Legislature(1995 - 1996)
04/19/1995 05:02 PM FSH
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON FISHERIES April 19, 1995 5:02 p.m. MEMBERS PRESENT Representative Alan Austerman, Chairman Representative Carl Moses, Vice Chair Representative Scott Ogan Representative Gary Davis Representative Kim Elton MEMBERS ABSENT None COMMITTEE CALENDAR *HJR 43: Relating to commercial fishing and subsistence use in Glacier Bay National Park. PASSED OUT OF COMMITTEE *HB 284: "An Act relating to the Alaska Commercial Fishing and Agriculture Bank." PASSED OUT OF COMMITTEE (* First public hearing) WITNESS REGISTER RON SOMERVILLE P.O. Box 22394 Juneau, AK 99802 Telephone: 780-4812 POSITION STATEMENT: Provided background on HJR 43 BRUCE WEYHRAUCH, Attorney Allied Fishermen of Southeast Alaska 302 Gold Street Juneau, AK 99801 Telephone: 586-2210 POSITION STATEMENT: Provided background on HJR 43 CHERYL SUTTON, Administrative Assistant Representative Carl Moses Alaska State Legislature Capitol Building, Room 204 Juneau, AK 99801 Telephone: 465-6848 POSITION STATEMENT: Provided information on HB 284 ED CRANE, President Commercial Fishing and Agricultural Bank 2550 Denali Street Anchorage, AK 99503 Telephone: 276-2007 POSITION STATEMENT: Provided information on HB 284 DICK ELIASON, Director Commercial Fishing and Agricultural Bank P.O. Box 92070 Anchorage, AK 99509 Telephone: 276-2007 POSITION STATEMENT: Supported HB 284 PREVIOUS ACTION BILL: HJR 43 SHORT TITLE: FISHING AND SUBSISTENCE IN GLACIER BAY SPONSOR(S): SPECIAL COMMITTEE ON FISHERIES JRN-DATE JRN-PG ACTION 04/07/95 1173 (H) READ THE FIRST TIME - REFERRAL(S) 04/07/95 1173 (H) FISHERIES 04/19/95 (H) FSH AT 05:00 PM CAPITOL 124 BILL: HB 284 SHORT TITLE: AK COMMERCIAL FISHING & AGRICULTURE BANK SPONSOR(S): SPECIAL COMMITTEE ON FISHERIES JRN-DATE JRN-PG ACTION 03/27/95 933 (H) READ THE FIRST TIME - REFERRAL(S) 03/27/95 933 (H) FSH, LABOR & COMMERCE, FINANCE 04/05/95 (H) FSH AT 05:00 PM CAPITOL 124 04/19/95 (H) FSH AT 05:00 PM CAPITOL 124 ACTION NARRATIVE TAPE 95-24, SIDE A Number 000 CHAIRMAN ALAN AUSTERMAN called the meeting to order at 6:02 p.m. and noted for the record Representatives Davis and Ogan were in attendance and that a quorum was present. HJR 43 - FISHING AND SUBSISTENCE IN GLACIER BAY Number 010 CHAIRMAN AUSTERMAN read the sponsor statement aloud, "This Resolution has been introduced by the House Special Committee on Fisheries in response to concerns expressed by Southeast commercial fishermen and subsistence users. Glacier Bay has been a National Monument since 1925. Congress created the Glacier Bay National Park as part of ANILCA (Alaska National Interest Lands Conservation Act) in 1980. In 1990, environmental groups sued the National Park Service for, among other things, allowing commercial and subsistence fishing within Glacier Bay National Park. In 1991, the National Park Service promulgated draft regulations that would phase out commercial fishing in and around Glacier Bay within seven years, and completely prohibit subsistence fishing. Last year, a federal judge ruled that ANILCA did not prohibit commercial fishing in Glacier Bay National Park, but that ruling has since been appealed to the Ninth Circuit Court of Appeals. Elimination of the commercial and subsistence fisheries in the vast area contained in the Glacier Bay National Park would significantly harm the coastal communities of northern Southeast. Both fisheries have utilized this area long before park designation. Also, if the area were closed to commercial fishing, other fisheries in Southeast would be harmed from increased pressure by those fishermen displaced by a closure of Glacier Bay waters." REPRESENTATIVE CARL MOSES joined the committee at 5:05 p.m. Number 050 RON SOMERVILLE testified, "As a member of the Alaska Department of Fish and Game previously, I dealt with this specific issue for about four years." He said, "When ANILCA passed in 1980, the extensions to Glacier Bay National Park were limited to mean high tide, although the only portions that really extended were in the northern portions. The whole issue here really revolves around whether or not the state of Alaska still retains authority to regulate and authorize subsistence fishing and commercial fishing within what the Park Service claims is the boundary of the park. We, of course, have claimed for a long time that in fact their authority really doesn't extend into territorial waters. We came close to a resolution of this issue two years ago, and right at the dying moments of Congress, we were unable to finalize a bill and thus we went back to kind of a status quo. Since then, the Park Service has been proceeding with the concept, that's why you see it in Resolution here, of adopting regulations to authorize some subsistence taking and commercial taking within the Park." MR. SOMERVILLE continued, "We've always contended that these are not park resources. The bulk of them that are taken in the waters adjacent to Glacier Bay National Park because most of them are in essence passing through those waters and we claim that they really don't have any jurisdiction over them as being park resources. We tried to work with the Park Service to develop a process whereby the Parks and the state could work together to maintain some kind of cooperative effort, if you will, but we still maintained that we had the authority to regulate taking for subsistence or commercial purposes. If the Park Service goes forward with their regulations, which they now have found out that they can allow the taking of commercial purposes within the park, just to give you kind of a glimpse of what we've seen in those regulations: One is they would like to phase out fishing within the Glacier Bay proper, within the Park which would then affect some of the subsistence fisheries within the Park." REPRESENTATIVE KIM ELTON joined the committee at 5:10 p.m. Number 168 REPRESENTATIVE GARY DAVIS voiced concern about page 2, line 11 of HJR 43 where it says, "WHEREAS the State of Alaska has a claim to ownership of the submerged lands and navigable waters of the Park." MR. SOMERVILLE replied, "Glacier Bay was included in the general encompassing litigation called the Babbitt case, which the Governor dropped. That included jurisdictional aspects related to all of the waters of the state," and clarified, "The position of the state has been, I think it still is, that lands underlying the waters, adjacent to Glacier Bay out to three miles are submerged lands belonging to the state of Alaska. We just have never filed in court to claim those titles." Number 205 BRUCE WEYHRAUCH, Attorney, Allied Fishermen of Southeast Alaska, described the geographic area encompassed in the Glacier Bay National Park and testified, "What happened is, when Congress passed ANILCA they created this park and that's when they created the marine water area of the park. Fishing has continued in that area for centuries and these communities have sprung up because of that. In 1990, the Alaska Wildlife Alliance and American Wildlands sued the National Park Service, the Secretary of the Interior, and said, in part that `You're violating the Marine Mammal Protection Act because there's whales affected. The vessel management plan for the park that allows vessels going in there is implicated. The concessionaires are implicated because of the vessels you're allowing in there. But they also said that ANILCA prohibits commercial fishing and that issue was addressed by federal district Court Judge Holland who said that ANILCA does not prohibit commercial fishing in the non-wilderness waters of Glacier Bay National Park. The environmental groups have now appealed that to the Ninth Circuit and it has not been briefed yet, but it's probably going to be briefed this year." MR. WEYHRAUCH then suggested some amendments: Inserting ", environmental," after "economic" on page 1, line 12. On page 1, line 13, delete "northern". On page 2, line 23, insert "if it promulgate regulations" and delete "proceed expeditiously to amend its regulations in order to". On page 2, line 25, insert "authorize continued" and delete "allow". On page 2, line 26, delete "non-wilderness areas of the park" and insert "marine waters of Glacier Bay National Park". He also suggested that language be added to the Resolution to amend ANILCA to authorize subsistence and commercial fishing. MR. WEYHRAUCH added, "The National Park Service is maybe searching for some hook if it's going to prohibit commercial fishing to do that. It's not easy (for them) because (1) commercial fishing does not harm park values, it has been going on there for more than a century; (2) there's been no environmental harm. This is not an environmental issue; and (3) the fisheries that are caught are not resident fish species of the park, they're migratory. The salmon and halibut move in and out. There are some resident crab populations perhaps." He also said, "So it's not clear that they will promulgate regulations. I think that it's important that they get the idea if they're going to do it, that this is a longstanding, environmentally safe, economically sound and well- managed fishery by the state of Alaska that should go on. This is not a problem. And if it is prohibited, it's going to wreck serious economic and environmental harm in this state and on the fishermen that work in that area." Number 412 REPRESENTATIVE ELTON asked if the first resolve was necessary. MR. WEYHRAUCH indicated that there are ongoing research projects which the state would like to stay apprised of. Number 434 REPRESENTATIVE OGAN moved that the suggested amendments be adopted. There were no objections. REPRESENTATIVE OGAN moved to pass CSHJR 43(FSH) out of committee. There were no objections. HB 284 - AK COMMERCIAL FISHING & AGRICULTURE BANK Number 452 CHERYL SUTTON, Administrative Assistant to Representative Carl Moses, testified saying, "HB 284 seeks to modify and refit the Commercial Fishing & Agriculture Bank's (CFAB's) enabling statute to reflect evolving commercial law and present day fishing economies needs. CFAB was created in 1978 and much has changed in both commercial law and fishing economies since that time. There are two significant changes which would be enacted with the passage of HB 284. The first is permanent ownership by the state through retirement of all but $1 million of the state's initial investment of $32 million. Second, broadening of the purposes and circumstances for which a fisherman may use his limited entry permit as collateral. Some of these include loans for lease or purchase of quota shares, IFQs, other licenses, and the purchase, construction, maintenance, repair or improvement of commercial fishing boats, sites, gear and improvement." ED CRANE, President, CFAB, said, "We're really not creating something new here. We're simply redoing and revising, and mechanically this is the easiest way to handle what was intended." He testified, "When CFAB was established by a 1978 act which was implemented in 1980, the state of Alaska invested $32 million as seed capital in the form of stock in CFAB. And the statute provided for CFAB to retire, that it return all the money, to retire that stock within 20 years, by the year 2000. The theory was as that money was returned by the state, it would be replaced by money invested by members, users, borrowers of CFAB. That process has taken place. Actually seven years ago, the state wrote off the entire $32 million that has been carried for the last few years as zero on the books of the state. Nevertheless, we have been retiring that stock. We have now retired $21,750,000 to be specific. And also we have accumulated roughly sixteen and a half million dollars of replacement equity that represents investments of fishermen or borrowers or fisherman and farmers. Unfortunately, there was a catch, as near as I know, an inadvertent catch-22 in the existing statute. On the one hand it says that if CFAB does not retire, fails to retire all of the $32 million in stock by the year 2000, the Commissioner of Commerce can take steps to dissolve the bank, to liquidate the bank. Then, in another part of the statute, it says that when CFAB has retired all of the $32 million, the statute lapses. Well, if the statute lapses, there is no CFAB, it's gone. So we had that particular concern that this bill addresses. But in addition to that is the fact that CFAB, as we discussed some time ago, CFAB is the only private entity, nongovernmental entity which has the statutory authority to accept a lien on a limited entry permit and allow fishermen to use permits as devices through which they can finance their operations." He then indicated that in order to justify CFAB's unique status with the state, it is necessary for CFAB to retain $1 million in CFAB as a "perpetual investment." He pointed out there is considerable responsibility and accountability to the state. Number 578 REPRESENTATIVE ELTON asked if Mr. Crane was comfortable with the three year terms of board members appointed by the Governor. MR. CRANE said yes. REPRESENTATIVE ELTON pointed out that one of the board members is required to be a "resident farmer." MR. CRANE indicated that the original statute was even more restricting. He said, "The original statute required that it be a farmer with ten years of experience farming in Alaska. Also in the original statute, directors were required to be active members, that is current borrowers, of CFAB." He said CFAB has made very few loans to farmers historically, due to the state's agricultural loan program. REPRESENTATIVE ELTON asked if that seat would be better designated to a timber harvester or processor. MR. CRANE indicated that the definition of commercial agriculture can be found on page 17 of the bill and it includes forest products. REPRESENTATIVE ELTON contended that a timber harvester would not be a resident farmer. Number 639 MR. CRANE said probably not unless it was on their own land on a sustained yield basis. REPRESENTATIVE ELTON asked about changes in indemnity for officers and employees of CFAB. MR. CRANE said, "Our intention here is simply to say that CFAB's directors and employees may have the same indemnification in insurance provisions as any private corporation in the state, no more and no less." REPRESENTATIVE ELTON said he viewed page 8, paragraphs 14 and 15 as granting questionably "broad authorization" to CFAB. MR. CRANE replied, "I cannot imagine our board doing anything spectacular, if you will, which would appear to be supportive of one small segment of the total fishing community and not have a significant reaction from other CFAB members. (Indisc.) CFAB members over time, and it has taken us some time to get there, are beginning to be more and more attuned to the fact that what CFAB does directly affects their pocketbook." TAPE 95-24, SIDE B Number 000 MR. CRANE continued, "It was written broadly, mostly because we did not have anything specific in mind." REPRESENTATIVE ELTON indicated that he is somewhat more comfortable with those sections and asked about page 11, section 20, paragraph 5. He said, "With that paragraph, if somebody runs up a huge bill at Nordstroms, they can pledge their permit at your financial institution to pay off a Nordstrom's debt that has absolutely nothing at all to do with fisheries or timber or agriculture." MR. CRANE replied, "We make loans for the purpose of commercial fishing related purposes and for many fishermen, particularly those that simply operate as sole proprietors as opposed to having their fishing business incorporated. There's essentially no distinction between their personal obligations and their fishing obligations. We have, to my knowledge, we have never been asked to finance the kind of debt which you mentioned." He added, "The other side of it is we, it is not unusual for fishermen or a fisherperson to come to us with kind of a panacea of obligations that often do include credit card debt, miscellaneous, not necessarily Nordstrom's but for the things that all of us use credit cards for and we will include that in the financing, again, for working capital purposes." Number 160 MR. CRANE continued, "It is difficult for anybody who has perhaps only one payday a year to live from one payday to the next and it is not unusual for persons in those circumstances to wind up in the tenth month of their year with fuel bills, that is home heating fuel bills, payable and credit card debt payable and a bill at the grocery store that they've got to have taken care of before they can actually obtain financing for their upcoming fishing season." REPRESENTATIVE MOSES said that he suggests to fishermen friends to pay with credit cards so they don't lose receipts, as they might with paying cash. REPRESENTATIVE OGAN asked if the chairman's intent was to move the bill out of committee today. CHAIRMAN AUSTERMAN said yes. Number 215 DICK ELIASON, CFAB Director, testified in support of CFAB, "I was impressed with the operation of the bank. I remember not too many years ago, we looked upon CFAB as maybe even a mistake because things were going wrong and a lot of bad publicity in the legislative bodies, and we were wondering if, in fact, it was going to disappear. However, within the last ten years they've made an astounding comeback." He stressed the importance of the bank to the rural areas of the state where there are often few financing alternatives. He added, "Certainly, I'd have no qualms in saying it was a bad deal if it was a bad deal because I don't have a vested interest, but, I'd just like to reassure you that it's working and I would like to see it continue to work (indisc.) good service for the state and for the industry at large in Alaska." REPRESENTATIVE ELTON asked, "Are you comfortable with the expansion of duties into the venture capital kind of realm?" MR. ELIASON said yes, and added, "There was some speculation, that maybe we shouldn't put this large a bill forward at this time because we know how busy the legislature is, especially this time of the year. But we thought that it has a lot of merit and there is a lot of support out there." Number 303 REPRESENTATIVE MOSES moved to pass the bill out of committee. There were no objections. CHAIRMAN AUSTERMAN adjourned the meeting at 6:04 p.m.