Legislature(2015 - 2016)CAPITOL 120

02/24/2015 10:00 AM House FISHERIES

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10:03:36 AM Start
10:04:00 AM Overview: Commercial Fisheries Entry Commission (cfec)
11:17:00 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview & Presentation: TELECONFERENCED
Commercial Fisheries Entry Commission
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                       February 24, 2015                                                                                        
                           10:03 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Louise Stutes, Chair                                                                                             
Representative Neal Foster                                                                                                      
Representative Bob Herron                                                                                                       
Representative Charisse Millett                                                                                                 
Representative Jonathan Kreiss-Tomkins                                                                                          
Representative Dan Ortiz                                                                                                        
MEMBERS ABSENT                                                                                                                
Representative Craig Johnson                                                                                                    
OTHER MEMBERS PRESENT                                                                                                         
Representative Bryce Edgmon                                                                                                     
COMMITTEE CALENDAR                                                                                                            
OVERVIEW:  COMMERCIAL FISHERIES ENTRY COMMISSION (CFEC)                                                                         
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
BRUCE TWOMLEY, Chairman/Commissioner                                                                                            
Commercial Fisheries Entry Commission (CFEC)                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided the overview on behalf of the                                                                   
Commercial Fisheries Entry Commission (CFEC).                                                                                   
BENJAMIN BROWN, Commissioner                                                                                                    
Commercial Fisheries Entry Commission (CFEC)                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Participated in the overview of the                                                                      
Commercial Fisheries Entry Commission (CFEC).                                                                                   
ACTION NARRATIVE                                                                                                              
10:03:36 AM                                                                                                                   
CHAIR  LOUISE  STUTES  called  the  House  Special  Committee  on                                                             
Fisheries  meeting  to  order  at  10:03  a.m.    Representatives                                                               
Stutes, Herron,  Millett, and Ortiz  were present at the  call to                                                               
order.  Representatives Kreiss-Tomkins  and Foster arrived as the                                                               
meeting was in progress.                                                                                                        
^OVERVIEW:  COMMERCIAL FISHERIES ENTRY COMMISSION (CFEC)                                                                        
     OVERVIEW:  COMMERCIAL FISHERIES ENTRY COMMISSION (CFEC)                                                                
10:04:00 AM                                                                                                                   
CHAIR STUTES announced  that the only order of  business would be                                                               
an  overview  from  the  Commercial  Fisheries  Entry  Commission                                                               
10:04:37 AM                                                                                                                   
BRUCE TWOMLEY, Chairman/Commissioner,  Commercial Fisheries Entry                                                               
Commission  (CFEC), provided  that the  Limited Entry  Commission                                                               
was established in 1972, following  a statewide vote that amended                                                               
the Constitution of  the State of Alaska, Article  8, Section 15.                                                               
He paraphrased the amended section, which reads:                                                                                
     No  exclusive right  or  special  privilege of  fishery                                                                    
     shall be  created or authorized  in the  natural waters                                                                    
     of  the State.    This section  does  not restrict  the                                                                    
     power of the State to  limit entry into any fishery for                                                                    
     purposes of resource  conservation, to prevent economic                                                                    
     distress among fishermen and  those dependent upon them                                                                    
     for  a   livelihood  and   to  promote   the  efficient                                                                    
     development  of aquaculture  in  the  State.   [Amended                                                                    
MR.  TWOMLEY stressed  that limited  entry is  confined to  these                                                               
constitutional   purposes  and   if  it   extends  beyond   these                                                               
parameters, or  operates to  ensure the  wealth of  fisherman and                                                               
the value of permits, the result  may be an exclusive fishery and                                                               
the value  of the CFEC will  have been breached.   Thus, from the                                                               
beginning, the  commission has walked a  constitutional tightrope                                                               
in all  of the  decisions rendered.   In  1973, the  Alaska State                                                               
Legislature  enacted Alaska's  Limited Entry  Act (AS  16.43) for                                                               
commercial  fisheries.    He  described  the  act  as  extensive,                                                               
complicated, and, in one judge's opinion,  arcane.  The act is an                                                               
area  of specialty  law,  only  taken up  by  a  few lawyers  who                                                               
represent   fisherman   before   the    court.      The   initial                                                               
implementation  of the  limited  entry  occurred from  1975-1980.                                                               
The  original 19  salmon fisheries  were limited  simultaneously,                                                               
1/1/73, causing thousands  of applications to be  received at one                                                               
time.  The  first stage of review is to  determine an applicant's                                                               
dependency on the  fishery and apply a point system  to issue the                                                               
permit;  the  higher  dependency,  the more  points  are  scored.                                                               
Although this  initial review is  relatively easy,  following the                                                               
paper trail of fish tickets,  applicants have the right to appeal                                                               
a decision  following this initial  determination.   Unlike other                                                               
legal  offices, the  CFEC receives  a flood  of cases  whenever a                                                               
fishery is limited,  and it is necessary to choose  which to take                                                               
up at  a given time.   Interruptions in the process  often occur.                                                               
For example, Isakson  v. Rickey, 550 P.2d 359 (1976)  was a class                                                             
action law  suit that was filed  early in the process,  after the                                                               
commission  had set  maximums for  fisheries  and decisions  were                                                               
being issued.   The  case resulted  in the  receipt of  1,327 new                                                               
applicants, creating  a major  slowdown at  the agency,  and also                                                               
causing  the fishery  to exceed  the maximum  number.   Two other                                                               
situations may also  result in the established  maximum number to                                                               
be surpassed:   First, the requirement  in the Act to  permit any                                                               
fishermen who,  under the  point system,  can show  a significant                                                               
hardship would result  if denied.  Second, a direct  order to the                                                               
commission to exceed the limit.                                                                                                 
10:11:21 AM                                                                                                                   
MR.  TWOMLEY said,  when the  commission received  this flood  of                                                               
cases, it adopted the policy  to first complete the hearings, for                                                               
evidentiary purposes, prior  to writing decisions.   By the early                                                               
1980's over five  hundred hearings had been held  and hundreds of                                                               
tapes  logged, by  five hearing  officers.   Unfortunately, these                                                               
officers did not remain with  the commission through the decision                                                               
process.   The  incoming officers  were  met by  an abundance  of                                                               
evidence  tapes,  and  new   information  continuing  to  arrive.                                                               
Additionally,  the commission  began  to be  effected by  Supreme                                                               
Court decisions.   One principal case was Ostrosky  v. State, 667                                                             
P.2d 1184 (1983)  seeking to strike down  free transferability of                                                               
limited entry permits.   Members of the  Supreme Court considered                                                               
this  case  as  a  possible vehicle  to  entirely  eliminate  the                                                               
limited entry of  fisheries.  For that reason,  the Supreme Court                                                               
held all other  limited entry cases in abeyance  until a decision                                                               
was issued  on Ostrosky.   The  free transferability  was upheld,                                                             
primarily  due to  a  declaration by  the  legislature that  such                                                               
action would allow  the permits to be retained  by family members                                                               
and  preserve community  access  to traditional  fisheries.   The                                                               
decision has  been important to  the commission, as  it continues                                                               
to administer the  limited entry act.  Entire  programs have been                                                               
supported, by the commission, to  assist citizens to benefit from                                                               
Ostrosky  and ensuring  that permits  are  retained by  Alaskans.                                                             
Following Ostrosky, the Supreme Court  issued 28 decisions in two                                                             
years, including significant cases  that required additional CFEC                                                               
adjudications.   Two  of these  decisions,  Byayuk v.  Commercial                                                             
Fisheries Entry  Commission, 684 P.2d  114 (1984), and  Cashen v.                                                           
Commercial Fisheries Entry Commission,  686 P.2d 1219 (1984) have                                                             
impacted all  subsequent CFEC  decisions.   The Byayuk  case held                                                             
that when  the Supreme Court  reverses a rule of  the commission,                                                               
that   reversal  may   be   applied  retroactively;   effectively                                                               
reopening previously closed  cases.  The Cashen  case operated on                                                             
a similar  premise to  allow new applications  to be  filed, long                                                               
after the  application period ended.   Hence, it  became apparent                                                               
that  quantity  could not  be  sacrificed  for quality  regarding                                                               
commission rulings, thus ensuring  that CFEC decisions would hold                                                               
if brought before the Supreme Court.                                                                                            
10:16:58 AM                                                                                                                   
MR. TWOMLEY  said another class  action suit, with  wide reaching                                                               
effects on the  system, was the 1975 Wassillie v.  Simon, Nl. 3AN                                                             
75-506 Civ. (1988) settlement.   The case allowed people to apply                                                               
who had  been disadvantaged in  the initial  application process,                                                               
primarily  rural  residents.     He  pointed  out  that  priority                                                               
consideration was  given to applicants eligible  under Wassillie,                                                             
as well  as transfer cases when  the immediate right to  fish was                                                               
at  stake and  hinged on  CFEC action;  priorities that  continue                                                               
today.   A new applicant, for  a permanent permit, is  allowed to                                                               
fish  indefinitely, as  long as  the application  remains active.                                                               
The ability to  fish, during the application  process, may appear                                                               
to be a  loophole, but the Supreme Court holds  it as a windfall,                                                               
and  it  is  written  into  the  Act.    The  commission  has  an                                                               
affirmative, constitutional, duty to limit  a fishery when a case                                                               
can  be  demonstrated  that limiting  entry  serves  conservation                                                               
purposes  and prevents  economic distress  among fishermen.   The                                                               
commission has, since  1984, been charged with the  duty to limit                                                               
an additional  35 fisheries,  resulting in  the receipt  of about                                                               
4,700 applications.   Consequently, he said, the  commission is a                                                               
moving  bus,  with some  people  getting  off but  always  others                                                               
getting on, which  has been the process since the  inception.  By                                                               
1990 the  commission's case  load had  nearly doubled  and become                                                               
unmanageable,  which  resulted  in   the  adoption  of  a  triage                                                               
approach for case selection.  The  choice was made to address the                                                               
concerns which, at that time, were  under the most pressure:  all                                                               
of  the Prince  William Sound  fisheries, by  virtue of  the 1989                                                               
Exxon Valdez oil  spill; the Cook Inlet salmon  drift and set-net                                                               
fisheries, because  of Board  of Fish  limits being  imposed; and                                                               
the  Southeast  salmon seine  and  troll  fisheries, due  to  the                                                               
effects of  the treaty with  Canada.  During this  time, Chignik,                                                               
was  a successful  enough fishery  that  residents petitioned  to                                                               
have  adjudication delayed.   Similarly,  the Bristol  Bay salmon                                                               
drift net fishery was robust  and challenged the need for limited                                                               
entry under the  Kelly case.  However, by 1997  it was clear that                                                             
farmed salmon companies were competing  vigorously for a share of                                                               
the world fish  market, undermining the cost of  wild salmon, and                                                               
thus  caused a  tremendous  economic upset  and  collapse in  the                                                               
industry.   The CFEC reordered  the case priorities,  turning its                                                               
attention to Bristol Bay concerns, being the largest fishery.                                                                   
10:24:10 AM                                                                                                                   
MR. TWOMLEY explained  that from 1980 through 2015,  the CFEC has                                                               
faced  a number  of obstacles.   One  was the  IRS attempting  to                                                               
seize and  force the sale  of limited entry permits;  contrary to                                                               
state law.   The  Alaska State  Legislature declared  the permits                                                               
exempt from  the claim of  all predators,  and for over  10 years                                                               
the  commission worked  to resist  the efforts  of the  IRS.   He                                                               
recalled  that, in  one  instance  the agents  came  to the  CFEC                                                               
office  with  demands  and   the  commissioner  felt  personally,                                                               
legally threatened.   The IRS conducted a  massive sale, demanded                                                               
that a  permit be  transferred, the  commission refused,  and the                                                               
result  was the  Carle (1996)  decision.   The  commission is  an                                                             
independent agency and, as such,  made the decision to resist the                                                               
IRS.   He stressed that the  commission has been able  to work in                                                               
this way, because of its  inherent independent authority, and not                                                               
being  bound to  any political  agenda,  as held  by other  state                                                               
agencies.  The economic collapse  of the salmon industry resulted                                                               
in consolidation  of the  fleet in 1998,  thus avoiding  the buy-                                                               
back option.                                                                                                                    
10:28:52 AM                                                                                                                   
REPRESENTATIVE MILLETT  questioned the  buy-back option,  and the                                                               
paper  the commissioner  wrote diminishing  the effectiveness  of                                                               
such action.                                                                                                                    
MR. TWOMLEY explained  that he wrote an outline  regarding all of                                                               
the  possibilities, including  permit  buy-back,  to explore  the                                                               
alternatives and understand the drawbacks of each option.                                                                       
REPRESENTATIVE  MILLETT pointed  out  that  since 1998  buy-backs                                                               
have been  successful, and opined that  this could be a  good way                                                               
to manage a fishery particular to  a region.  The Southeast seine                                                               
fishermen have self-managed for  some time employing the buy-back                                                               
system.    Federal funding  was  initially  used, and  caps  were                                                               
established  for  the number  of  permits  allowed for  purchase.                                                               
Given the six  year history on the Southeast  seiner fishery, she                                                               
asked whether buy-back systems could now be considered feasible.                                                                
MR.  TWOMLEY  agreed,  and  said  the  commission  supported  the                                                               
seiners when  they sought  information to take  a vote  and enter                                                               
into  the  federal  loan  obligation.     He  stressed  that  the                                                               
participation  of  the  fishermen  in making  the  decisions  and                                                               
setting-up the federal agreement was  an important element to the                                                               
success of the program.                                                                                                         
10:31:12 AM                                                                                                                   
REPRESENTATIVE  MILLETT  observed  that  the  Southeast  seiner's                                                               
success  may  stimulate  other areas  where  latent  permits  and                                                               
permit  stacking  is  a  factor.   Regional  fishermen  could  be                                                               
provided the opportunity  to vote a self-imposed tax  in order to                                                               
create/maintain  a  viable  fishery.     She  asked  whether  the                                                               
commission supports that type of management.                                                                                    
MR.  TWOMLEY concurred  that it  is a  viable option;  however, a                                                               
substantial  initial investment  is required,  and the  remaining                                                               
fishermen do  not receive  an immediate benefit.   State  law has                                                               
not  been established  to support  the scenario  and the  federal                                                               
government  has been  the funding  source for  Southeast seiners.                                                               
The Bristol Bay  fishermen met recently, November  2014, with the                                                               
commission  to explore  the opportunity.   He  stressed that  the                                                               
large  amount of  initial cash  is the  major hurdle,  and agreed                                                               
that once established it can be a good management system.                                                                       
10:33:09 AM                                                                                                                   
BENJAMIN   BROWN,   Commissioner,  Commercial   Fisheries   Entry                                                               
Commission (CFEC), added that the  commission's research staff is                                                               
finalizing  a history  of the  Southeast buy-back,  including the                                                               
details involved to arrange the federal  financing.  It will be a                                                               
helpful  document,  he  opined, for  understanding  the  complete                                                               
process  and the  role of  the CFEC.   It  will also  include the                                                               
aspects  that  effect the  various  regional  fisheries and  gear                                                               
types, he said, and stressed  that the one-size fits all approach                                                               
is impossible.                                                                                                                  
REPRESENTATIVE MILLETT  recalled the difficulty, at  the time the                                                               
Southeast buyback  system was established, in  obtaining the loan                                                               
guarantee, and  also working  as a member  of the  legislature to                                                               
address the  issue.  It  is an  excellent program, she  said, and                                                               
opined that it  doesn't necessarily need to be  under the purview                                                               
of the  CFEC; many of  the commercial fisheries have  the ability                                                               
to  implement the  system.   She acknowledged  that the  CFEC has                                                               
been a good advocate for the fisheries.                                                                                         
MR. TWOMLEY agreed that the  CFEC is not integral to establishing                                                               
a  buy-back  system,  but  the   commission  assists  by  sharing                                                               
information   and  transferring   the  permits;   no  proprietary                                                               
interest is held by the CFEC.                                                                                                   
REPRESENTATIVE  MILLETT suggested  that the  primary role  of the                                                               
CFEC was to provide fish  ticket information.  The commission, as                                                               
an information  gathering agency, provided this  essential factor                                                               
to assure the federal government of the assets behind the loan.                                                                 
MR.  TWOMLEY  concurred  that the  informational  facet  was  one                                                               
element, and  the other  was to  advocate for  legislative action                                                               
that  would provide  insurance  for the  buy-back  program.   The                                                               
constitutional  amendment  requires  that a  fishery  not  become                                                               
exclusive, and,  when regarding a  buy-back system, that  must be                                                               
considered.    At the  request  of  the seiners,  the  commission                                                               
assisted in lobbying for appropriate  legislation.  He provided a                                                               
theoretical situation that would  result in testing the governing                                                               
constitutional amendment, as it applies to permit buy-backs.                                                                    
REPRESENTATIVE MILLETT  recalled limits  being placed  in statute                                                               
to govern permit buy-backs.                                                                                                     
MR. TWOMLEY  offered that the  CFEC holds  a letter of  intent to                                                               
that  effect;  however,  the  determination  was  not  made.    A                                                               
negotiation occurred between the  fishermen and the processors to                                                               
establish limits, but state statute was not created.                                                                            
10:39:27 AM                                                                                                                   
REPRESENTATIVE  ORTIZ asked  whether  the constitutional  mandate                                                               
restricting  a fishery  from becoming  exclusive is  a subjective                                                               
decision  on  the part  of  the  CFEC  or a  statistically  based                                                               
MR. TWOMLEY responded that it  involves as little subjectivity as                                                               
possible.   Three  optimum number  studies have  been undertaken,                                                               
and  criteria   is  applied  that   include  the  terms   of  the                                                               
constitutional amendment,  such as  conservation of  the fishery,                                                               
and  the  economic  distress  of the  fishermen.    An  elaborate                                                               
economic study  is one means  to approach the question,  which is                                                               
what occurred in  Bristol Bay where estimates were  assumed and a                                                               
working model  was created to  forecast the fishery.   Individual                                                               
tax  returns  required  review,  which can  be  intrusive.    The                                                               
legislature assisted by allowing a  range to be considered versus                                                               
a  single number  and  eventually an  optimal  range was  reached                                                               
following  two   years  of  data  gathering   and  deliberations.                                                               
Certainly, world  markets have since evolved  and the conclusions                                                               
are now  out of date.   In contrast,  a subsequent claim  was put                                                               
before the  CFEC that  a fishery was  becoming exclusive,  and an                                                               
optimum  number study  was again  undertaken.   Expert  testimony                                                               
upheld that  low numbers were  needed to conserve  the challenged                                                               
fishery,  and the  commission wrote  an  optimum number  rational                                                               
based only  on that  testimony, which  was upheld  in court.   He                                                               
pointed out that this was  possible, due to the careful attention                                                               
given  to  the  constitutional  premises being  served.    Should                                                               
another buy-back  arise, he  said this  type of  compact approach                                                               
could again  be successful, but  managers with  solid information                                                               
will be necessary and conservation concerns need to be covered.                                                                 
10:45:35 AM                                                                                                                   
MR.  TWOMLEY introduced  another  interruption  from the  1980's,                                                               
class  action   suit  Carlson   v.  Commercial   Fisheries  Entry                                                             
Commission 798 P.2d 1269 (1990).   The action was brought by out-                                                             
of-state  fishermen seeking  to strike  down the  3:1 permit  fee                                                               
differential that is charged; a  ration held in regulation at the                                                               
time  and now  under statute.   The  case upheld  that the  ratio                                                               
represented  a form  of discrimination;  however,  a formula  was                                                               
devised to  address the question of  non-resident versus resident                                                               
fees.   The class  action effected  95,000 individuals,  but only                                                               
4,700  recovered  damages.    The  remaining  90,000  could  have                                                               
appealed,  save  for the  effort  put  in  by the  commission  to                                                               
respond  to inquiries  and deflect  a large  number of  hearings.                                                               
The last  of the appeals  were heard in 2014.   He opined  on the                                                               
volume,  complexity,  and  labor  intensive work  that  is  being                                                               
handled by the  commission today.  Considering  the point system,                                                               
the   multitude   of   fisheries,    and   the   fact   intensive                                                               
adjudications,  he  said  today's  appeals  are  as  complex  and                                                               
difficult as Carlson.                                                                                                         
10:48:47 AM                                                                                                                   
MR. TWOMLEY  said other obstacles  that the commission  has faced                                                               
include  budget cuts,  which have  taken  a toll  on the  agency,                                                               
including:    elimination  of   the  executive  director,  salary                                                               
freezes,  leave without  pay, and  having  41 fulltime  positions                                                               
reduced  to 28.   The  commissioners have  taken up  managing the                                                               
office.  As an exempt agency,  not subject to human resource laws                                                               
that govern  bargaining units, he  said it has been  possible for                                                               
the  commission to  unilaterally freeze  salaries and  take other                                                               
cost  saving  measures.   He  pointed  out  that the  30  percent                                                               
decrease in positions has required  other staff members to absorb                                                               
the necessary functions.                                                                                                        
10:50:27 AM                                                                                                                   
REPRESENTATIVE MILLETT asked when the budget cuts occurred.                                                                     
MR. TWOMLEY answered that cuts were  made in the 1980's and early                                                               
REPRESENTATIVE  MILLETT   inquired  how  many  cases   have  been                                                               
adjudicated since 2013.                                                                                                         
MR.  TWOMLEY  responded  that in  2014,  143  adjudications  were                                                               
handled; none on appeal, at this time.                                                                                          
10:52:06 AM                                                                                                                   
MR. TWOMLEY said that the 900  cases presented in 1990, have been                                                               
appropriately  managed and  the  commission now  has a  rational,                                                               
manageable caseload of  28.  The goal is to  complete these cases                                                               
in  2016; appeals  and remands  notwithstanding.   Transfer cases                                                               
remain a top  priority and, as included in  the committee packet,                                                               
the  case of  Lisa M.  Williams for  Permanent Transfer  of Entry                                                             
Permit S04T 65633 to John  B. Roehl, CFEC# 14-053-P, provides one                                                             
example  of how  serious  and complicated  transfers can  become;                                                               
often  as involved  as  an  initial application.    He urged  the                                                               
committee to take  time to look at this case  in which an elderly                                                               
woman  nearly lost  her  life  savings in  the  transaction.   It                                                               
became necessary for the commission  to intervene in order to see                                                               
the transfer  through to completion  when the  transferor refused                                                               
to  cooperate  after  money  had   exchanged  hands.    Thus,  he                                                               
stressed,    transfers   cannot    be   dismissed    as   minimal                                                               
[administrative procedures]; the stakes can be high.                                                                            
10:54:07 AM                                                                                                                   
REPRESENTATIVE  MILLETT  asked  how   a  typical  application  is                                                               
handled and the expected timeline for processing.                                                                               
MR. TWOMLEY explained that there  is first a limitation, followed                                                               
by the adaptation  of a point system under  which the application                                                               
is made.   Then a paralegal performs a review  of the fish ticket                                                               
documents  to determine  sufficiency  for support  of the  claim.                                                               
Permits are granted  or denied at this point in  the process, and                                                               
denied claims are  allowed to appeal to a hearing  officer.  To a                                                               
follow-up  he said  denial is  based  on the  application of  the                                                               
point system  that measures criteria based  on past participation                                                               
and  the  level   of  economic  dependency.     The  fish  ticket                                                               
information  provides   the  historical   data  to   support  the                                                               
REPRESENTATIVE MILLETT questioned how a  new person to the state,                                                               
without  experience,  would  gain  access  to  participate  in  a                                                               
MR. TWOMLEY  answered that,  in order to  be permit  eligible, an                                                               
individual  would need  to have  fished  with a  gear license  or                                                               
interim  use  permit  before  the   qualification  date  for  the                                                               
fishery.   To  a follow-up  question, he  said acting  as a  deck                                                               
hand, without  an interim use permit  to a fishery, would  not be                                                               
sufficient.    The  initial  decision  to  limit  a  fishery,  he                                                               
mentioned, is  the decision  to call  out a  maximum number.   He                                                               
     ...  and  by law  the  maximum  number  has to  be  the                                                                    
     highest  number of  units of  gear in  one of  the four                                                                    
     years leading up  to the limitation.   That's where the                                                                    
     maximum number comes in.                                                                                                   
REPRESENTATIVE MILLETT surmised  that if criteria is  not met and                                                               
the application is rejected, an appeal can be made.                                                                             
MR.  TWOMLEY agreed,  and said  an  appeal to  a hearing  officer                                                               
would  occur,  and a  decision  is  issued  based on  a  thorough                                                               
review.  As the last level  of appeal, the CFEC then receives the                                                               
application to consider, prior to a court case being filed.                                                                     
REPRESENTATIVE   MILLETT  recalling   the   143  cases   recently                                                               
adjudicated,  she  confirmed that  it  represents  the number  of                                                               
cases decided at the hearing officer level.                                                                                     
10:57:46 AM                                                                                                                   
CHAIR  STUTES  inquired  what  the   timeframe  is  for  deciding                                                               
MR.  TWOMLEY answered  that a  hearing could  occur in  two days.                                                               
For example, an  application for a transfer that  has been denied                                                               
by  licensing staff,  is  top priority  for  turn-around, as  the                                                               
immediate right  to fish could  be at  stake.  He  suggested that                                                               
the  response time  may surpass  any  other state  agency, in  an                                                               
effort to  allow a fisherman access  to a fishery.   He clarified                                                               
that this refers to transfers of permit ownership.                                                                              
10:59:10 AM                                                                                                                   
REPRESENTATIVE MILLETT  asked for  an estimate  of the  number of                                                               
new applications received in a year.                                                                                            
MR. TWOMLEY  said, "We're  at a point  of closing  out fisheries,                                                               
... so  at this point we're  not getting new applications."   The                                                               
applications on hand are being  finished, and if a new limitation                                                               
were imposed on a fishery, that would generate new applications.                                                                
REPRESENTATIVE MILLETT  maintained her interest in  knowing about                                                               
any new applications.                                                                                                           
MR.  TWOMLEY  responded  that,  in 2014,  there  were  three  new                                                               
applications  for transfer,  concluded  by the  CFEC; cases  that                                                               
came-up through the system.                                                                                                     
CHAIR STUTES  restated the question,  to ascertain the  number of                                                               
new permits that were not appeals or transfers.                                                                                 
MR.  TWOMLEY said  there were  none,  in 2014,  as fisheries  are                                                               
being closed  out and  the commission is  working to  exhaust the                                                               
existing caseload.                                                                                                              
MR.  BROWN  elaborated  on  the complexity  of  closing  out  the                                                               
existing cases.  Two components  are being applied in addition to                                                               
the past  participation and  economic dependency  criteria, which                                                               
are:   extraordinary, and  unavoidable circumstances.   Reviewing                                                               
the old hearings and paper  records to ascertain these two facets                                                               
is  primarily  what  the final  cases,  under  adjudication,  are                                                               
hinged upon.                                                                                                                    
11:01:56 AM                                                                                                                   
CHAIR STUTES asked how many cases were closed out in 2014.                                                                      
MR. TWOMLEY  responded that  three were  adjudicated in  the last                                                               
twelve months; 2 in 2014, and 1 in 2015.                                                                                        
REPRESENTATIVE MILLETT concluded that 60 cases remain.                                                                          
MR. TWOMLEY said  the remaining number is 28, and  the goal is to                                                               
have these final cases finished in  2016.  He qualified the goal,                                                               
stating  that the  commission may  be faced  with appeals,  after                                                               
these cases are decided.                                                                                                        
11:02:56 AM                                                                                                                   
MR. TWOMLEY said that the  commission's other undertakings, along                                                               
with  adjudication  efforts,  include  the Gowen,  Inc.,  v.  F/V                                                             
Quality One, 244 F.3d 64 (1st  Cir. 2001), case, which holds that                                                             
a maritime  lien can be applied  to take a limited  entry permit.                                                               
The CFEC has  guarded Alaskan permits from being  claimed, but it                                                               
presents an  issue as  law allows maritime  liens to  precede all                                                               
other liens.   Similarly, two state authorized  loan programs are                                                               
at  issue, which  use permits  as  collateral.   A maritime  lien                                                               
could be  applied and defeat  the state loan program,  he pointed                                                               
out,  creating  the need  to  lobby  for federal  legislation  to                                                               
clarify that  limited entry permits  are not subject  to maritime                                                               
liens.  In the last  year, with only two commissioners available,                                                               
the CFEC  was not  able to  pursue this issue  as ardently  as is                                                               
called for, he said.                                                                                                            
11:05:13 AM                                                                                                                   
MR.  TWOMLEY called  attention to  the  committee packet  handout                                                               
titled,  "Commercial Fisheries  Entry Commission  Overview; House                                                               
Fisheries Committee;  February 24, 2015,"  page 10 to  review the                                                               
cost  and  revenues  generated  by  the  CFEC.    The  agency  is                                                               
basically supported via receipts  from fisherman, which generates                                                               
more than  is necessary for  the agency to operate;  indicated by                                                               
the  bar  graph.    The   excess  receipts,  are  paid  into  the                                                               
fisherman's  fund, as  well as  a percentage  paid to  the Alaska                                                               
Department  of  Fish  &  Game  to  apply  to  management  issues.                                                               
Additionally,   the  commission   typically   spends  below   the                                                               
appropriation levels, as indicated by  the line graph on page 11.                                                               
On the  theme of savings,  he stressed that the  ultimate savings                                                               
is realized by  ensuring that appeals cases can be  won in court.                                                               
The page 12  bar graph presents the court activity  by year.  The                                                               
commission won  21 of the 23  cases challenged, and the  two that                                                               
were lost resulted in only partial  reversals.  The reversal of a                                                               
case results in  a quick loss of money that  could be financially                                                               
enormous.   He suggested that through  the commission's diligence                                                               
and expertise,  and with a  success rate that exceeds  90 percent                                                               
over its 20 year history, this is a savings area for the state.                                                                 
11:08:00 AM                                                                                                                   
MR. TWOMLEY  called attention to  the Kuzmin v.  State Commercial                                                             
Fisheries  Entry Commission,  No. S-13115.  (2009), contained  in                                                             
the committee packet,  and said these two  applicants were denied                                                               
by the commission,  and chose not to appeal.   He explained that,                                                               
because  of  a series  of  somewhat  lucky circumstances,  and  a                                                               
legislative policy  ruling, the  fishery case was  dispatched and                                                               
the  fishery  closed in  a  relatively  short time,  with  little                                                               
contest.   Although more  fisheries will soon  be closed  out, he                                                               
said it is a critical time  for the commission.  Should a severe,                                                               
retroactive,  reversal occur  at this  time, it  would present  a                                                               
worst case  scenario to be  handled and have negative  effects on                                                               
the fishermen as  well as the state.  Any  change of structure in                                                               
what has  been adjudicated, would  cause a  retroactive reworking                                                               
of  the  previously  denied  applicants   and  create  a  divided                                                               
situation.    He  suggested that  the  legislature  maintain  the                                                               
status quo until  the case load has been exhausted  to best avoid                                                               
such a situation.                                                                                                               
11:12:13 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS  asked for  an outline of  the role                                                               
the CFEC plays outside of the adjudicatory duties.                                                                              
MR.  TWOMLEY said  that the  commissioners act  as administrative                                                               
law  judges; rule  makers adopting  regulations; and  supervising                                                               
managers  of the  agency.   He  clarified that  four parts  exist                                                               
under  the CFEC:   adjudications;  licensing; research;  and data                                                               
11:14:20 AM                                                                                                                   
REPRESENTATIVE  ORTIZ  asked  for  an  explanation  of  the  term                                                               
"closing out."                                                                                                                  
MR. TWOMLEY responded  that this applies when a  fishery has been                                                               
limited, based  on the history  of a  fishery to allow  a certain                                                               
number of  fishermen to  participate.   Not everyone  who applies                                                               
can receive  a permit,  and when the  maximum number  is attained                                                               
the fishery  is closed.   Transfers can  occur but  no additional                                                               
permits are considered.                                                                                                         
11:16:02 AM                                                                                                                   
CHAIR  STUTES thanked  the day's  participants and  announced the                                                               
next meeting agenda.                                                                                                            
11:17:00 AM                                                                                                                   
There being no further business before the committee, the House                                                                 
Special Committee on Fisheries meeting was adjourned at 11:17                                                                   

Document Name Date/Time Subjects
Index Feb 24 26.pdf HFSH 2/24/2015 10:00:00 AM
CFEC PowerPoint.pdf HFSH 2/24/2015 10:00:00 AM
CFEC Annual Report.pdf HFSH 2/24/2015 10:00:00 AM
CFEC Kuzmin final decision.pdf HFSH 2/24/2015 10:00:00 AM