Legislature(2003 - 2004)

04/25/2003 08:35 AM FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                         April 25, 2003                                                                                         
                           8:35 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Paul Seaton, Chair                                                                                               
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Dan Ogg                                                                                                          
Representative Ralph Samuels                                                                                                    
Representative David Guttenberg                                                                                                 
MEMBERS ABSENT                                                                                                                
Representative Cheryll Heinze                                                                                                   
Representative Ethan Berkowitz                                                                                                  
COMMITTEE CALENDAR                                                                                                            
HOUSE JOINT RESOLUTION NO. 25                                                                                                   
Supporting Alaska's independent commercial fishermen and                                                                        
Alaska's fish processing industry and opposing the establishment                                                                
of processor quota shares.                                                                                                      
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: HJR 25                                                                                                                  
SHORT TITLE:COMMERCIAL FISHING & PROCESSOR SHARES                                                                               
SPONSOR(S): REPRESENTATIVE(S)SEATON                                                                                             
Jrn-Date   Jrn-Page                     Action                                                                                  
04/16/03     1008       (H)        READ THE FIRST TIME -                                                                        
04/16/03     1008       (H)        FSH, STA, RES                                                                                
04/16/03     1008       (H)        REFERRED TO FISHERIES                                                                        
04/22/03     1058       (H)        COSPONSOR REMOVED: HEINZE                                                                    
04/23/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
04/23/03                (H)        Heard & Held                                                                                 
04/25/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
LINDA FREED, City Manager                                                                                                       
City of Kodiak                                                                                                                  
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HJR 25 and answered                                                                
questions from the members.                                                                                                     
RON BRIGGS                                                                                                                      
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
ROGER ROLAND                                                                                                                    
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
DAVID HILLSTRAND                                                                                                                
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified on HJR 25.                                                                                       
MAX MALAVANSKY, City Administrator                                                                                              
City of Saint George                                                                                                            
Saint George, Alaska                                                                                                            
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
BOB STORRS, Vice President                                                                                                      
Unalaska Native Fisherman's Association                                                                                         
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified on HJR 25.                                                                                       
SINCLAIR WILT                                                                                                                   
Alyeska Seafoods, Inc.                                                                                                          
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
JOHN MERCULIEF, City Manager                                                                                                    
City of Saint Paul                                                                                                              
Saint Paul Island, Alaska                                                                                                       
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
TOM ENLOW, General Manager                                                                                                      
UniSea, Inc.                                                                                                                    
Unalaska, Alaska                                                                                                                
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
RON PHILEMONOF, Chief Executive Officer                                                                                         
Village Corporation of Saint Paul                                                                                               
Saint Paul Island, Alaska                                                                                                       
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
PHYLLIS SWETZOF, City Clerk                                                                                                     
Village Corporation of Saint Paul                                                                                               
Saint Paul Island, Alaska                                                                                                       
POSITION STATEMENT:  Testified against HJR 25.                                                                                  
DOROTHY CHILDERS, Executive Director                                                                                            
Alaska Marine Conservation Council (AMCC)                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
DAN FALVEY, Advisory Council Member                                                                                             
North Pacific Fishery Management Council                                                                                        
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
DAVE OHMER, Plant Manager                                                                                                       
NorQuest Seafoods, Inc.                                                                                                         
Petersburg, Alaska                                                                                                              
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
STEVE FISH                                                                                                                      
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
SUE WEAVER                                                                                                                      
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
JESSIE NELSON                                                                                                                   
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
GLENN CARROLL                                                                                                                   
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified on HJR 25.                                                                                       
JOHN HANSEN                                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
DAVE WOODRUFF, Manager                                                                                                          
Alaska Fresh Seafoods                                                                                                           
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
DICK POWELL                                                                                                                     
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HJR 25.                                                                            
GREG HATHAWAY, Plant Manager                                                                                                    
Trident Seafoods, Inc.                                                                                                          
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
JULIE BONNEY, Director                                                                                                          
Alaska Ground Fish Data Bank                                                                                                    
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
CHARLES REHDER                                                                                                                  
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
MIMI TOLVA                                                                                                                      
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HJR 25                                                                             
CHARLIE PARSONS                                                                                                                 
Western Gulf of Alaska Fishermen Group                                                                                          
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  testified in opposition to HJR 25.                                                                         
HEATHER McCARTY, Representative                                                                                                 
for Central Bering Sea Fishermen's Association;                                                                                 
Board Member                                                                                                                    
Alaska Seafood Marketing Institute                                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HJR 25 and                                                                      
answered questions from the members.                                                                                            
KRIS NOROSZ, Representative                                                                                                     
for Icicle Seafoods, Inc.                                                                                                       
Petersburg, Alaska                                                                                                              
POSITION STATEMENT:  Testified in opposition to HJR 25.                                                                         
GORDON BLUE, President                                                                                                          
C.R.A.B. Group [Crab Rationalization and Buyback Group]                                                                         
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HJR 25 and answered                                                                
questions from the members.                                                                                                     
ACTION NARRATIVE                                                                                                              
TAPE 03-26, SIDE A                                                                                                            
Number 0001                                                                                                                     
CHAIR  PAUL   SEATON  called  the  House   Special  Committee  on                                                             
Fisheries meeting to order at  8:35 a.m.  Representatives Seaton,                                                               
Wilson, Ogg,  and Guttenberg were  present at the call  to order.                                                               
Representatives  Samuels   joined  the  meeting  as   it  was  in                                                               
progress.  Representative Heinze was excused from the meeting.                                                                  
HJR 25-COMMERCIAL FISHING & PROCESSOR SHARES                                                                                  
Number 0064                                                                                                                     
CHAIR SEATON announced  that the only order of  business would be                                                               
HOUSE JOINT  RESOLUTION NO.  25, Supporting  Alaska's independent                                                               
commercial fishermen  and Alaska's  fish processing  industry and                                                               
opposing the establishment of processor quota shares.                                                                           
Number 0142                                                                                                                     
LINDA FREED, City  Manager, City of Kodiak,  testified in support                                                               
of  HJR  25.    She  told the  members  that  all  on-shore  crab                                                               
processing  in the  Kodiak  region  takes place  in  the City  of                                                               
Kodiak, so  this is a  very significant issue for  the community.                                                               
She pointed  out that the  members have  a copy of  Mayor Floyd's                                                               
letter [in  their packets] which  highlights some points  made by                                                               
the mayor and  responds to some of the testimony  made in earlier                                                               
MS.  FREED stated  that this  is  a policy  issue on  one of  the                                                               
largest industries in  the state of Alaska, and  it is imperative                                                               
that the legislature  take a look at this because  it will impact                                                               
coastal  communities and  residents  throughout the  state.   The                                                               
North Pacific Fisheries Management  Council [NPFMC] is influenced                                                               
by what the policy is in the  state of Alaska with this and other                                                               
fisheries  issues.    She  encouraged   the  members  to  provide                                                               
guidance to  the NPFMC  and the administration.   Ms.  Freed said                                                               
the City  of Kodiak  has participated in  the NPFMC  process, but                                                               
does not  believe the process has  been as open and  inclusive as                                                               
others have  said.  She  explained that  while there have  been a                                                               
number of economic studies and  analysis done with regard to this                                                               
issue,  the  council  has  eliminated  or  ignored  some  of  the                                                               
economic analysis  that did not  support the  council's preferred                                                               
Number 0331                                                                                                                     
MS.  FREED  told  the  members that  the  only  reason  community                                                               
protection and  binding arbitration are a  necessary component of                                                               
the  council's preferred  alternative  is due  to  the fact  that                                                               
individual  processing   quotas  [IPQs]  are  included   in  that                                                               
alternative.  The alternative the  council promoted is called the                                                               
two-pie system,  which gives  quotas to  both the  processors and                                                               
the  individual  harvesters  and   fishermen.    This  system  is                                                               
untried, untested, and  has not been shown  to maximize national,                                                               
regional, or state benefit.  There  is no reference in any of the                                                               
analysis that  shows that the two-pie  system has been in  use in                                                               
any  resource extraction  industry anywhere  in the  world.   The                                                               
proposed rationalization  plan will be the  theory's multimillion                                                               
dollar,  or perhaps  billion dollar,  beta test,  she said.   Ms.                                                               
Freed told the  members that the City of Kodiak  does not believe                                                               
Alaska should  be the guinea pigs  for this system.   She pointed                                                               
out that  they have  agreed that some  IPQs could  be acceptable,                                                               
but in  a much  smaller percentage  or range, at  most at  the 30                                                               
percent range.                                                                                                                  
MS.  FREED stated  that the  City of  Kodiak is  only one  of the                                                               
coastal communities  that will be  damaged and  severely impacted                                                               
by  this particular  program.   She  summarized  her comments  by                                                               
saying  that [the  city] supports  the  legislature's efforts  to                                                               
look  into  this policy  issue  and  encourages them  to  provide                                                               
policy  direction for  the  administration and  the  NPFMC.   Ms.                                                               
Freed stated that the City of Kodiak supports this resolution.                                                                  
Number 0409                                                                                                                     
REPRESENTATIVE  GUTTENBERG  asked  Ms.  Freed to  expand  on  her                                                               
comments concerning the NPFMC's not having an open process.                                                                     
MS. FREED  responded that she  sat as  a member of  the Community                                                               
Protection  Committee   which  was  established  to   talk  about                                                               
protections  for  communities  that  would be  impacted  by  this                                                               
particular  program.   She  explained that  the  members [of  the                                                               
Community  Protection  Committee]  were  told it  would  only  be                                                               
possible for  them to  bring up issues  already posed  within the                                                               
framework  of the  council's decisions,  and anything  outside of                                                               
the council's framework  could not be discussed  by the committee                                                               
unless the committee  had a two-third's vote.   The committee was                                                               
established in  such a  way that  Kodiak could  never get  a two-                                                               
third's vote to bring any issue  of discussion to the table.  Ms.                                                               
Freed said she would be happy  to provide the members with copies                                                               
of the  minutes of those  meetings.   She said she  was concerned                                                               
because  she believed  if the  committee was  working to  protect                                                               
communities,  then  there  should  have been  an  opportunity  to                                                               
discuss  all kinds  of protections  that might  help most  of the                                                               
coastal communities  that are dependent on  crab.  Unfortunately,                                                               
the  committee  was  not  given   that  opportunity  through  the                                                               
process.  On the surface it  appeared open, but the fact remained                                                               
that there  were such  strict rules  for participation,  that the                                                               
committee was  not allowed to  explore what some  members thought                                                               
were   adequate,  appropriate,   or   even  unconventional,   but                                                               
acceptable, community protection measures.                                                                                      
Number 0560                                                                                                                     
REPRESENTATIVE   GUTTENBERG  commented   that  he   believed  her                                                               
response  was directed  at  the process  after  the decision  was                                                               
made.  He asked her what  happened prior to that, while the NPFMC                                                               
was deliberating on the issue.                                                                                                  
MS.  FREED replied  that the  City of  Kodiak was  never formally                                                               
asked or  involved within the process.   The NPFMC did  not reach                                                               
out specifically to  communities.  What did happen  is that there                                                               
would  be  notices posted  on  the  council's  web site,  and  if                                                               
communities  went to  the web  site  and were  familiar with  the                                                               
issues and understood  the significance of the  issues, they were                                                               
allowed to  participate, but were  not encourage or  contacted to                                                               
identify  the significance  of the  issues going  on.   Ms. Freed                                                               
told the  members that  the City of  Kodiak testified  before the                                                               
council that  if the  city had realized  the significance  of the                                                               
issues and  had been better  informed by direct contact  with the                                                               
NPFMC   or   council  staff,   the   city   would  have   started                                                               
participation much  earlier in the  process.  She said  that once                                                               
the city understood what the  council was doing, they became very                                                               
actively involve.   She commented that this  involvement has been                                                               
very  expensive  for  the  city   to  protect  the  industry  and                                                               
Number 0650                                                                                                                     
REPRESENTATIVE OGG  asked Ms. Freed  what steps are left  in this                                                               
MS.  FREED responded  that there  are significant  steps left  in                                                               
this  process.     The  NPFMC  has  come  up   with  a  preferred                                                               
alternative without meeting the  requirements of the federal NEPA                                                               
[National Environmental  Policy Act of  1969] process.   She said                                                               
the  council  has  not  done  a  full  analysis  of  a  range  of                                                               
reasonable  and practical  alternatives  as  required by  federal                                                               
law.  Ms. Freed said the City  of Kodiak is very hopeful that the                                                               
NPFMC will go  through that process, and it will  be much clearer                                                               
what the  impacts really are  because they will have  completed a                                                               
full analysis.  She explained that  the council still has to take                                                               
final action and cannot do that  until the NEPA or EIS process is                                                               
complete.  Ms. Freed said  she understands Senator Stevens may be                                                               
holding public  hearings on this  process and that is  one reason                                                               
it  is so  important for  the  state to  be involved  and take  a                                                               
closer look at this as a  policy perspective.  If Senator Stevens                                                               
asks  for  a state  position,  it  is  imperative  that it  be  a                                                               
position  that  takes  into  consideration   all  of  the  needs,                                                               
interests,  and concerns  of residents  and  participants of  the                                                               
fishing industry, she concluded.                                                                                                
Number 0755                                                                                                                     
RON BRIGGS testified  in support of HJR 25.   He told the members                                                               
that  the majority  of  the  fishermen and  a  lot  of the  small                                                               
business people  he knows in  Dutch Harbor  do not want  the last                                                               
best  offer that  was voted  on  by the  NPFMC.   This vote  went                                                               
against the  findings of the  expert the council hired,  Dr. Pott                                                               
from California Technical Institute, who  is considered to be the                                                               
leading expert on binding arbitration  in the United States.  Dr.                                                               
Pott  recommended fleetwide  arbitration because  it enables  the                                                               
fishermen to negotiate  the best price for their  crab, which, in                                                               
turn,  generates   more  fish  tax   money  for  the   state  and                                                               
communities.   Mr. Briggs explained that  fishermen perceive that                                                               
in going  down this road,  fishermen will  get less and  less for                                                               
their product, which,  in turn, will generate less  money for the                                                               
state and communities through fish taxes.                                                                                       
Number 0871                                                                                                                     
ROGER  ROLAND testified  in  support  of HJR  25.    He told  the                                                               
members he  is a resident of  Unalaska, and fishes for  salmon in                                                               
Chignik, gray and  black cod in Unalaska, and  herring around the                                                               
state.   He  asked  the  members to  note  what  has happened  in                                                               
Chignik over  the past  couple of  years.   He explained  that in                                                               
2001 the fishermen were presented  with a new product possibility                                                               
which  substantially  out   performed  the  traditional  markets.                                                               
However, both  of the commercial  buyers told him that  they were                                                               
not interested in  the new product because they  thought it would                                                               
not work in  the marketplace.  Mr. Roland said  that in 2002 this                                                               
new  market  returned  a  dollar   a  pound  ex-vessel  price  to                                                               
fishermen for  sockeye salmon.   He stated  that a  comparison of                                                               
what  Kodiak and  Area M,  which are  the two  areas that  border                                                               
where  he fishes,  averaged approximately  $.50  per pound  [more                                                               
than where he fishes].                                                                                                          
Number 0986                                                                                                                     
MR. ROLAND  said the two-pie  discussion concerns crab  stocks in                                                               
the  Bering Sea,  but he  said he  is convinced  that these  same                                                               
companies  that  would benefit  from  processor  shares for  crab                                                               
would  use  this  plan  for a  template  for  multi-species  Gulf                                                               
rationalization.   The miniscule 10  percent that is  supposed to                                                               
allow for the  kind of competition he mentioned  earlier would be                                                               
laughable if  it were not so  tragic.  Mr. Roland  encouraged the                                                               
members to  ask any  of the  existing processors  if it  would be                                                               
possible for  them to be  successful on  10 percent [share].   In                                                               
closing,  he  said  he  supports  legislation  that  stymies  the                                                               
processors ability to dictate an unfair price to the fishermen.                                                                 
Number 1020                                                                                                                     
DAVID HILLSTRAND testified  on HJR 25.  He told  the members that                                                               
he  remembers  when the  halibut  quota  share system  was  first                                                               
implemented, and  many people opposed  it.  He asked  the members                                                               
to  come up  with more  than  a resolution  opposing the  NPFMC's                                                               
proposal.  He  said he believes it would be  more helpful for the                                                               
legislature to come  up with a recommendation or  solution to the                                                               
problem  for the  council and  Senator Stevens.   Mr.  Hillstrand                                                               
said that during the NPFMC's  hearings Kodiak, Homer, and several                                                               
other  communities  came out  in  opposition  to processor  quota                                                               
shares, and this  had no effect on the NPFMC's  vote for the crab                                                               
rationalization plan.                                                                                                           
MR. HILLSTRAND said  when hearings were held [on  the IFQ system]                                                               
the only thing  the fishermen were able to affect  were the dates                                                               
that  were  chosen.    The  council  did  listen  to  fishermen's                                                               
suggestions and  [the fishery]  went to  a limited  entry system,                                                               
and then  to an IFQ  system.  He  pointed out that  the fishermen                                                               
saw the  shares split up  between lots  of smaller boats.   There                                                               
was equity  in that the resources  were split up between  all the                                                               
users of the resource, he commented.                                                                                            
Number 1126                                                                                                                     
MR. HILLSTRAND explained that there  is some history with the IFQ                                                               
program.    When  fishermen  received  quota  shares,  they  took                                                               
advantage of the opportunity to put  as much money as possible in                                                               
their pockets, and there was  an effort to bypass the processors.                                                               
He  said  he does  see  the  processors'  side of  the  argument;                                                               
however, giving  the processors 100  percent was not  a realistic                                                               
option, so the council came up  with the 90 percent to 10 percent                                                               
option.   He said he does  not believe that option  is justified.                                                               
Mr.   Hillstrand   commented  that   a   50-percent-to-50-percent                                                               
proposal might  be more equitable.   He said if this  option were                                                               
adopted there  would be  less argument between  the parties.   He                                                               
said he believes binding arbitration  is not realistic because it                                                               
only encourages price fixing.   He suggested that the legislature                                                               
address the option  of the first right of refusal  of the selling                                                               
of processor  shares to the  CDQ groups, and  the regionalization                                                               
of CDQ groups.                                                                                                                  
Number 1238                                                                                                                     
MAX  MALAVANSKY,  City  Administrator,   City  of  Saint  George,                                                               
testified in opposition to HJR 25.   He told the members that the                                                               
council process  was open.   The community  has been  involved in                                                               
the  crab rationalization  process  since 1999.   Mr.  Malavansky                                                               
said he  sat on the  Community Protection Committee and  that the                                                               
process was  open, fair,  and democratic.   He  said he  does not                                                               
agree with comments  that the process was not fair.   Since Saint                                                               
George is  750 miles west  of Anchorage the community  made every                                                               
effort to be present at the  NPFMC meetings.  Mr. Malavansky said                                                               
that   he  believes   the   processors   have  made   significant                                                               
investments in  communities.  The  public investment by  the City                                                               
of Saint George, the State  of Alaska, and the federal government                                                               
has been  over $40 million  in the last 15  years.  He  said that                                                               
the community looks at crab rationalization [favorably].                                                                        
Number 1372                                                                                                                     
BOB   STORRS,  Vice   President,   Unalaska  Native   Fisherman's                                                               
Association, testified  on HJR 25.   He told the members  that he                                                               
is  standing in  for others  who  could not  get off  of work  to                                                               
testify.  He  commented that there has been a  lot said about the                                                               
two-pie option including the fact that  it was a result of a long                                                               
complicated process, went before the  NPFMC, and that it had been                                                               
reviewed by  a number of economists.   Mr. Storrs agreed  that it                                                               
was a long  and complicated process; however,  from the beginning                                                               
the committee was  told by the large  [processing] companies that                                                               
there was a  "poison pill."  Any program that  did not offer them                                                               
PQs [IPQs]  was not to  be considered as a  preferred alternative                                                               
or  the large  [processing] companies,  with their  immense money                                                               
and political clout,  would not allow it to go  forward, he said.                                                               
The final package  that was put before the council  was looked at                                                               
by the NPFMC and approved unanimously.                                                                                          
MR. STORRS  pointed out  that only  one currently  active Alaskan                                                               
fisherman  was on  that council.   He  said if  this option  went                                                               
before the council  today, there would not be  the same unanimous                                                               
vote.  He took issue with  respect to earlier comments that a lot                                                               
of economists  reviewed [and agreed  with] this option.   He said                                                               
what  was  not  mentioned  is  that with  the  exception  of  the                                                               
economists hired by the  Knowles Administration, whose department                                                               
at Washington  State University received  a very large  amount of                                                               
money from the  Pacific Seafood Processors; almost  all the other                                                               
economist who looked  at this plan have trashed it.   The General                                                               
Accounting Office  [GAO] is not  known as "bean counters  with an                                                               
attitude," but in  their polite way they did  develop an attitude                                                               
over Dr.  Matulich's methodology.   Mr.  Storrs told  the members                                                               
that even though  the Knowles Administration did  decide to carry                                                               
the  charge for  the  big  companies and  hired  Dr. Matulich  to                                                               
justify it, people in the Alaska  Department of Fish and Game and                                                               
at the federal  level have expressed incredulity  at this option.                                                               
One senior  member of  the division  that would  be administering                                                               
the  plan,   when  asked   about  Dr.   Matulich's  use   of  the                                                               
halibut/sablefish program  as an indicator for  the problems that                                                               
would happen for big business, said that this is "fraud."                                                                       
MR. STORRS  summarized his comments  by saying that there  is the                                                               
threat  that if  the  processors  do not  get  quotas, there  are                                                               
certain communities  that would  suffer and  die.   He emphasized                                                               
that there  are alternatives that  have been proposed  to protect                                                               
these  communities  by  regionalizing   the  deliveries.    These                                                               
alternatives  were killed  by  that "poison  pill"  and were  not                                                               
allowed to  proceed unless the  companies, not the  regions, were                                                               
specifically  granted  the  resource.     Mr.  Storrs  said  that                                                               
Alaskans should not  be the only people in the  United States who                                                               
do  not  receive protection  under  anti-trust  legislation.   He                                                               
believes  fishermen should  be  allowed  to establish  functional                                                               
fishermen's cooperatives  because people  are willing to  look at                                                               
other alternatives.                                                                                                             
Number 1680                                                                                                                     
SINCLAIR  WILT, Alyeska  Seafoods, Inc.,  testified on  behalf of                                                               
Alyeska Seafoods, Inc., in saying he opposed HJR 25.                                                                            
Number 1712                                                                                                                     
JOHN MERCULIEF,  City Manager, City  of Saint Paul,  testified in                                                               
opposition to HJR 25.  He  told the members that since the harbor                                                               
opened on  August 4, 1990, it  has become one of  the two largest                                                               
ports in  the Bering Sea.   Crab processing has replaced  the fur                                                               
seal industry,  and it is  Saint Paul's only industry  that makes                                                               
up 80  percent of the  community's tax  base.  The  shoreside and                                                               
shore-based  processors handle  about  40 percent  of the  opilio                                                               
crab caught  in the  Bering Sea.   The  spin-off business  on the                                                               
islands of Saint  Paul and Saint George  creates independence and                                                               
local  employment, and  improves the  viability of  the community                                                               
and the  well being of  the people who live  in Saint Paul.   The                                                               
community  is  able  to have  volunteer  services,  maintain  the                                                               
infrastructure, and have  year-round jobs for many  of the people                                                               
as  a result  of  the crab  industry  operating, processing,  and                                                               
flying people in  and out of Saint Paul Island.   To support this                                                               
industry  in the  past, the  community invested  its future,  and                                                               
incurred one  of the  highest per  capita debts  in the  state to                                                               
support  the local  and national  crab industry.   Mr.  Merculief                                                               
pointed out  that they do not  have cod, salmon, or  pollock; all                                                               
they have is  crab.  The [Village Corporation] of  Saint Paul has                                                               
invested  time, money,  and manpower,  working  closely with  the                                                               
NPFMC, state  and federal government agencies,  and various crab-                                                               
dependent  communities.     The   community  supports   the  crab                                                               
rationalization plan.  He said Saint  Paul put their faith in the                                                               
process  mandated by  Congress  in  the Magnuson-Stevens  Fishery                                                               
Conservation  and Management  Act; and  he asked  the members  to                                                               
respect this act.  Mr. Merculief  told the members that on behalf                                                               
of the community of  Saint Paul, he opposes HJR 25.   He told the                                                               
members   that  this   is  an   attempt  to   override  hearings,                                                               
deliberations, negotiations, and due  process.  The resolution is                                                               
a direct threat to the  well-being and livelihood of the citizens                                                               
of Saint Paul.                                                                                                                  
Number 1880                                                                                                                     
TOM   ENLOW,  General   Manager,  UniSea,   Inc.,  testified   in                                                               
opposition to HJR  25.  He told the committee  that UniSea, Inc.,                                                               
has been  a crab processor in  Unalaska for 30 years.   Mr. Enlow                                                               
said he is  testifying in opposition to HJR 25  and in support of                                                               
the  NPFMC  preferred  alternative.    That  plan  addresses  the                                                               
economic  concerns  for  communities,   seeks  to  retain  parity                                                               
between  harvesters  and  processors, and  promotes  conservation                                                               
issues  including the  rebuilding of  healthy crab  stocks.   The                                                               
plan chosen  by the council is  the result of many  years of hard                                                               
work  by  dozens  of  staff  and  industry  representatives,  and                                                               
includes  extensive public  hearings  and  complete and  thorough                                                               
analysis,  he said.    Mr. Enlow  explained  that throughout  the                                                               
rationalization  process  there  was  bound  to  be  controversy,                                                               
simply  because there  was too  little fishery  left and  far too                                                               
many interested  parties.   It came down  to those  entities that                                                               
could demonstrate  a historical  economic dependency to  the crab                                                               
Number 1947                                                                                                                     
MR.  ENLOW told  members  that  many of  the  concerns that  were                                                               
raised  in HJR  25 were  also  raised during  the public  hearing                                                               
process and have  been addressed by the NPFMC and  the crab plan.                                                               
Amendments  to the  NPFMC motion  have been  fully developed  and                                                               
deal with  many of  the issues  including provisions  for binding                                                               
arbitration that  allows for an  independent third party  to come                                                               
in and  help determine  and negotiate  fair market  price between                                                               
harvesters and processors.                                                                                                      
MR. ENLOW  went on  to say  community protection  provisions were                                                               
established  to   ensure  that   coastal  communities   that  are                                                               
economically dependent on crab fisheries  are protected under the                                                               
rationalization plan.   Mr. Enlow  explained that at the  core of                                                               
these community  protection provisions lie processor  quotas, for                                                               
what really  binds a  harvester to a  community is  the processor                                                               
who resides  in that community.   Without the processor  tie, the                                                               
harvester has  nothing that  binds them to  the community  and it                                                               
would  mean   the  catch  could  be   taken  anywhere,  including                                                               
communities that do not have a historical dependency on crab.                                                                   
Number 1977                                                                                                                     
MR.  ENLOW  disagreed with  earlier  testimony  from Kodiak  that                                                               
there is  no model available  to compare  what would happen  on a                                                               
two-pie system.   He  said he  believes there is  a model  in the                                                               
American Fisheries Act groundfish  rationalization, which is a de                                                               
facto two-pie system.   Mr. Enlow said this system  has had great                                                               
success   simply   because   processors   and   harvesters   have                                                               
collaborated to maximize the value of the fishery.                                                                              
MR. ENLOW  said processors have  invested millions of  dollars in                                                               
the pollock  and cod  operations.   UniSea, Inc.,  alone invested                                                               
$10 million  in the pollock  plants to increase  recovery, reduce                                                               
costs,  and  add value  by  diversifying  their product  line  in                                                               
supplying  new markets.   As  a result,  there have  been greater                                                               
revenues, which have been shared  with the harvesters, as well as                                                               
the  local  communities of  Unalaska  and  the State  of  Alaska.                                                               
Without the  assurance of marketshare, processors  would not have                                                               
the  confidence to  make  the  investments.   Mr.  Enlow said  he                                                               
believes the  same thing will  happen with  crab rationalization.                                                               
Without  the processor  quota [shares],  the processors  will not                                                               
have the confidence  to make the necessary  investments that will                                                               
lead  to   maximizing  the  fisheries  value,   and  sharing  the                                                               
increased  revenues  with  both harvesters  and  coastal  fishing                                                               
Number 2066                                                                                                                     
MR. ENLOW remarked that crab  fisheries have a desperate need for                                                               
a comprehensive  rationalization plan  to fix the  many problems.                                                               
This  plan  should  not  jeopardize  the  economic  viability  of                                                               
communities and  fishermen, he said.   Mr.  Enlow said it  is his                                                               
understanding that the  NPFMC is done with the work  on this plan                                                               
and has no  intentions of going back and redoing  any part of it.                                                               
That  basically  means any  opposition  to  its current  form  is                                                               
opposition to the  entire rationalization plan.   In closing, Mr.                                                               
Enlow said this  plan must be moved forward  with confidence that                                                               
the  responsible  agencies  including   the  U.S.  Department  of                                                               
Commerce and Congress will keep  the program under close scrutiny                                                               
and won't allow any unfair practices.                                                                                           
Number 2110                                                                                                                     
RON PHILEMONOF,  Chief Executive Officer, Village  Corporation of                                                               
Saint Paul, testified in support of  HJR 25.  He told the members                                                               
that  TDX Corporation  is  the landlord  for  Trident and  Icicle                                                               
seafood plants on Saint Paul  Island and only has a leaseholder's                                                               
interest in these  plants.  They also own  the Anderson building,                                                               
which was  the first crab  plant on  Saint Paul; however,  it was                                                               
cutoff from the  8 percent historical quota by  an arbitrary date                                                               
that was set.   Mr. Philemonof commented that all  is not well on                                                               
Saint Paul  Island because there  is not agreement on  all points                                                               
in the [crab]  rationalization plan.  Mr.  Philemonof pointed out                                                               
that  at  one  point  TDX  [Corporation]  did  support  the  crab                                                               
rationalization plan, but  unfortunately the community protection                                                               
measures were  watered-down to a  point where these  measures are                                                               
meaningless.    It is  an  empty  promise  because there  are  no                                                               
protections  for communities  under the  current amendments  that                                                               
were adopted, he stated.                                                                                                        
MR. PHILEMONOF  told the committee  that the  Village Corporation                                                               
of Saint  Paul doesn't support the  crab rationalization program;                                                               
and therefore, they  support HJR 25.  He asked  that the members,                                                               
too, demand  that the  NPFMC put  in better  community protection                                                               
measures.  He said the community  was told that they had no risks                                                               
with this  rationalization plan,  but unfortunately, that  is not                                                               
true.   The  community  has  taken risks  by  investing over  $20                                                               
million  in  Saint Paul,  yet  there  is  no protection  for  the                                                               
community.     Mr.   Philemonof   commented   that  the   Village                                                               
Corporation of Saint  Paul has no problem  with Icicle [Seafoods,                                                               
Inc.] and Trident  [Seafoods, Inc.] getting PQs  [IPQs], but what                                                               
they do  require is that those  PQs [IPQs] be tied  to the plants                                                               
in the community  where the Village Corporation  has already made                                                               
substantial investments.   It  is essential  that the  product is                                                               
not taken to floating processors around the country, he said.                                                                   
Number 2229                                                                                                                     
PHYLLIS SWETZOF,  City Clerk, Village Corporation  of Saint Paul,                                                               
testified on  HJR 25.  She  told the committee that  while she is                                                               
currently the city clerk, she  was the school board president for                                                               
many  years,  and is  very  concerned  about the  crab  fisheries                                                               
because it  is so much  a part of  the community's economy.   Ms.                                                               
Swetzof pointed  out that HJR  25 opposes  all the work  that has                                                               
been done by  the parties involved.  There were  hundreds of man-                                                               
hours  spent in  trying  to reach  a fair  deal  between all  the                                                               
parties.   The  end of  negotiations always  means that  everyone                                                               
wins  something and  everybody loses  something, she  said.   Ms.                                                               
Swetzof pointed  out that the crab  rationalization plan complies                                                               
with  the Magnuson-Stevens  Fishery  Conservation and  Management                                                               
Act,  the American  Fisheries  Act, the  development  of the  IFQ                                                               
processes, and  an on-going attempt  to protect  stakeholders and                                                               
the resource.  Ms. Swetzof told  the members that she believes it                                                               
is  important that  this legislation  be allowed  to go  through.                                                               
She stated she opposes HJR 25.                                                                                                  
Number 2289                                                                                                                     
DOROTHY CHILDERS, Executive  Director, Alaska Marine Conservation                                                               
Council (AMCC),  testified in support  of HJR  25.  She  told the                                                               
members that  AMCC is  a community  based organization  with over                                                               
900 members, most of whom  are fishermen, subsistence harvesters,                                                               
small  business  owners,  and other  local  residents  living  in                                                               
Alaska's coastal  communities.  Ms.  Childers said that  the AMCC                                                               
supports  the rationalization  of  the crab  fishery because  the                                                               
resources  need an  improved management  system.   She  explained                                                               
that  she  worked with  the  NPFMC  to advance  conservation  and                                                               
community  benefits   of  groundfish  rationalization   as  well.                                                               
However,  the AMCC  supports HJR  25 because  they are  concerned                                                               
about the processor quota and  the controlling affect this system                                                               
will  have on  markets,  fishermen, communities,  and the  public                                                               
process for managing Alaska's resources.                                                                                        
Number 2351                                                                                                                     
MS. CHILDERS  went on  to say that  she recognizes  the important                                                               
role that  the processing  sector has in  communities.   She said                                                               
the question  of Congress legalizing processor  quotas should not                                                               
be reduced to  a processor versus fishermen battle,  as some have                                                               
made it  out to be,  because everyone  knows the two  sectors are                                                               
mutually dependent.   She said she thinks instead  of asking what                                                               
it  will  take  to  get   fishermen  and  communities  to  accept                                                               
processor  quotas,   the  question   should  be,  "What   is  the                                                               
appropriate way  to support each  sector of the  seafood industry                                                               
in order  to better  serve conservation  management of  the fish,                                                               
stability of  the communities, and  preservation of  the American                                                               
competitive   free-enterprise  system."      The  Alaska   Marine                                                               
Conservation Council is  involved in this issue  because they see                                                               
processor  quotas  as  much  more  than  an  ordinary  allocation                                                               
decision.   Processor quotas  in the crab  fishery, and  if [this                                                               
kind of  plan] is applied  to groundfish and  salmon [fisheries],                                                               
it  will have  a tremendous  impact on  the face  of the  seafood                                                               
industry, governance of the public fishery resources, and day-                                                                  
to-day  challenges  for  fishing families  and  small  processing                                                               
companies, she stated.                                                                                                          
Number 2395                                                                                                                     
MS.  CHILDERS believes  that having  the government  allocate the                                                               
marketshare in  the form  of processor  quotas cannot  be glossed                                                               
over as  a creative solution  for rationalization.  She  said she                                                               
believes  it will  create  a  kind of  cartel  that will  squelch                                                               
innovation  and  entrepreneurial   opportunities  and  ultimately                                                               
exert  an unacceptable  degree of  control over  Alaska's fishing                                                               
MS.  CHILDERS urged  the members  to consider  the public  policy                                                               
implications of the  processor quotas because the  NPFMC can find                                                               
other ways  to support processors and  communities without giving                                                               
permanent  rights  to  a  few   corporations  to  buy  fish  from                                                               
independent fishermen.                                                                                                          
Number 2436                                                                                                                     
DAN  FALVEY,  Advisory  Council  Member,  North  Pacific  Fishery                                                               
Management Council, testified in support of  HJR 25.  He told the                                                               
members  that he  is a  fisherman and  has been  a member  of the                                                               
Advisory Council  on NPFMC  for the  last 12  years.   Mr. Falvey                                                               
commented   that  while   he  fully   appreciates  Representative                                                               
Samuels' remarks on the council's  process, he fully supports HJR                                                               
25 and  believes it  is very appropriate  for the  legislature to                                                               
comment on  this issue because  processor quotas are  outside the                                                               
normal secretary/council  review process.  He  explained that PQs                                                               
[IPQs]  require Congress  to substantially  change the  Magnuson-                                                               
Stevens  Fishery Conservation  and  Management Act  and grant  an                                                               
exemption  to the  Sherman Anti-Trust  Act of  1890.   Mr. Falvey                                                               
said  he sees  HJR  25 as  a  comment to  Senator  Stevens as  he                                                               
considers making legislative changes,  rather than micro managing                                                               
the NPFMC process.   Processor quota shares will  have a profound                                                               
impact  on  Alaska's  communities   and  he  reiterated  that  he                                                               
believes  it is  appropriate for  the legislature  to comment  on                                                               
Number 2505                                                                                                                     
MR.  FALVEY shared  that 45  percent of  the PQs  [IPQs] will  be                                                               
owned  by foreign  owned companies,  the processors  can leave  a                                                               
community two  years after  PQs [IPQs] are  enacted, and  it will                                                               
have a significant  effect on raw fish tax.   He told the members                                                               
that  he believes  this plan  will effect  all fishermen  because                                                               
this  plan will  cause consolidation  in the  processing industry                                                               
and will  eliminate independent  market processors  from forming.                                                               
This  will affect  ground fisheries  and salmon  fisheries, at  a                                                               
time  when there  is  a  need for  more  markets and  innovation,                                                               
rather than  less, he stated.   Mr.  Falvey said he  believes PQs                                                               
[IPQs] will spread to other fisheries.   He sited proposals for a                                                               
Gulf of  Alaska rationalization  plan and a  plan for  the salmon                                                               
fisheries  in  Bristol Bay  as  well.    In closing,  Mr.  Falvey                                                               
pointed  out  that the  NRC  [National  Research Council]  report                                                               
states  that there  is no  compelling reason  to have  PQs [IPQs]                                                               
because  the  concerns of  processors  can  be addressed  through                                                               
other mechanisms  that are  legal and  do not  require anti-trust                                                               
[exemptions].  The  concerns of the communities  can be addressed                                                               
through regionalization of components of  the plan that are legal                                                               
and do  not require  legislative changes.   Mr. Falvey  urged the                                                               
members to support HJR 25.                                                                                                      
Number 2543                                                                                                                     
DAVE OHMER,  Plant Manager, NorQuest Seafoods,  Inc. testified on                                                               
HJR 25.   He  told the members  that he has  been in  the seafood                                                               
processing business for 25 years  and cannot remember a time when                                                               
the processors  and fishermen have had  such financial hardships.                                                               
Mr. Ohmer said  he believes it takes a lot  of discussion, public                                                               
input, and expertise  by the management bodies  to offer positive                                                               
solutions.  He  stated there is no way the  legislature can match                                                               
this process, and  is very concerned for the  future of decision-                                                               
making  processes if  the  legislature steps  in  and throws  out                                                               
decisions that  have taken  years to  be worked  out.   Mr. Ohmer                                                               
said  that he  believes it  is important  to keep  the NPFMC  and                                                               
Board of  Fish processes because it  is the proper place  to find                                                               
the solutions  to the  industry's problems.   He told  the member                                                               
that he  does not believe  this precedent would  affect long-line                                                               
fisheries and  salmon fisheries.   Mr. Ohmer said he  opposes HJR                                                               
25 and hopes the committee will let the process work.                                                                           
Number 2620                                                                                                                     
REPRESENTATIVE  SEATON clarified  that HJR  25 does  not override                                                               
anything that has been done by  the [NPFMC].  The resolution is a                                                               
comment on  a section  of the proposal  going through  the NPFMC.                                                               
He explained to Mr. Ohmer that  the legislature does not have the                                                               
authority to override the council's process.                                                                                    
Number 2642                                                                                                                     
STEVE FISH testified  in support of HJR 25.   He told the members                                                               
he is a 29 year resident  of Southeast Alaska, and believes it is                                                               
not  appropriate for  the legislature  to tell  the NPFMC  how to                                                               
manage  fisheries;  however,  it   is  appropriate  for  Alaska's                                                               
Representatives to  raise red flags  when a proposed  action will                                                               
threaten  and  impose  undue  hardship  on  Alaskan  communities,                                                               
businesses, people, and the state's  resources.  Mr. Fish said he                                                               
believes  it is  important that  Alaska has  a strong  processing                                                               
sector  in   the  industry  because   fishermen  depend   on  the                                                               
processors  a  lot; however,  what  is  being proposed  goes  way                                                               
beyond what he believes is  appropriate in helping the processing                                                               
sector.    Quota  share  programs   are  designed  to  facilitate                                                               
consolidation.  When  considering  consolidation and  the  market                                                               
control  of  the  fisheries,  the   negatives  far  outweigh  the                                                               
positives, and the positives can  be reached through other means.                                                               
Mr. Fish reiterated his support of HJR 25.                                                                                      
Number 2718                                                                                                                     
SUE  WEAVER testified  in opposition  to HJR  25.   She told  the                                                               
members that  she and her  husband have been Bering  Sea crabbers                                                               
for 22  years.  She  said she  supports the NPFMC  11-0 decision,                                                               
and recognizes  that council  has spent  four years  listening to                                                               
all the testimony on all the  issues.  Ms. Weaver stated she does                                                               
not  believe the  legislature should  be  addressing issues  like                                                               
this; stay out of it and let the process work.                                                                                  
MS. WEAVER  said one of  the reasons she  would like to  see this                                                               
crab  rationalization  plan go  forward  is  that it  would  mean                                                               
longer seasons.   For  example, last fall  the king  crab opening                                                               
was  68 hours  long, and  the  opilio season  was 10  days.   Ms.                                                               
Weaver explained  that openings such  as this leave little  or no                                                               
room  for error  or breakdown,  and  either one  of these  events                                                               
could cost  a crabber the season.   She also pointed  out that if                                                               
the season were  longer it would be possible to  open new markets                                                               
and  develop  new  products.   Another  reason  this  plan  would                                                               
benefit  fishermen  is  that  many times  fishermen  are  out  in                                                               
weather  they should  not be  out in.   Even  though it  is about                                                               
choices, it is  also the only way [she and  her husband] can make                                                               
a  living.   Ms. Weaver  said  that in  all the  years they  have                                                               
fished the  crab season, only  once were they delayed  because of                                                               
weather.   That was three  years ago,  when the U.S.  Coast Guard                                                               
said that  if something happened  they would not  risk themselves                                                               
to save us.   Crabbers have the most dangerous  job in the world,                                                               
she commented.   Safety is one  of their biggest concerns  and if                                                               
the crab  rationalization plan  were to pass,  all of  this would                                                               
change for them, she said.                                                                                                      
MS. WEAVER told the members that  they are on one of the smallest                                                               
boats that  fish in the Bering  Sea and are from  a small coastal                                                               
community.  She said AMCC  claims to be protecting fishermen like                                                               
her and her  husband, but AMCC is really  an environmental group.                                                               
Ms. Weaver closed by saying she opposes HJR 25.                                                                                 
Number 2800                                                                                                                     
REPRESENTATIVE  WILSON  asked  Ms.   Weaver  to  comment  on  the                                                               
testimony from  individuals who are  in favor  of HJR 25,  but do                                                               
not live  in a  coastal community  or make  their living  as crab                                                               
MS.  WEAVER replied  that  she is  not  sure what  Representative                                                               
Wilson  is asking.   However,  she  said that  she questions  why                                                               
groups  and people  who are  opposing  the [crab  rationalization                                                               
plan] are  testifying in  support of  HJR 25  since they  have no                                                               
vested interest in it; while she  and her husband, who oppose the                                                               
resolution,  do.   She said  she believes  their voice  should be                                                               
heard  over other  people [who  have  no vested  interest in  the                                                               
Number 2866                                                                                                                     
JESSIE NELSON  testified in opposition to  HJR 25.  She  told the                                                               
members that  she and  her husband  had a  crab boat  that fished                                                               
from  Kodiak to  Adak to  the Russian  border.   The NPFMC  spent                                                               
years working on the Bering  Sea crab rationalization program and                                                               
voted 11-0  to forward the  plan.  Ms.  Nelson asked how  many of                                                               
the members  of the  committee have  attended these  meetings and                                                               
how many  have testified.   The sponsors  of this  resolution are                                                               
not fishermen  and have  no vested interest  in the  fishery, she                                                               
commented.     She  questioned  how  the   Special  Committee  on                                                               
Fisheries  can make  a judgment  on this  issue without  spending                                                               
months   evaluating    the   plan   and    conducting   hearings.                                                               
Environmental groups are  testifying on this issue,  but there is                                                               
no environmental  issue here.   Ms. Nelson expressed  the opinion                                                               
that  the stakeholders  are the  ones who  should be  listened to                                                               
with respect to this issue.                                                                                                     
MS.  NELSON told  the members  that salmon  fishermen are  afraid                                                               
that this  plan will extend  to salmon fisheries; however,  as 35                                                               
year salmon fishermen, they have  delivered to the same processor                                                               
for  30 years  [and are  not concerned  with the  processor quota                                                               
shares option  in the plan].   For  the past eight  years, salmon                                                               
fishermen  have  lamented  the   negative  effects  of  the  last                                                               
governor's injection  of politics into fisheries  management, and                                                               
now this resolution is proposing to do just that, she commented.                                                                
MS.  NELSON  pointed out  that  during  the hotly  contested  IFQ                                                               
debate the legislature  properly stayed out of it.   She told the                                                               
members  that she  is  opposed  to setting  a  new precedent  and                                                               
opposes HJR 25.                                                                                                                 
Number 2945                                                                                                                     
GLENN CARROLL testified  on HJR 25.  He told  the members that he                                                               
has been  fishing for 40 years  and is now currently  involved in                                                               
the Gulf of Alaska groundfish fishery.                                                                                          
TAPE 03-26, SIDE B                                                                                                            
MR. CARROLL  said he is concerned  about what will come  next [in                                                               
the Gulf  of Alaska ground fisheries].   He said first  there was                                                               
the cooperative  issue, then the crab  [rationalization program],                                                               
and he  believes the Gulf  of Alaska is  next.  Mr.  Carroll said                                                               
that  he  does  not  support blocking  the  crab  rationalization                                                               
program, just the provision of processor quotas.                                                                                
Number 2926                                                                                                                     
JOHN  HANSEN testified  in opposition  to HJR  25.   He told  the                                                               
members that  he is an  owner and operator  of a Bering  Sea crab                                                               
boat.   For  the  past four  years the  people  involved in  this                                                               
fishery; the  fishermen, the communities, the  canneries, and the                                                               
NPFMC  have been  negotiating  this  rationalization process,  he                                                               
said.   The  program  needs  to proceed  forward  for safety  and                                                               
economic reasons.  Mr. Hansen is opposed to HJR 25.                                                                             
Number 2866                                                                                                                     
DAVE  WOODRUFF,  Manager,  Alaska Fresh  Seafoods,  testified  in                                                               
support of  HJR 25.   He told the members  that he is  part owner                                                               
and operator of a seafood processing  plant.  He said he has been                                                               
a  resident  since territorial  days,  started  his crab  fishing                                                               
career in Dutch  Harbor in 1969, and he has  owned and operated a                                                               
crab  processing plant  in  Kodiak for  25 years.    He told  the                                                               
members that he  has brought millions of pounds of  crab from the                                                               
Bering Sea on  vessels that were owned by  Alaska Fresh Seafoods.                                                               
He  explained  that   his  partners  owned  50   percent  of  the                                                               
processing facility  in Kodiak.   In the  scenario the  NPFMC has                                                               
brought forth,  these vessels  will not  have the  opportunity to                                                               
bring crab  back to  Kodiak as they  have through  the qualifying                                                               
MR. WOODRUFF  pointed out that  Kodiak has helped to  pioneer the                                                               
Bering  Sea   crab  fishery.     The  community  has   built  the                                                               
infrastructure  to handle  the large  fleet of  boats, which  was                                                               
over 65 crabbers at  one time, but is currently down  to 35 to 40                                                               
vessels.  The  crabbers have brought crab back  to this community                                                               
year  after year  and will  not have  that opportunity  any more.                                                               
Mr.  Woodruff  told  the  members that  as  a  four-time  elected                                                               
official of  Kodiak, he felt  it was his responsibility  to bring                                                               
this  to the  committee's  attention  and ask  for  help when  he                                                               
realized the  community was  losing the battle.   He  pointed out                                                               
that Kodiak  has a vested interest  in the Bering Sea  crab, just                                                               
like Saint  Paul and Unalaska.   Kodiak has invested  millions of                                                               
dollars of capital and still  has the processor capability to run                                                               
crab from the Bering Sea.                                                                                                       
MR. WOODRUFF summarized  his comments by saying  that he supports                                                               
HJR 25, and  believes the council process is broken  and needs to                                                               
be fixed.  He told the members  that he served eight years on the                                                               
advisory panel  and in those  eight years the panel  managed fish                                                               
stocks, not people and companies.   Mr. Woodruff said he believes                                                               
the  NPFMC  needs  to  get   back  to  managing  fisheries  on  a                                                               
sustainable  basis, and  not  try to  manage  the social  problem                                                               
since these problems will work themselves out.                                                                                  
Number 2736                                                                                                                     
DICK POWELL testified in support of  HJR 25.  He told the members                                                               
that he  has fished  out of  Kodiak for 39  years and  owns three                                                               
crab  boats.   Two  of  them  fish crab  in  the  Bering Sea  and                                                               
Aleutian Islands.   Processor shares would force him  to sell his                                                               
crab   to   a  specific   processor,   and   since  he   owns   a                                                               
catcher/processor, he  would not be  allowed to even buy  his own                                                               
crab  which he  has done  in  years past,  he said.   Mr.  Powell                                                               
stated that he believes he should  be allowed to sell his crab to                                                               
whomever he wants to, and especially to his own processor.                                                                      
MR.  POWELL   explained  that  he   has  been  involved   in  the                                                               
discussions of  the crab rationalization  process with  the NPFMC                                                               
since the beginning and he is  very disappointed.  He said he has                                                               
been  to nearly  every meeting  and  has made  numerous trips  to                                                               
Washington, D.C. on  this issue.  Mr. Powell told  the members he                                                               
believes  this  process  is  broken   because  one  industry  has                                                               
controlled the whole  process.  The processors have  been able to                                                               
out-spend the  fishermen, their lobbyists,  and consultants.   He                                                               
commented   that  after   the   NPFMC   selected  the   preferred                                                               
alternative [which  was included in  the report and  provided] to                                                               
Congress, the  processors went racing back  to [Washington, D.C.]                                                               
to get special legislation enacted  right away to adopt the plan.                                                               
Mr. Powell stated that there has  been so much opposition to this                                                               
from Alaska  and other  areas of the  country, that  Congress has                                                               
decided to have a hearing on this issue before taking action.                                                                   
Number 2650                                                                                                                     
MR.  POWELL  told the  members  that  he  believes that  the  new                                                               
administration and the legislature needs  to take a stand on this                                                               
important policy question.  He  questioned whether Alaska will go                                                               
back  to  the  fish  trap   days  when  the  processing  industry                                                               
controlled  commercial  fishing.    Mr.  Powell  stated  that  he                                                               
supports HJR 25 and asked the members to pass it from committee.                                                                
Number 2677                                                                                                                     
GREG HATHAWAY,  Plant Manager, Trident Seafoods,  Inc., testified                                                               
in opposition to HJR 25.  He told  the members that he is 16 year                                                               
resident and  runs the  processing plant  in Kodiak  that employs                                                               
250.  Mr.  Hathaway stated that he is strongly  opposed to HJR 25                                                               
because  he believes  that any  crab rationalization  plan should                                                               
recognize  both  harvesters  and  processors  equally  for  their                                                               
investment in the  industry.  The NPFMC has been  working on this                                                               
issue for a number of years,  and processors shares is one way to                                                               
recognized both sectors investments equally.                                                                                    
Number 2591                                                                                                                     
JULIE BONNEY,  Director, Alaska Ground Fish  Data Bank, testified                                                               
in  opposition to  HJR 25.   She  told the  members that  she has                                                               
lived  in Kodiak  for 20  years, and  owns a  consulting business                                                               
that   represents   troll   catcher   vessels   and   shore-based                                                               
processors.   Ms. Bonney said  she is  opposed to HJR  25 because                                                               
she  does not  believe  the Alaska  State  Legislature should  be                                                               
involved  in  this issue  by  advising  Senator Stevens  [of  the                                                               
legislature's  position].   There  have  been many  controversial                                                               
allocation restrictions on fisheries that  both the NPFMC and the                                                               
Board  of Fisheries  have worked  through, and  at the  time when                                                               
those  other decisions  were made,  the Alaska  State Legislature                                                               
did not  make a statement  on the issues,  she said.   Ms. Bonney                                                               
pointed out that the NPFMC is  under scrutiny on a national level                                                               
by organizations such as, the  U.S. Oceans Commission and the PEW                                                               
Oceans Commissions,  who review  how federal fisheries  are being                                                               
managed.  Some people would like  to see the fisheries managed on                                                               
a  national level  by removing  all regional  authority, but  she                                                               
said she believes that is the last thing Alaskans want.                                                                         
MS.  BONNEY pointed  out that  she believes  the testimony  heard                                                               
before the committee  is the same testimony that  came before the                                                               
NPFMC.  The difference is that  while the members are hearing the                                                               
motions  and views  of individuals,  they are  not receiving  the                                                               
analytical information on  why this decision was  made, she said.                                                               
MS.  BONNEY  commented that  in  terms  of Gulf  rationalization,                                                               
those  members  that  she   represents  believe  that  historical                                                               
communities,  processors, harvesters  need  to  benefit from  the                                                               
allocation system.  HJR 25  is really an anti-community and anti-                                                               
processor position [statement].                                                                                                 
Number 2465                                                                                                                     
CHARLES REHDER  testified in opposition to  HJR 25.  He  told the                                                               
members  that  he  is  a  Bering  Sea  crab  fisherman.    During                                                               
testimony he has been keeping track  of those for and against the                                                               
resolution.    He  said  his  count shows  22  in  favor  of  the                                                               
resolution and  23 against  the resolution.   Mr. Rehder  said he                                                               
opposes the resolution because it does  not offer a solution.  He                                                               
said  at  this  point  in  the process  he  is  interested  in  a                                                               
solution, not opposition.                                                                                                       
Number 2427                                                                                                                     
MIMI TOLVA testified in support of  HJR 25.  She told the members                                                               
that she has a financial interest  in a Bering Sea crab boat that                                                               
she depends  on for  her family's support.   Ms.  Tolva commented                                                               
that she does not know  how the [processor quota shares proposal]                                                               
has managed  to get this  far, and  cannot fathom how  a proposal                                                               
which provides for  90 percent of "A" shares and  only 10 percent                                                               
"B"  shares  [has  proceeded  through   the  process].    Several                                                               
advisory panel members  at the NPFMC expressed shock  at the 11-0                                                               
vote allowing  this proposal to  go forward, she commented.   Ms.                                                               
Tolva told  the members  that she believes  it is  important that                                                               
the legislature  weigh in on this  issue.  She offered  that some                                                               
of the processors may be  feeling pressured because they now have                                                               
to offer  competitive prices for  halibut, on top of  battling an                                                               
anti-trust law suit on [salmon pricing].                                                                                        
MS. TOLVA  stated that she does  not believe that the  Bering Sea                                                               
crab fishermen should  have to accept artificially  low prices to                                                               
compensate  for  the  challenges  facing processors.    Once  the                                                               
[quotas] are  given away, it will  be impossible to get  it back;                                                               
and  once the  harvesters lose  the ability  to negotiate  a fair                                                               
price, find a better market, or  a more innovative way to process                                                               
or market crab, that ability is  gone forever.  Ms. Tolva said if                                                               
there had been a more  fair and equitable processor quota system,                                                               
she  would have  supported  it,  but as  it  stands  now, in  the                                                               
interest  of protecting  the present  and future  participants in                                                               
this fishery  in the  free market  system, she  strongly supports                                                               
HJR 25.                                                                                                                         
Number 2345                                                                                                                     
CHARLIE  PARSONS,   Western  Gulf  of  Alaska   Fishermen  Group,                                                               
testified in opposition  to HJR 25.  He told  the members that he                                                               
has 25 years of experience as  a ground fisherman and he believes                                                               
the rationalization  plan should stay within  the NPFMC [purview]                                                               
because he  has faith in  the process and [the  council members']                                                               
abilities.   Mr. Parsons said  he believes that  some individuals                                                               
with little or  no history in the fishing industry  would like to                                                               
see this  process derailed.   He  asked the  members to  see that                                                               
this does not happen.                                                                                                           
Number 2310                                                                                                                     
HEATHER   McCARTY,   Representative   for  Central   Bering   Sea                                                               
Fishermen's Association;  Board Member, Alaska  Seafood Marketing                                                               
Institute,  testified  in  opposition  to  HJR  25  and  answered                                                               
questions from  the members.  She  told the members that  she has                                                               
been a resident of Alaska for  nearly 30 years and her family has                                                               
been  in the  salmon  fishing industry  for as  long  as she  can                                                               
recall.   Ms.  McCarty explained  that her  testimony before  the                                                               
committee  is on  behalf of  the Central  Bering Sea  Fishermen's                                                               
Association which is the CDQ  [community development quota] group                                                               
on Saint Paul  Island.  She said that she  knows the members have                                                               
heard from a  number of people on Saint Paul  Island, all but one                                                               
of whom, has been opposed to HJR 25.                                                                                            
MS. McCARTY told the members that  she has a copy of the economic                                                               
analysis  report which  is about  600  pages long  [300 pages  of                                                               
analysis and 300  pages of appendices] and was done  by the NPFMC                                                               
and  the  agency  staff  to   support  the  crab  rationalization                                                               
program.  The report deals with  every aspect of this issue.  She                                                               
offered to leave the report with  anyone who would like to review                                                               
it, she said.                                                                                                                   
MS. McCARTY responded to an  earlier question posed by Vice Chair                                                               
Wilson to [Sue  Weaver who lives in Homer], as  to the motives of                                                               
individuals who  are supportive of  HJR 25, but are  not involved                                                               
in crab  fisheries or who  are not living  in one of  the coastal                                                               
communities [that  depend on  the crab  fisheries].   Ms. McCarty                                                               
said she believes these individuals  believe that this program is                                                               
a template  for other  fisheries, but  that assumption  is wrong.                                                               
In  fact, when  David Benton,  Chairman  of the  NPFMC, made  his                                                               
final speech on this issue, he  stated for the record that no one                                                               
on the council, in voting for  this plan, intended for this to be                                                               
a template  for the rationalization  of the  groundfish fisheries                                                               
in  the  Gulf, and  certainly  not  for  salmon fisheries.    Ms.                                                               
McCarty stated that  she believes that fear is what  is driving a                                                               
lot  of  the opposition  to  processor  shares,  and that  is  an                                                               
unfounded fear in her opinion.                                                                                                  
Number 2155                                                                                                                     
MS. McCARTY commented that the committee  has heard a lot of good                                                               
testimony on  why community  protection and  processor protection                                                               
are inextricably linked in this plan.   Saint Paul Island has two                                                               
lags to  the economy in  Saint Paul,  one is crab  processing and                                                               
the  other is  a local  halibut  fishery.   These fishermen  make                                                               
their  living fishing  for  halibut; there  are  about 1  million                                                               
pounds in  that quota, and it  is fished every year  out of small                                                               
boats  around  the  island.     These  fishermen  depend  on  the                                                               
processing capacity on the island  which does crab processing, to                                                               
then  process  their  halibut.   If  that  processing  capability                                                               
disappears they  would not have  the capability to  process their                                                               
own halibut and that would be a huge loss to them.                                                                              
Number 2102                                                                                                                     
CHAIR  SEATON asked  Ms.  McCarty, after  [the  adoption of]  the                                                               
amendments [to the crab  rationalization plan], what restrictions                                                               
are in  place with respect to  CDQ groups or other  groups moving                                                               
their processing quota shares from one community to another?                                                                    
MS. McCARTY  commented that  she is  not an  expert on  the final                                                               
amendments.    She  offered  to provide  her  perception  of  the                                                               
amendments with respect to this issue.                                                                                          
CHAIR SEATON responded that a  representative from NMFS [National                                                               
Marine Fisheries Service]  is here and can  answer this question.                                                               
The committee has heard two  testimonies on this issue from Saint                                                               
Paul Island; the  TDX Native Corporation stated that  they do not                                                               
have protection,  and the City  of Saint Paul Island  stated that                                                               
they do have protection.                                                                                                        
MS. McCARTY  replied that she  can address the Saint  Paul issue.                                                               
The TDX Native  Corporation owns the buildings and  the land that                                                               
is being  used by a  couple of processing  plants.  If  the quota                                                               
share measures  go through, those  processors would be  given the                                                               
quota shares  rather than the  owners of the property,  she said.                                                               
In   Saint  Paul,   the  processor   and  community   protections                                                               
intertwine in this program which  provides an opportunity for the                                                               
community  to  gain  even  more   control  over  the  processing.                                                               
Community groups,  such as CDQ  groups, could actually  take over                                                               
those processing plants in communities.                                                                                         
Number 1957                                                                                                                     
KRIS NOROSZ, Representative for  Icicle Seafoods, Inc., testified                                                               
in opposition  to HJR 25.   She told the members  that processors                                                               
in  the crab  fishery  made large  specialized investments  based                                                               
upon  a derby  style fishery,  and likewise,  crab vessel  owners                                                               
made significant investments.  When  a fishery rationalizes, such                                                               
as the  plan for  the one in  the Bering Sea,  the race  for fish                                                               
ends  and  there  is  a  surplus capacity.    Both  sectors,  the                                                               
harvesters  and the  processors,  need to  be  granted shares  in                                                               
recognition of  their investment and historical  participation in                                                               
order to avoid  a shift in the power of  one sector over another,                                                               
while still  protecting communities,  she said.   In the  case of                                                               
the sablefish  and halibut  program, shares  were not  granted to                                                               
each sector  and, as  a result,  there was a  shift in  power and                                                               
some  communities, such  as Yakutat  and Pelican,  lost a  lot of                                                               
income as  a result of  that shift in  power.  Ms.  Norosz stated                                                               
that the Bering  Sea Crab [rationalization] plan  has taken great                                                               
pains to avoid that type of situation.                                                                                          
Number 1885                                                                                                                     
MS.  NOROSZ  explained  that  Icicle  Seafoods,  Inc.  has  three                                                               
floating processors  that they use  for crab [processing].   They                                                               
have also used  these platforms to process herring  and salmon in                                                               
Western  Alaska.   Ms. Norosz  told  the members  that if  Icicle                                                               
Seafoods  is   not  granted  processor  shares   based  on  their                                                               
historical participation  there is a strong  likelihood that they                                                               
would  not be  able  to economically  continue  to operate  these                                                               
platforms and that would result  in fewer markets for salmon and,                                                               
in some cases, maybe no markets  at all for herring in some areas                                                               
of Western Alaska.                                                                                                              
Number 1846                                                                                                                     
MS. NOROSZ commented that she  listened to a previous meeting via                                                               
teleconference  where  it  was  erroneously  reported  that  crab                                                               
fishermen do  not support  this plan.   She  said she  thinks the                                                               
members have  heard otherwise  today.   Ms. Norosz  concluded her                                                               
testimony  by  highlighting  the Alaska  Crab  Coalition's  press                                                               
release where  they state their  strong support for  the program.                                                               
She  also  pointed  out  that   the  Bering  Sea's  Skippers  for                                                               
Equitable  Access also  support the  program.   Ms. Norosz  noted                                                               
that both of  these groups were part of  the initial stakeholders                                                               
that initiated the Bering Sea crab [rationalization] plan.                                                                      
MS.  NOROSZ submitted  additional  papers [and  reports] for  the                                                               
members  review, and  pointed out  that one  paper by  the United                                                               
States  Congressional Research  Service  which  deals with  anti-                                                               
trust  issues  disputes  these   concerns  and  identifies  other                                                               
industries  with market  segmentation.   Another report  that she                                                               
provided the  members is  the State of  Alaska's response  to the                                                               
GAO's [General  Accounting Office]  report.   In this  report the                                                               
state concludes that the GAO  distorted the state's research into                                                               
the halibut  and sablefish IFQ  program, and that the  GAO relied                                                               
on faulty analysis, she commented.   The final paper she provided                                                               
the members  is a white paper  done by the State  of Alaska which                                                               
was  written  last   June  after  the  NPFMC   passed  the  [crab                                                               
rationalization] plan  unanimously; that paper supports  the plan                                                               
and states the reasons for supporting such a plan.                                                                              
Number 1751                                                                                                                     
GORDON BLUE, President, C.R.A.B.  Group [Crab Rationalization and                                                               
Buyback  Group], testified  in  support of  HJR  25 and  answered                                                               
questions  from  the  members.    He told  the  members  that  he                                                               
submitted some  information for the  members review,  including a                                                               
memorandum  [Sher  &  Blackwell  LLP, dated  June  14,  2002]  on                                                               
antitrust issues,  which Mr. Garner  told the members was  not in                                                               
existence  at  a  previous  hearing [see  minutes  of  the  House                                                               
Special Committee on Fisheries meeting  dated 4/23/03].  Mr. Blue                                                               
encouraged the members to study  that memorandum and the material                                                               
that  Ms.  Norosz  has  provided  because this  is  a  large  and                                                               
important  part  of  what  the  proposed plan  does.    The  plan                                                               
allocates  the  quota for  processors  and  creates a  horizontal                                                               
market  division  which is  a  per  se violation  under  existing                                                               
antitrust rules.   He pointed out that Congress has  the power to                                                               
set those  rules aside.  What  is important to note,  he said, is                                                               
that  the NPFMC  had no  debate on  the wisdom  of the  antitrust                                                               
rules; and,  in fact, they set  aside the study which  showed the                                                               
proposal would probably  create an unfair balance  to the benefit                                                               
of processors, which the council itself had commissioned.                                                                       
Number 1642                                                                                                                     
MR. BLUE  commented that  the members have  heard from  some crab                                                               
fishermen today who  support this program because  of their close                                                               
relationship with particular canneries  that have spanned as many                                                               
as 25 years.  He pointed  out that the C.R.A.B. Group is composed                                                               
of 104  crab harvester  vessels.   He said he  has fished  in the                                                               
Aleutians and Bering Sea for  25 years.  The group's [membership]                                                               
supports  crab rationalization,  but  they do  not support  crab-                                                               
processing quotas for  the reasons already described.   He stated                                                               
that the group supports HJR 25.                                                                                                 
REPRESENTATIVE  OGG asked  Mr.  Blue if  all  104 crab  harvester                                                               
vessels presently fish  in the area that will be  impacted by the                                                               
[NPFMC crab rationalization] plan.                                                                                              
MR. BLUE  responded that  he has not  verified that;  however, he                                                               
said he  does know that all  of those vessels have  the right and                                                               
the privilege to  participate in the fishery.   He commented that                                                               
he does not know, for instance,  if everyone of them went out for                                                               
the opilio crab fishery this last season.                                                                                       
REPRESENTATIVE  OGG asked  for clarification  that they  have the                                                               
right to participate in the fishery.                                                                                            
MR.  BLUE responded  that  in the  last two  years  all 104  crab                                                               
harvesters have participated in the fishery.                                                                                    
Number 1531                                                                                                                     
REPRESENTATIVE OGG  restated his  question by  asking if  all 104                                                               
vessels participated in both the  opilio and king crab fishery in                                                               
the last two years.                                                                                                             
MR. BLUE  replied that, of the  104 vessels in the  group, nearly                                                               
all have participated in the last  couple of years, but he stated                                                               
that he does not know if they fished  just in the Bering Sea.  He                                                               
pointed out  that there is  also the Aleutian Islands  brown crab                                                               
fisheries.   Mr.  Blue  said  he is  sure  about  the fact  [that                                                               
members of  the group have  fished for  crab] because there  is a                                                               
recent  qualification period  that applies  which he  believes is                                                               
about 4  years old.   So everyone who  is licensed would  have to                                                               
have  participated  within  that  time.   Mr.  Blue  said  it  is                                                               
possible that  there are  some members who  have lost  vessels or                                                               
have tied up  for one reason or another; however,  that would not                                                               
be a significant number of the membership.                                                                                      
REPRESENTATIVE  OGG asked  if  all 104  vessels  qualify for  the                                                               
Bering  Sea  crab rationalization  plan,  with  the exception  of                                                               
those vessels that had been lost at sea.                                                                                        
MR. BLUE said  that is absolutely correct; in  fact, even vessels                                                               
that had been  lost at sea [could be replaced  and participate in                                                               
the fishery].                                                                                                                   
CHAIR SEATON  announced that  he was  ending public  testimony on                                                               
HJR 25.  [HJR 25 was held over.]                                                                                                
Number 1388                                                                                                                     
There being no  further business before the  committee, the House                                                               
Special  Committee   on  Fisheries   meeting  was   adjourned  at                                                               
9:52 a.m.                                                                                                                       

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