Legislature(2017 - 2018)GRUENBERG 120

01/25/2018 11:00 AM FISHERIES

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11:08:11 AM Start
11:09:20 AM HB188
12:00:46 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
Heard & Held
Introduction of Committee Substitute
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                        January 25, 2018                                                                                        
                           11:08 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Louise Stutes, Chair                                                                                             
Representative Jonathan Kreiss-Tomkins                                                                                          
Representative Mike Chenault                                                                                                    
Representative David Eastman                                                                                                    
Representative Mark Neuman                                                                                                      
MEMBERS ABSENT                                                                                                                
Representative Zach Fansler                                                                                                     
Representative Geran Tarr                                                                                                       
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 188                                                                                                              
"An   Act  relating   to   commercial   fishing  entry   permits;                                                               
establishing  regional  fisheries   trusts  and  fisheries  trust                                                               
regions; relating  to commercial  fishing entry permits  held and                                                               
leased by a  regional fisheries trust; relating to  the duties of                                                               
the  Alaska   Commercial  Fisheries  Entry  Commission   and  the                                                               
Department of Commerce, Community,  and Economic Development; and                                                               
providing for an effective date."                                                                                               
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 188                                                                                                                  
SHORT TITLE: COMM. FISH. ENTRY PERMITS; LOANS; TRUSTS                                                                           
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS                                                                                    
03/20/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/20/17       (H)       FSH, L&C                                                                                               
04/13/17       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
04/13/17       (H)       -- MEETING CANCELED --                                                                                 
04/20/17       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
04/20/17       (H)       -- MEETING CANCELED --                                                                                 
04/25/17       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
04/25/17       (H)       Heard & Held                                                                                           
04/25/17       (H)       MINUTE(FSH)                                                                                            
01/25/18       (H)       FSH AT 11:00 AM GRUENBERG 120                                                                          
WITNESS REGISTER                                                                                                              
REPRESENTATIVE JONATHAN KREISS-TOMKINS                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   As  prime sponsor,  presented  HB 188  and                                                             
answered questions.                                                                                                             
REID MAGDANZ, Staff                                                                                                             
Representative Kreiss-Tomkins                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     Answered  questions  and   presented  an                                                             
overview of the  major changes incorporated into Version  M of HB
188, on behalf of Representative Kreiss-Tomkins, prime sponsor.                                                                 
ALVIN OSTERBACK, Mayor                                                                                                          
Aleutians East Borough                                                                                                          
Sand Point, Alaska                                                                                                              
POSITION STATEMENT:  Provided testimony on House Bill 188.                                                                    
ACTION NARRATIVE                                                                                                              
11:08:11 AM                                                                                                                   
CHAIR  LOUISE  STUTES  called  the  House  Special  Committee  on                                                             
Fisheries  meeting  to  order  at  11:08  a.m.    Representatives                                                               
Neuman, Kreiss-Tomkins, Chenault, and  Stutes were present at the                                                               
call to  order.   Representative Eastman  arrived as  the meeting                                                               
was in progress.                                                                                                                
        HB 188-COMM. FISH. ENTRY PERMITS; LOANS; TRUSTS                                                                     
11:09:20 AM                                                                                                                   
CHAIR STUTES announced  that the only order of  business would be                                                               
HOUSE BILL NO. 188, "An  Act relating to commercial fishing entry                                                               
permits;  establishing regional  fisheries  trusts and  fisheries                                                               
trust regions; relating to commercial  fishing entry permits held                                                               
and leased by a regional  fisheries trust; relating to the duties                                                               
of  the  Alaska Commercial  Fisheries  Entry  Commission and  the                                                               
Department of Commerce, Community,  and Economic Development; and                                                               
providing for an effective date."                                                                                               
CHAIR  STUTES stated  that the  committee had  heard HB  188 once                                                               
last year and that a committee substitute is available today.                                                                   
REPRESENTATIVE  CHENAULT moved  to adopt  the proposed  committee                                                               
substitute  (CS)  for  HB   188,  Version  30-LS0389\M,  Bullard,                                                               
1/22/18,  as  a working  document.    There being  no  objection,                                                               
Version M was before the committee.                                                                                             
CHAIR  STUTES  stated that  it  was  not  her intention  to  move                                                               
Version M from  committee that day because new  fiscal notes were                                                               
being developed.   She said that she would  distribute the fiscal                                                               
notes to the committee when they become available.                                                                              
11:11:01 AM                                                                                                                   
REPRESENTATIVE    JONATHAN     KREISS-TOMKINS,    Alaska    State                                                               
Legislature, said  that he would  provide a few  initial comments                                                               
as  prime  sponsor  of  HB  188,  prior  to  his  staff  member's                                                               
presentation,   which  will   include  the   significant  changes                                                               
incorporated into Version M.   He began by stating that fisheries                                                               
trusts are a  policy tool developed by  working with stakeholders                                                               
around Alaska.   He said they  would be an "elective  tool in the                                                               
tool box"  in that they  would not  be mandatory but  an "opt-in"                                                               
tool that regions  can use to help new and  young fishermen enter                                                               
into commercial  fishing.  He  stated that HB 188  would maximize                                                               
the benefit  of the  fishing resource  to Alaska  communities and                                                               
try to create a driver  for economic development, particularly in                                                               
coastal Alaska  where there  are limited  economic opportunities.                                                               
He  said  that  over  the  past  year a  lot  of  work  has  been                                                               
accomplished with stakeholders, responding  to their feedback and                                                               
ultimately making improvements  to the bill.  He said  that a lot                                                               
of these changes will be presented in the overview today.                                                                       
11:12:21 AM                                                                                                                   
REID  MAGDANZ,  Staff,  Representative  Jonathan  Kreiss-Tomkins,                                                               
Alaska  State Legislature,  on behalf  of Representative  Kreiss-                                                               
Tomkins, prime sponsor  of HB 188, began his  presentation with a                                                               
slide  titled "New  year, New  bill."   The slide  explained that                                                               
much work  had been done on  the bill over the  last nine months,                                                               
with major  revisions in response  to the letters  received after                                                               
many conversations with fishermen  and other groups interested in                                                               
this idea.  Because of the  many changes to the bill, Mr. Magdanz                                                               
said  he  wanted to  first  provide  the committee  with  another                                                               
review of  fishery trusts and  how they  function.  He  stated he                                                               
would  introduce the  major  changes to  the  bill following  his                                                               
11:13:50 AM                                                                                                                   
MR. MAGDANZ presented the next  slide, which was a "Review" slide                                                               
asking the  question "What  do fisheries trusts  look like?"   He                                                               
explained that the  trusts are regional entities  and are "opt-in                                                               
and  self-determined."   He pointed  out that  the Department  of                                                               
Commerce,   Community,  and   Economic  Development   (DCCED)  in                                                               
consultation with the  Alaska Department of Fish  & Game (ADF&G),                                                               
will  divide  the state  into  regions  based on  the  Commercial                                                               
Fishery    Entry    Commission's   (CFEC's)    existing    salmon                                                               
administrative areas,  and these  administrative areas  are shown                                                               
on the  next slide.   He then  explained the "opt-in"  and "self-                                                               
determined" aspects of  fisheries trusts.  He stated  that HB 188                                                               
would not  create fisheries trusts  automatically, and  that they                                                               
can  only exist  in a  region if  two-thirds of  the incorporated                                                               
municipalities in that  region petition the DCCED  to establish a                                                               
trust.    He  said  that   fisheries  trusts  are  community  and                                                               
regionally governed,  such that the  board of each trust  is made                                                               
up  of  a  representative  from  each  municipality  within  each                                                               
defined  region.    He  stated   that  there  would  be  "limited                                                               
authorization," meaning  that no  more than  three trusts  can be                                                               
established in the state without  further legislative action.  To                                                               
make that  point clear, he  said that  if Bristol Bay,  the Aleut                                                               
Region,  and  Kodiak were  to  establish  trusts, then  no  other                                                               
trusts  could be  established without  further  legislation.   He                                                               
posed the question,  "What do fisheries trusts  do?" and answered                                                               
that  they temporarily  transfer permits  to qualified  fishermen                                                               
"as  stepping   stones"  that  provide  access   into  commercial                                                               
fisheries.   He  said a  transfer might  occur for  up to  but no                                                               
longer  than  six years.    As  a final  point,  he  said that  a                                                               
fisheries trust  can only hold up  to 2.5 percent of  the permits                                                               
in any given fishery.                                                                                                           
REPRESENTATIVE KREISS-TOMKINS added that  the 2.5 percent cap was                                                               
based  on the  same  rationale  used in  pilot  programs where  a                                                               
limited  start is  recommended  to  see how  a  new program  will                                                               
perform in  the real world.   He said  that this will  provide an                                                               
opportunity  to learn  from what  works and  does not  work, make                                                               
changes  as needed,  and  only then  allow  additional trusts  to                                                               
exist.   He restated an  earlier point that  additional fisheries                                                               
trusts could only occur under further legislation.                                                                              
11:16:35 AM                                                                                                                   
REPRESENTATIVE NEUMAN referenced  the regional three-permit limit                                                               
and  said he  liked  this concept,  particularly  because of  the                                                               
nonprofit  type  status.    He  asked if  the  permits  would  be                                                               
transferrable from region to region.                                                                                            
11:17:16 AM                                                                                                                   
MR. MAGDANZ answered that no  more than one fisheries trust would                                                               
be allowed to hold permits in  any given fishery.  In the example                                                               
of Bristol Bay  salmon drift net and set net  fisheries, the only                                                               
trust that could acquire permits  in those fisheries would be the                                                               
Bristol Bay fisheries trust.  He  said there would be no transfer                                                               
of permits between regions or trusts.                                                                                           
REPRESENTATIVE  NEUMAN clarified  that his  question was  whether                                                               
permits  were transferable  from one  region to  another, and  he                                                               
offered his understanding that the answer is no.                                                                                
MR. MAGDANZ affirmed that Representative Neuman was correct.                                                                    
11:18:13 AM                                                                                                                   
MR.  MAGDANZ continued  his presentation  with a  second "Review"                                                               
slide that  asked, "Why should  we care about  fisheries trusts?"                                                               
He  answered  this  question  by  addressing  each  of  the  five                                                               
bulleted points  on the  slide.   The first  bullet on  the slide                                                               
stated that fisheries  are the economic engine  of coastal Alaska                                                               
and, in  many communities, they are  the primary if not  the only                                                               
economic driver.  The second  bullet states that access to Alaska                                                               
fisheries has  become "highly capital  intensive."   When limited                                                               
entry was first  put in place in the mid-1970s,  it was much more                                                               
feasible to buy a low-cost  permit, acquire a "beat-up boat," and                                                               
go fishing.   Today this is  not the case, as  becoming a captain                                                               
on  one's own  boat requires  hundreds of  thousands of  dollars.                                                               
The third bullet  states that access to  commercial fisheries has                                                               
decreased  in  much of  Alaska,  especially  rural Alaska,  since                                                               
1975.    It   was  well  documented  by  the  CFEC   as  well  as                                                               
organizations like the Institute  of Social and Economic Research                                                               
(ISER) that over the last  40 years certain communities in Alaska                                                               
have lost  some of their  opportunities to enter  into fisheries.                                                               
The  fourth bullet  on the  slide indicates  that fishermen  with                                                               
limited  access  to  capital are  increasingly  "left  on  shore"                                                               
because of capital-related barriers.   He said that fishermen who                                                               
received initial  permits were successful, but  those permits did                                                               
not always stay in the  communities when those fishermen retired.                                                               
The  final bullet  on the  slide relates  to the  negative impact                                                               
that barriers  to entry  have had  on rural  coastal communities.                                                               
Mr. Magdanz  stated that is  a result  of the combined  effect of                                                               
the two  increasing trends  he mentioned:   higher cost  of entry                                                               
and loss of permits within communities.                                                                                         
11:20:21 AM                                                                                                                   
MR.  MAGDANZ presented  a  third "Review"  slide  that asked  two                                                               
questions.    The first  question  was,  "Will this  allow  other                                                               
entities  or  individuals  the ability  to  temporarily  transfer                                                               
permits?"   He said the answer  to this question is  a definitive                                                               
no.  He  reiterated that HB 188 would give  fisheries trusts, and                                                               
only  fisheries  trusts,  the  ability  to  temporarily  transfer                                                               
permits.   He  said that  it  would not  interfere with  existing                                                               
emergency transfers, and that no  other entities would be allowed                                                               
to have this temporary transfer arrangement.                                                                                    
MR.  MAGDANZ said  the second  question  on the  third and  final                                                               
"Review"  slide asked,  "Where will  the  money come  from?"   He                                                               
answered  this question  by first  saying that  HB 188  would not                                                               
provide  any  funding  for  fisheries  trusts;  it  merely  would                                                               
authorize their  establishment.  He  said that a group  of people                                                               
in a  region wanting  to establish  a trust  would have  to raise                                                               
money for the purchase of permits on the open market.                                                                           
11:21:14 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS added  that  the reasoning  behind                                                               
not providing money to the trusts  as a "leg-up" was based on the                                                               
idea that  people in  the communities and  regions would  need to                                                               
demonstrate the ability to "bootstrap  themselves" for this to be                                                               
successful.  He  said that HB 188 would create  the mechanism and                                                               
the tool, but it would be up  to the communities to use this tool                                                               
in a  way that it  would work.   He said that  conversations with                                                               
people  suggest that  there is  substantial interest  in pursuing                                                               
this in  some regions.  He  stated that he believes  people would                                                               
be  successful in  "bootstrapping" themselves  and turning  their                                                               
trusts  into  a tool  that  helps  generate economic  opportunity                                                               
within their regions.  He reiterated  that the idea is to provide                                                               
the tool and nothing more.                                                                                                      
MR.  MAGDANZ said  that his  presentation  would now  move on  to                                                               
changes that were made  to HB 188 since it was  last heard by the                                                               
committee.   He  indicated that  he  would start  with the  major                                                               
changes and then  move to some of the minor  but still meaningful                                                               
MR.  MAGDANZ  said that  the  most  important change  present  in                                                               
Version M  of the bill  is the restructuring of  the relationship                                                               
between a fisheries  trust and a fisherman who  received a permit                                                               
from  a  trust.    He  said the  previous  version  of  the  bill                                                               
structured this arrangement  as a lease and  Version M structures                                                               
it as a  temporary transfer.  He said this  was important because                                                               
Version M  is more in  line with  the way CFEC  currently manages                                                               
commercial  fishery permits.   He  said that  temporary transfers                                                               
already  exist  in the  form  of  temporary emergency  transfers;                                                               
therefore,  this change  ensures that  regional fisheries  trusts                                                               
would merely be  doing what is already allowed  under the Limited                                                               
Entry  Act.   He added  that while  the fisheries  trust scenario                                                               
would be  slightly different, the process  would follow precedent                                                               
and existing CFEC  procedure.  He said that  an important element                                                               
of this change  is the provision that CFEC  will review temporary                                                               
transfers  between trusts  and fishermen  and have  the power  to                                                               
approve  or deny  them, as  it currently  does for  emergency and                                                               
permanent  transfers.   He summarized  this  important change  by                                                               
reading the  last line on the  slide as follows:   "These changes                                                               
harmonize the  bill with existing  CFEC practices and  ensure the                                                               
legal status of permits does not change."                                                                                       
11:23:50 AM                                                                                                                   
MR. MAGDANZ  continued to  the next slide,  titled "A  little bit                                                               
more on temporary transfers."   The slide pertains to two issues:                                                               
the time limit  of a temporary transfer and the  possibility of a                                                               
transfer being  revoked.  He  said that he had  already mentioned                                                               
the six-year  limit for  the temporary  permit transfers,  and he                                                               
added that  many trusts would  likely transfer them  for two-four                                                               
years.   Regarding  the question  of  whether a  transfer can  be                                                               
revoked, he said  that this could occur only  in situations where                                                               
a  transferee   violates  fishing  regulations,  fails   to  make                                                               
payments as  agreed upon with  the fisheries trust,  or falsifies                                                               
information  to the  CFEC or  other regulatory  bodies.   He said                                                               
that  other  than  these circumstances,  a  temporary  transferee                                                               
would  hold  his/her   permit  and  have  the   same  rights  and                                                               
privileges to fish as any other permit holder.                                                                                  
11:24:53 AM                                                                                                                   
REPRESENTATIVE NEUMAN  drew attention  to statements made  by Mr.                                                               
Magdanz regarding  the current difficulty  in obtaining  a permit                                                               
and  the reasons  a  temporary permit  acquired  through a  trust                                                               
could be revoked.   He said that  it seemed to him  that it would                                                               
be  logical  for the  commissioner  to  have some  authority  for                                                               
unique circumstances  that might  arise.  He  said that  it's not                                                               
possible to think of everything  in advance, that emergencies can                                                               
occur,  and that  conditions such  as the  ocean environment  can                                                               
11:25:46 AM                                                                                                                   
MR.  MAGDANZ offered  to speak  with Representative  Neuman about                                                               
that matter.   He  added that under  the proposed  legislation, a                                                               
temporary  transferee could  emergency transfer  a permit  in the                                                               
same  way any  other permit  holder currently  can if  injured or                                                               
called into military service.                                                                                                   
11:26:14 AM                                                                                                                   
CHAIR  STUTES asked  whether [under  the proposed  legislation] a                                                               
temporary transferee  could emergency transfer his/her  permit to                                                               
another individual or if the permit  would have to go back to the                                                               
permit bank.                                                                                                                    
MR. MAGDANZ responded to the  Representative Stutes saying that a                                                               
temporary  transferee  does not  have  the  power to  permanently                                                               
transfer a permit.                                                                                                              
CHAIR STUTES clarified that she  was not referring to permanently                                                               
transferring  a permit  but  to a  situation  within the  maximum                                                               
transfer limit of  six years.  She asked if  an individual with a                                                               
permit from the  permit bank, who is suddenly  called to military                                                               
duty, would  have the opportunity  to transfer his/her  permit to                                                               
another fishing individual  or if the permit would  return to the                                                               
permit bank.                                                                                                                    
MR.  MAGDANZ answered  by stating  that the  permit holder  could                                                               
transfer his/her  permit to  another individual.   He  noted that                                                               
this  provision was  still being  developed in  consultation with                                                               
CFEC.  He  elaborated that in the example of  someone called into                                                               
military service after  fishing a transfer permit for  two of its                                                               
three  years,   the  permit  could  be   transferred  to  another                                                               
individual  who  could  fish  the permit  for  the  permit's  one                                                               
remaining year.  He said  the transfer described in this scenario                                                               
would have to be approved by CFEC.                                                                                              
11:27:48 AM                                                                                                                   
REPRESENTATIVE  NEUMAN said  that  he likes  the  fact that  CFEC                                                               
would have  to approve  the transfer  again because  the original                                                               
transferee might  not know  the financial  background of  the new                                                               
permit holder.                                                                                                                  
MR. MAGDANZ presented the next  slide, titled "The other big one:                                                               
Leasing  Criteria."   He  said the  other big  change  to HB  188                                                               
pertains to the  constitutionality of a provision  present in the                                                               
original  version     a  provision  that  would  have  restricted                                                               
transfers  to Alaska  residents.   He said  lawyers disagreed  on                                                               
whether  that restriction  should  be allowed  to  remain in  the                                                               
bill.   It  was decided  to  choose the  most conservative  legal                                                               
option, which  was removal  of the  residency requirement.   This                                                               
decision  eliminates any  federal constitutional  challenges that                                                               
could be brought against HB 188.                                                                                                
11:29:08 AM                                                                                                                   
CHAIR STUTES  asked who would  be eligible for these  permits and                                                               
if there would be any  requirements for prior fishing experience.                                                               
She asked if, for example,  someone could arrive from the Midwest                                                               
and request a permit.                                                                                                           
MR.  MAGDANZ responded  that Sec.  16.44.080,  as proposed  under                                                               
Version M,  on page 26, line  12, would require that  a permittee                                                               
must be  able to participate  actively in  the fishery.   He said                                                               
that  this is  the  same  standard that  CFEC  uses  to judge  if                                                               
someone is  eligible to receive  a transferred permit.   He added                                                               
that  this requirement  would address  the scenario  described by                                                               
Representative Stutes, of someone  arriving from the Midwest with                                                               
no gear, no boat, and no fishing experience.                                                                                    
CHAIR  STUTES suggested  that  Mr. Magdanz  was  stating that  an                                                               
eligible permittee must simply be an able-bodied human being.                                                                   
MR. MAGDANZ  said he thinks  there would be some  discretion from                                                               
the agencies  and the fisheries  trust in their  determination of                                                               
what being able to participate in  the fishery means.  He said he                                                               
cannot say how CFEC currently  interprets that language.  He also                                                               
said  there  is intent  to  add  a  section  that would  allow  a                                                               
fisheries trust  to place additional qualifications  on temporary                                                               
CHAIR  STUTES asked  for confirmation  that the  current language                                                               
would  allow  anyone  to  be   eligible  for  a  transfer  permit                                                               
regardless  of whether  they  have participated  in  any type  of                                                               
11:31:07 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS   said  that  the   Chair  Stutes'                                                               
assessment   was   correct;   however,   it   is   important   to                                                               
differentiate  eligibility from  the  likelihood  of receiving  a                                                               
permit.   He said anyone  with no fishing experience  could apply                                                               
for a  loan from the  Commercial Fishery Revolving Loan  Fund but                                                               
the  likelihood of  them receiving  a loan  was almost  nil.   He                                                               
added that it  would be "financially masochistic"  for someone to                                                               
acquire a fisheries  trust permit, "flail around"  in the fishery                                                               
for  a season,  and still  be required  to pay  the same  fees as                                                               
someone making  an emergency  medical permit  transfer.   He said                                                               
that this would  not be in that person's best  interest.  He also                                                               
said  that the  preference  criteria,  specifically the  "initial                                                               
allocation criteria"  under the Limited Entry  Act, identified in                                                               
the  second portion  of the  current slide,  was oriented  around                                                               
people  who  are  from  coastal communities  and  who  depend  on                                                               
fishing  for  a  livelihood.    He  indicated  that  given  these                                                               
elements  of the  program, the  person  from Iowa  was "going  to                                                               
strike out."                                                                                                                    
CHAIR STUTES said  she appreciated that explanation  and that she                                                               
was simply trying to determine  the parameters for eligibility as                                                               
they currently exist.                                                                                                           
11:32:31 AM                                                                                                                   
REPRESENTATIVE CHENAULT  stated that his  concern was that  a 2.5                                                               
percent cap on the number of  permits may not represent very many                                                               
permits in  some areas.   As an example,  he said he  didn't know                                                               
the  total  number  of  permits available  in  Bristol  Bay,  but                                                               
guessed that  it was  rather large.   He didn't  know if  the 2.5                                                               
percent  was going  to represent  25,  50, or  100 permits  being                                                               
available.  He  said he realized that the trust  was being set up                                                               
to help local communities, increase  the growth of the fleet, and                                                               
encourage younger people  to be involved in  fisheries.  However,                                                               
he  wanted to  point out  that  while HB  188 addresses  concerns                                                               
about the high cost of entry  into fisheries, there are those who                                                               
are  not  concerned  about  the  high costs  and  have  money  to                                                               
purchase a boat or  permit or both.  With that  in mind, he asked                                                               
if  there was  any disadvantage  in structuring  this program  so                                                               
nonresidents would  come here  to use  the state's  resources and                                                               
see a  return on their  efforts.  He said  he was unsure  if this                                                               
was a question  or a statement, but that it  was something he was                                                               
looking at regarding HB  188.  He said he is  aware that there is                                                               
a lot of interest in figuring  how to help rural Alaska residents                                                               
get  into fishing,  and he  has the  same concerns  for the  Cook                                                               
Inlet area  where the fleet is  aging and fewer young  people are                                                               
participating in the fisheries.  He  stated that he does not know                                                               
how to help  these people and if HB 188  is the correct approach.                                                               
He said he has not spoken  with too many fishermen about this but                                                               
wanted more comments or thoughts about the issue.                                                                               
11:35:02 AM                                                                                                                   
MR. MAGDANZ  drew attention back  to the slide titled  "The other                                                               
big one: Leasing  Criteria" and said he would  explain the second                                                               
bulleted point,  which partially  addresses some of  the comments                                                               
raised by Representative Chenault.   He began by reiterating that                                                               
legal concerns  restrict the availability of  fisheries trusts to                                                               
only Alaska residents.   He supported that  statement by pointing                                                               
out   that  legal   provisions,   particularly   in  the   Alaska                                                               
Constitution,  make it  very  clear that  the  state cannot  give                                                               
preference to people based directly  on their place of residence;                                                               
it  cannot let  people from  some communities  access a  resource                                                               
while restricting  people from other  communities.  He  said that                                                               
this is well established in state law.                                                                                          
MR. MAGDANZ said  that when the Alaska  residency restriction was                                                               
removed from  HB 188, constitutionality was  further strengthened                                                               
by reworking the bill's bid  preference criteria.  These proposed                                                               
changes are found in Sec. 16.44.050(c),  on page 24 of Version M.                                                               
He directed the  committee's attention to a bulleted  list on the                                                               
slide, which identifies the new  bid preference criteria that has                                                               
been  incorporated into  Version M.   He  stated that  these were                                                               
based  on court-  and agency-vetted  standards  that other  state                                                               
programs use  or have used  in resource management cases.   These                                                               
criteria would allow fisheries trusts  to prioritize the granting                                                               
of permits to  people who have past ties to  a fishery, few other                                                               
economic opportunities, and a record  of participation in fishery                                                               
management  or  with fishery  organizations  such  as the  United                                                               
Fisherman of Alaska,  Fish and Game Advisory  Committees, and the                                                               
Board  of  Fisheries.    He   reiterated  that  these  preference                                                               
criteria have  been used  in the  past, in  programs such  as the                                                               
Limited  Entry Act,  when permits  were first  allocated, and  in                                                               
ADF&G's  Tier II  subsistence hunting  permits.   He stated  that                                                               
these criteria are utilized to  make sure the competitive bidding                                                               
process provides  a fair playing  field that would  assist people                                                               
who may  have good  access to  capital as well  as those  who may                                                               
11:38:02 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS  told Representative  Chenault that                                                               
the comments he  offered were well received.  He  opined that the                                                               
two bulleted  points on the  slide identify elements of  the bill                                                               
that will ideally  align the direction of the  program to provide                                                               
commercial fishing  opportunity for the  people that both  he and                                                               
Representative  Chenault   know  and   want  to  see   have  that                                                               
opportunity  - not  the "people  scooping up  the resources  from                                                               
elsewhere."   He said that  he is optimistic that  this direction                                                               
can  be  created,  even  while  operating  within  constitutional                                                               
REPRESENTATIVE KREISS-TOMKINS  said that conversations  were held                                                               
with  many young  fishermen  around Alaska  over  the last  three                                                               
years while the  bill was being developed, and that  many of them                                                               
are deck-handing  because they love  commercial fishing  and they                                                               
love hard  work.  He  then restated  that there are  high capital                                                               
costs of entering  into a commercial fishery.  He  added that the                                                               
Commercial Fishing Revolving  Loan Fund has not kept  up with the                                                               
increasing  capital cost  of fishing,  despite recent  efforts by                                                               
the  legislature.   He stated  that the  fisheries trust  program                                                               
will create a needed stepping stone,  because it is a "huge jump"                                                               
for someone who is currently a  deckhand to become a skipper.  He                                                               
added that it is  an "all in"; it is a  high capital fishery; and                                                               
it is a "deep, deep end that you  are diving into."  Based on the                                                               
conversations with  fishermen, he  said that it  would be  a huge                                                               
benefit  to acquire  a fisheries  trust permit  for two  to three                                                               
years, so you could run your  own boat, make some mistakes, learn                                                               
from your mistakes, and save some  money in the process.  He said                                                               
that,  to some  extent, this  is the  "tool" young  fishermen are                                                               
using when  they access emergency medical  transfer permits, even                                                               
though  those permits  were not  designed for  that purpose.   He                                                               
stated that accessing permits through  a fisheries trust would be                                                               
a more  transparent means to  the same  end.  He  analogized this                                                               
situation  to that  of  purchasing  other large  assets.   As  an                                                               
example, he  said that most  people don't transition  from living                                                               
with  their parents  to purchasing  their own  house on  the open                                                               
market.   They usually rent  an apartment for few  years, acquire                                                               
some life  experiences, and save  some money for a  down payment.                                                               
He said  that renting an apartment  is a great stepping  stone to                                                               
becoming a home owner and building equity.                                                                                      
11:41:53 AM                                                                                                                   
MR.  MAGDANZ  directed the  committee's  attention  to the  final                                                               
slide identifying  substantive changes incorporated  into Version                                                               
M of  HB 188.   He explained  while the changes  he was  about to                                                               
show are meaningful,  they are of slightly less  scope than those                                                               
he identified  in the  prior slides.   He  stated that  the first                                                               
bullet on  the slide identifies  the requirement under  Version M                                                               
that fisheries trust boards have  a diversity of experience, with                                                               
at  least  two  board  members having  background  in  commercial                                                               
fishing.   He said this change  was made in response  to feedback                                                               
received from fishermen.                                                                                                        
MR.  MAGDANZ said  that the  second bullet  identifies a  concern                                                               
that an individual  may find it difficult to acquire  a permit in                                                               
a small fishery comprised of as  few as roughly twenty permits if                                                               
a trust  had also  acquired permits  in that  small fishery.   To                                                               
resolve  this  concern,  Version  M  would  restrict  a  regional                                                               
fisheries trust  from acquiring permits  in fisheries  with fewer                                                               
than 40 transferable limited entry permits.                                                                                     
MR.  MAGDANZ said  that the  third bullet  shows that  a regional                                                               
fisheries trust could not hold  quota share in a federal fishery.                                                               
He  also  stated that  it  was  never  intended that  a  regional                                                               
fisheries trust  could acquire  quota share,  but that  Version M                                                               
makes this explicitly clear.  He  noted that the fourth bullet on                                                               
the slide explains  that in the event a  regional fisheries trust                                                               
dissolves or  fails, the permits  held by the trust  would revert                                                               
to CFEC for reissue.                                                                                                            
MR.   MAGDANZ  said   that  the   fifth  bullet   identifies  the                                                               
requirement proposed under Version  M that a temporary transferee                                                               
must  pay all  the taxes  and assessments  that any  other permit                                                               
holder  would be  required  to  pay.   He  pointed  out that  the                                                               
previous version  of the bill inadvertently  exempted people with                                                               
regional fisheries trust permits  from paying some fisheries fees                                                               
and taxes.   He said that the final bullet  on the slide explains                                                               
that  a  regional fisheries  trust  would  have to  receive  fair                                                               
market value for a permit it transfers from its possession.                                                                     
11:44:43 AM                                                                                                                   
REPRESENTATIVE  NEUMAN  offered   his  understanding  that  state                                                               
dollars  would not  be  used to  finance  the regional  fisheries                                                               
trusts.    He   said  some  regional  fisheries   trusts  may  be                                                               
recipients  of a  grant  or  loan, and  if  they  don't meet  the                                                               
conditions  of the  grant or  loan, there  should be  regulations                                                               
requiring the conditions of the grant, loan, or permit be met.                                                                  
MR.  MAGDANZ said  that a  permit  held by  a regional  fisheries                                                               
trust would  be like a  permit held by  an individual in  that it                                                               
cannot be  pledged as security for  a loan or mortgage.   He said                                                               
that this is  a fundamental tenet of existing  limited entry law,                                                               
and "we  are sticking  with that."   He said  that if  a regional                                                               
fisheries  trust  wanted a  loan,  then  it  would have  to  find                                                               
collateral other than the permits it may hold.                                                                                  
REPRESENTATIVE  NEUMAN  said  that  this  was  good  information.                                                               
However, he said  his point was that there should  be side boards                                                               
to ensure the integrity of the  program, so that the program does                                                               
not fail.                                                                                                                       
11:47:35 AM                                                                                                                   
REPRESENTATIVE  CHENAULT asked  about the  costs associated  with                                                               
holding a permit,  specifically, if there is a  yearly charge and                                                               
if costs vary by region around the state.                                                                                       
MR. MAGDANZ said that the  structuring of payment for a temporary                                                               
permit would  be left up  to the  regional fisheries trusts.   He                                                               
added that local control would  allow a regional trust to develop                                                               
methods that  work well  within its  own region.   He said  it is                                                               
likely that in  most cases there would be an  annual fee, because                                                               
the  high cost  of  full  payment up  front  for a  multiple-year                                                               
permit would  defeat the purpose  of the program to  some degree.                                                               
He  also  said  that  regional fisheries  trusts  would  allocate                                                               
permits based on a "preference  competitive bidding process," and                                                               
this process  would define  the price  of a  permit.   Under this                                                               
process,  the   regional  fisheries  trust  would   make  permits                                                               
available,  individuals would  submit bids  for the  permits, and                                                               
the  trust  could  adjust the  bids  with  predetermined  scoring                                                               
criteria.    He  said  that scoring  criteria  would  consist  of                                                               
factors he  mentioned earlier,  such as  the bidder's  history of                                                               
participation in the fishery or his/her economic dependence.                                                                    
11:49:52 AM                                                                                                                   
REPRESENTATIVE CHENAULT stated that he  understood the price of a                                                               
permit would  depend on the  number of  people who apply  for it.                                                               
However, he  was curious if there  might be a minimum  price.  He                                                               
asked, as  an example, if  a person might  pay $1,000 or  if that                                                               
person would pay $20,000.  He  said that he assumed the price was                                                               
closer to $1,000, as the  intent is to encourage participation at                                                               
the entry level.                                                                                                                
MR. MAGDANZ said  the bill does not specify a  minimum bid price.                                                               
He said a best guess at the  minimum bid price would be the price                                                               
people  are currently  willing to  pay for  an emergency  medical                                                               
transfer permit.                                                                                                                
11:50:51 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS added  that  to  some extent,  the                                                               
market  will ultimately  provide the  answer to  the question  of                                                               
permit pricing.   He said that the market  for regional fisheries                                                               
trust  permits  would be  similar  to  the market  for  emergency                                                               
medical transfer permits.   He said the real value  of a regional                                                               
fisheries trust  permit would  be in  the flexibility  it offers.                                                               
He  indicated that  it would  not be  in one's  best interest  to                                                               
acquire a  permit through a  regional fisheries trust if  one has                                                               
the capital  to purchase one  on the  open market.   Purchasing a                                                               
permit  on  the  open  market  rather  than  through  a  regional                                                               
fisheries trust would  be analogous to purchasing  your one's own                                                               
home versus  renting an  apartment.   The purchase  option allows                                                               
equity  to  be   built  for  oneself  rather   than  for  another                                                               
individual  or  entity.    He  reiterated that  the  value  of  a                                                               
regional  fisheries  trust  would  be the  flexibility  it  would                                                               
offer, allowing  certainty and  confidence to  be built  prior to                                                               
making the final investment decision of buying a permit.                                                                        
REPRESENTATIVE CHENAULT  indicated that this was  why some people                                                               
purchased  their own  house after  moving out  of their  parent's                                                               
11:51:58 AM                                                                                                                   
REPRESENTATIVE  EASTMAN  said  he  was supportive  of  making  it                                                               
easier for  new fishermen  to join  the fleet.   He said  that he                                                               
wanted to  take the position  of devil's  advocate and ask  a few                                                               
questions  to make  sure the  committee has  thought this  matter                                                               
through.    He said  he  understood  that  under Version  M,  the                                                               
program would not  create a lease situation.   However, he wanted                                                               
to  know how  a transfer  under Version  M was  different from  a                                                               
lease arrangement,  specifically in situations when  a permit can                                                               
be revoked because fishing regulations  were violated or payments                                                               
were not made.                                                                                                                  
11:52:55 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  said  that  the  answer  to  this                                                               
question  relates to  the issue  of  flexibility.   He said  that                                                               
someone who  has taken  out a  multi-hundred-thousand-dollar loan                                                               
to buy a  permit and a vessel would be  looking at a multi-decade                                                               
term.  He said that prior  to making such a long-term commitment,                                                               
one might  want to build experience  and develop a sense  of what                                                               
it  would be  like  to manage  one's own  crew  using a  regional                                                               
fisheries trust  permit, and  it is for  this reason  that people                                                               
have been pursuing emergency transfer permits.                                                                                  
MR.  MAGDANZ pointed  out there  was one  big difference  between                                                               
leasing under  the previous version  of the bill and  a temporary                                                               
transfer  under Version  M.   Under the  previous version  of the                                                               
bill,  a  regional  fisheries  trust would  set  some  terms  and                                                               
provide  a  permit  subject  to the  statutes,  but  without  any                                                               
further  approval required.   Under  Version  M, the  transaction                                                               
would be conducted  under the existing structure used  by CFEC in                                                               
its management  of permanent  and temporary  transfers.   He said                                                               
that the  proposed regional fisheries  trust program is  based on                                                               
CFEC's emergency transfer provisions, where  if a person does not                                                               
make the  payments, the  person offering the  permit can  take it                                                               
REPRESENTATIVE KREISS-TOMKINS  indicated that  the last  slide in                                                               
the  presentation   strikes  at   the  intent  of   the  proposed                                                               
legislation,  which  is  to create  maximum  access  to  economic                                                               
opportunity,  particularly in  communities  that presently  don't                                                               
have  a lot  of opportunities.   Using  commercial fishing  [as a                                                               
mechanism]  reaches  into  rural communities  that  are  becoming                                                               
increasingly self-sufficient  out of necessity.   The idea  is to                                                               
get  as many  dollars flowing  through the  rural communities  as                                                               
11:56:50 AM                                                                                                                   
CHAIR STUTES said  the sectional analysis for Version  M would be                                                               
heard at a later date.                                                                                                          
11:57:05 AM                                                                                                                   
CHAIR STUTES opened public testimony on HB 188.                                                                                 
ALVIN  OSTERBACK, Mayor,  Aleutians  East  Borough (AEB),  stated                                                               
that  the borough  comprises  6  communities encompassing  15,000                                                               
square  miles.    He  stated  that the  whole  lifestyle  of  the                                                               
residents of  this borough is fishing.   He said that  he started                                                               
as a  commercial fisherman with his  father back in 1958  and has                                                               
been  fishing since  then.   He said  that he  holds two  limited                                                               
entry permits;  a set net  permit and a  seine permit in  Area M.                                                               
He  said  that  he  came  to the  hearing  to  request  that  the                                                               
committee consider allowing  for an additional name  to be listed                                                               
on a limited  entry permit.  He said that  he hoped the committee                                                               
would consider this idea and added  that it has been around for a                                                               
while as "part of the committee's substitute language."                                                                         
MR.  OSTERBACK stated  that the  AEB passed  Resolution 18-23  to                                                               
make this  same request to  the legislature.   He said  King Cove                                                               
also  passed  a resolution  in  support  of  this.   He  said  he                                                               
discussed   this  idea   at   the   Southwest  Alaska   Municipal                                                               
Conference, at the  2016 Alaska Sea Grant  workshop on "Long-term                                                               
Challenges to Alaska's  Salmon and Salmon-Dependent Communities,"                                                               
and the  idea has  been well-received everywhere.   He  said that                                                               
allowing  an  additional name  on  a  permit would  allow  permit                                                               
holders  to   mentor  young  fishermen   and  help   them  become                                                               
established  financially.    It  would  also  help  new  entrants                                                               
establish a work  history in their fishing  career and eventually                                                               
obtain  commercial bank  loans  to purchase  a  boat and  fishing                                                               
gear.    An additional  name  on  a  permit  could also  allow  a                                                               
surviving spouse to continue to  survive from the sale of salmon.                                                               
He  said he  believes that  this concept  could help  address the                                                               
"graying of the fleet" and  potentially solve the outmigration of                                                               
permits, which is a serious dilemma for AEB.                                                                                    
MR. OSTERBACK added  that there have been a lot  of problems with                                                               
alcohol in the  area for quite some time, and  his proposal would                                                               
give young  fishermen hope  to be able  to access  fisheries that                                                               
are  becoming very  expensive.   He  said that  his permits  were                                                               
granted  to  him  during  the initiation  of  the  limited  entry                                                               
program, but  things have  changed since  then.   He said,  "As a                                                               
young person  back then,  we never  looked at  what was  going to                                                               
happen in  the future as we  got older".  Regarding  his request,                                                               
he said he  would "be able to  take a young person,  bring him on                                                               
my boat,  put their  name on  the permit,  get them  started, get                                                               
them a  track record, a history  that we could take  to the bank,                                                               
and he could buy it."                                                                                                           
12:00:23 PM                                                                                                                   
CHAIR STUTES  announced that public  testimony would  remain open                                                               
and HB 188 was held over.                                                                                                       
12:00:46 PM                                                                                                                   
There being no  further business before the  committee, the House                                                               
Special  Committee on  Fisheries meeting  was adjourned  at 12:01                                                               

Document Name Date/Time Subjects
HB188 Sectional Analysis ver M 1.24.18.pdf HFSH 1/25/2018 11:00:00 AM
HB 188
HB188 Sponsor Statement ver M 1.24.18.pdf HFSH 1/25/2018 11:00:00 AM
HB 188
HB188 Summary of Changes ver U-ver M 1.24.18.pdf HFSH 1/25/2018 11:00:00 AM
HB 188
HB188 Sponsor Statement ver M 1.24.18.pdf HFSH 1/25/2018 11:00:00 AM
HB 188
HB188 Draft Proposed Blank CS ver M 1.24.18.pdf HFSH 1/25/2018 11:00:00 AM
HB 188
HB188 Additional Document-Version M PPT 1.25.18.pdf HFSH 1/25/2018 11:00:00 AM
HB 188