                                              
is digitizing data  for this type of dissemination,  stressing the                                                              
benefit for informational access.                                                                                               
                                                                                                                                
MR. REGNART  replied that  it is an  on-going endeavor;  the state                                                              
library system is the primary access point.                                                                                     
                                                                                                                                
REPRESENTATIVE   FEIGE  noted  that   some  state  agencies   have                                                              
received additional  funding to  accomplish the digitalization  of                                                              
backlogged  material  and  asked   if  ADF&G  requires  additional                                                              
support to  accomplish similar  goals.  He  then asked if  a large                                                              
backlog still exists in the division.                                                                                           
                                                                                                                                
MR. REGNART offered to provide that information.                                                                                
                                                                                                                                
11:33:17 AM                                                                                                                   
                                                                                                                                
CHAIR  SEATON asked  whether  data is  available  prior to  formal                                                              
publication  of reports  and if  statute  needs to  be invoked  to                                                              
allow data access in a timelier manner.                                                                                         
                                                                                                                                
MR. REGNART  said delays in  reporting do  exist, but data  can be                                                              
procured  through  the  division,  when  possible.   He  said  the                                                              
Division  of  Commercial  Fisheries  works  with  non-governmental                                                              
agencies to  provide as much information,  in as timely  a manner,                                                              
as  possible.   The primary  concern  is to  have  the data  fact-                                                              
checked  prior to  dissemination.   To  a  follow-up question,  he                                                              
said  that  neither  statute  nor  regulation  requires  a  formal                                                              
report be published prior to the release of information.                                                                        
                                                                                                                                
11:36:16 AM                                                                                                                   
                                                                                                                                
MR.   REGNART  described   the  organization   of  the   division,                                                              
comprised  of four  regions and  the  divisional headquarters,  as                                                              
follows:                                                                                                                        
                                                                                                                                
     Southeast Fisheries Management Region - Douglas                                                                            
     Central Fisheries Management Region - Anchorage                                                                            
     A-Y-K Fisheries Management Region - Anchorage                                                                              
     Westward Fisheries Management Region - Kodiak                                                                              
     Divisional Headquarters - Juneau                                                                                           
                                                                                                                                
11:37:20 AM                                                                                                                   
                                                                                                                                
MR.  REGNART  said  the  fiscal   year  (FY)  2015  includes:  309                                                              
permanent staff;  432 seasonal  staff; 20  permanent offices;   84                                                              
seasonal offices/field camps; and 6 research vessels.                                                                           
                                                                                                                                
MR.  REGNART  provided  a  pie  chart  to  illustrate  the  budget                                                              
request for  FY15, of $73,260 [million].   The complete  budget is                                                              
parsed  as  follows:   Unrestricted  GF  (67.7%);   Designated  GF                                                              
(5.8%); Federal (12.7%); and Other Sources (13.8).                                                                              
                                                                                                                                
11:37:59 AM                                                                                                                   
                                                                                                                                
MR.  REGNART  stated  that  the economic  impact  of  the  seafood                                                              
industry  on Alaska's  economy,  as summarized  from the  McDowell                                                              
Group report of 2013 for the 2011 season, is as follows:                                                                        
                                                                                                                                
      Generated 63,100 Alaskan jobs in seafood harvesting,                                                                      
        processing sectors, and support industries, and                                                                         
      approximately 41,530 of these employees were Alaskan                                                                      
     residents.                                                                                                                 
                                                                                                                                
      Generated $1.73 billion in direct payments to labor                                                                       
        with $1.28 billion going to Alaska residents and                                                                        
     generated total seafood sales of $4.6 billion.                                                                             
                                                                                                                                
MR.  REGNART  explained  that  the   exvessel  value  is  used  to                                                              
describe the  success of fisheries.   He  provided a bar  graph to                                                              
illustrate  the  performance  of  Alaska's  commercial  fisheries,                                                              
which indicated that the overall price for fish has been good.                                                                  
                                                                                                                                
11:39:03 AM                                                                                                                   
                                                                                                                                
MR.  REGNART described  the  divisional highlights  of  2013.   He                                                              
said  the   commercial  salmon   harvest  value  approached   $700                                                              
million,  close  to the  record  high  set  in 1988;  the  Western                                                              
Alaska  salmon   stock  identification   program  was   completed,                                                              
representing  the  largest genetic  stock  identification  project                                                              
undertaken; the  commercial shellfish  harvest value  approached a                                                              
record  of $350  million;  and the  Chinook  Salmon Symposium  was                                                              
conducted,  which included  distribution of  materials to  product                                                              
marketers regarding Alaska's approach to sustainable fisheries.                                                                 
                                                                                                                                
11:40:57 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FEIGE  directed attention to the  committee handout                                                              
titled "Alaska  Department of Fish  & Game Division  of Commercial                                                              
Fisheries," page  25, containing the McDowell Group  2013 economic                                                              
summary, to note  that the seafood industry generates  63,100 jobs                                                              
employing  41,530   Alaskan  residents.     He  asked   whether  a                                                              
statistic could  be extracted from  these totals  specifically for                                                              
the Bristol Bay Region.                                                                                                         
                                                                                                                                
MR. REGNART agreed to provide the information.                                                                                  
                                                                                                                                
11:42:01 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON  reported having attended  the Chinook  Symposium and                                                              
the  Arctic Yukon-Kuskokwim  (AYK)  Sustainable Salmon  Initiative                                                              
meetings  and  said  there  appeared  to  be  two  very  different                                                              
approaches  being taken  to address  the  on-going Chinook  salmon                                                              
issue.  He  reported that the  AYK meeting identified a  number of                                                              
key questions, which  were then released for request  for proposal                                                              
(RFP) action  in order  to gather data  and provide  responses via                                                              
scientific  prove/disprove  methods.    Conversely  the  symposium                                                              
identified  knowledge   gaps  without  specific   questions  being                                                              
identified or means  for answering those questions  via scientific                                                              
theory,  he  said.    The symposium  did  identify  the  need  for                                                              
informative  data,  but there  did  not appear  to  be  a plan  to                                                              
scientifically  test theories  and provide  answers regarding  the                                                              
decline  in Chinook  populations  in  identified  watersheds.   He                                                              
conjectured   that   data   could  be   collected,   but   without                                                              
specification,  the  information   may  not  withstand  scientific                                                              
challenges and support  a workable theory for solving  the Chinook                                                              
salmon problem.  He asked how the department is handling that.                                                                  
                                                                                                                                
MR.  REGNART  responded  that the  division  approach  is  towards                                                              
applied  science  to   fill  in  the  gaps  and   gain  a  greater                                                              
understanding  of Chinook  productivity and  run totals.   Through                                                              
determining  that the  fecundity of  a fish is  within a  standard                                                              
range,  and  that  the  fry  through   smolt  survival  is  within                                                              
expectations,  the conclusion  can be drawn  that something  needs                                                              
to  be  addressed during  the  ocean  phase.   He  reported  that,                                                              
currently, division  studies are  being focused on  the freshwater                                                              
phase of  the Chinook  life cycle.   The applied science  approach                                                              
and  gap analysis  is  providing a  fuller  understanding of  this                                                              
aspect  of  the Chinook  issue.    Additionally, the  division  is                                                              
working  in  concert with  federal  agencies  to obtain  a  better                                                              
understanding   of  the  ocean   phase,  including   distribution,                                                              
feeding habits,  and general health/mortality.  The  ongoing ocean                                                              
work will  answer such variables  as changes in  oceanic currents,                                                              
food  availability,  predatory influences,  and  other  challenges                                                              
that an ocean-going salmon experiences prior to return.                                                                         
                                                                                                                                
11:46:48 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON  expressed concern  that, although general  knowledge                                                              
may be  increased, presenting  specific theories  to be  proven or                                                              
disproven  regarding  Chinook  populations  of  the  AYK  area  is                                                              
important.  He  requested the division provide  the committee with                                                              
the theories  currently being  applied to the  decline of  the AYK                                                              
Chinook stocks, including the testing methods.                                                                                  
                                                                                                                                
CHAIR SEATON  referred to the committee  packet and noted  that it                                                              
contained an additional  departmental report, titled  "Chinook and                                                              
Sockeye Salmon Migration  Patterns in Cook Inlet,  2013," which he                                                              
asked be postponed to a future meeting due to time constraints.                                                                 
                                                                                                                                
11:51:38 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Fisheries meeting was adjourned at 11:52                                                                   
a.m.                                                                                                                            

Document Name Date/Time Subjects
HB 177 Blank CS.PDF HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 CFRLF Historical Information.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 CFRLF Overview with Example Programs.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 Current and HB177 Interest Rates.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 Product Quality and Engine Efficiency Loans Through 3.6.13.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 Sectional Summary.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 Sponsor Statement.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 CSHB177(FSH) Sectional Summary.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 Changes in CSHB177(FSH).pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB177-DCCED-DED-03-29-13.pdf HFSH 1/28/2014 10:00:00 AM
HFSH 2/4/2014 10:00:00 AM
HB 177
UFA SUPPORT HB 177 Revolving Loan Fund 4 1 2013.pdf HFSH 1/28/2014 10:00:00 AM
HB 177
HB 177 Product Quality and Engine Efficiency Loans as of 1 15 2014.pdf HFSH 1/28/2014 10:00:00 AM
HFSH 2/4/2014 10:00:00 AM
HB 177
2014 H-FSH Commerical Fisheries Divsion Overview.pdf HFSH 1/28/2014 10:00:00 AM
ADFG Commfish overview
uci_kintama_2013.pdf HFSH 1/28/2014 10:00:00 AM
ADFG Commfish overview
HB 177 CDFU support.pdf HFSH 1/28/2014 10:00:00 AM
HFSH 2/4/2014 10:00:00 AM
HB 177
HB 177 Power Point Presentation.pdf HFSH 1/28/2014 10:00:00 AM
HFSH 2/4/2014 10:00:00 AM
HB 177