02/21/2003 08:33 AM House FSH
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
February 21, 2003
8:33 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Peggy Wilson, Vice Chair
Representative Cheryll Heinze
Representative Pete Kott
Representative Ethan Berkowitz
Representative David Guttenberg
MEMBERS ABSENT
Representative Ralph Samuels
COMMITTEE CALENDAR
HOUSE BILL NO. 22
"An Act relating to commercial fishing permit brokers; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 89
"An Act relating to standards for chilling and delivery of
commercially caught salmon; and providing for an effective
date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 22
SHORT TITLE:COMMERCIAL FISHING PERMIT BROKERS
SPONSOR(S): REPRESENTATIVE(S)WEYHRAUCH
Jrn-Date Jrn-Page Action
01/21/03 0037 (H) PREFILE RELEASED (1/10/03)
01/21/03 0037 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0037 (H) FSH, RES, FIN
02/21/03 (H) FSH AT 8:30 AM CAPITOL 124
BILL: HB 89
SHORT TITLE:FISH HANDLING AND DELIVERY STANDARDS
SPONSOR(S): REPRESENTATIVE(S)STEVENS
Jrn-Date Jrn-Page Action
02/10/03 0169 (H) READ THE FIRST TIME -
REFERRALS
02/10/03 0169 (H) FSH, RES
02/10/03 0169 (H) REFERRED TO FISHERIES
02/12/03 0203 (H) COSPONSOR(S): WOLF
02/21/03 (H) FSH AT 8:30 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE BRUCE WEYHRAUCH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided sponsor statement for HB 22.
JOHN MITCHELL, Owner
Alaska Permit Services
Bellingham, Washington
POSITION STATEMENT: Testified on HB 22, expressing concerns
regarding bonding and reciprocity issues.
BRUCE TOLLACK, Co-Owner
Tidewater Brokerege, Inc.
Petersburg, Alaska
POSITION STATEMENT: Testified on HB 22, expressing concerns
regarding residency and the amount of the bond.
STUART RICKEY, Owner and Operator
Rickey & Associates
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 22.
CHRIS GARCIA
Cook Inlet Fishermen's Fund
Kenai, Alaska
POSITION STATEMENT: Testified on HB 22, suggesting the use of
either an escrow or a trust account; testified in strong
opposition to HB 89.
MARY McDOWELL, Commissioner
Commercial Fisheries Entry Commission (CFEC)
Alaska Department of Fish & Game (ADF&G)
Juneau, Alaska
POSITION STATEMENT: Testified on HB 22, providing information
and answering questions.
KAREN (TAFFY) WELLS
Licensing Project Leader
Commercial Fisheries Entry Commission (CFEC)
Alaska Department of Fish & Game (ADF&G)
Juneau, Alaska
POSITION STATEMENT: Testified on HB 22 and answered questions
pertaining to delays in the permitting process.
RICK URION, Director
Division of Occupational Licensing (DOL)
Department of Community & Economic Development (DCED)
Juneau, Alaska
POSITION STATEMENT: Testified on HB 22, suggesting the use of
either an escrow or trust account.
SENATOR GARY STEVENS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided sponsor statement for HB 89.
CHERYLL SUTTON, Staff
to the Joint Legislative Salmon Industry Task Force
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on HB 89, stating that the bill,
in its current form, is not ready to be enacted as legislation.
CHRISTINE RYAN, Acting Director
Division of Environmental Health
Department of Environmental Conservation (DEC)
POSITION STATEMENT: Testified on HB 89 and questioned the
implementation of enforcement mechanisms.
JAMES SHULWALTER, Commercial Fisherman
Soldotna, Alaska
POSITION STATEMENT: Testified in strong opposition to HB 89.
LAURA FLEMING
Public Relations Director
Alaska Seafood Marketing Institute (ASMI)
Department of Community and Economic Development (DCED)
Juneau, Alaska
POSITION STATEMENT: Provided information pertaining to HB 89.
GREG FISK, Office of Fisheries Development
Fisheries Development Specialist
Division of Community & Business
Department of Community & Economic Development (DCED)
Juneau, Alaska
POSITION STATEMENT: Testified on HB 89, suggesting the
importance of working towards the goal of mandatory chilling.
ACTION NARRATIVE
TAPE 03-9, SIDE A
Number 0001
CHAIR PAUL SEATON called the House Special Committee on
Fisheries meeting to order at 8:33 a.m. Representatives Seaton,
Wilson, Heinze, Kott, and Guttenberg were present at the call to
order. Representative Berkowitz arrived as the meeting was in
progress. Also present were Representatives Weyhrauch and Gary
Stevens.
HB 22-COMMERCIAL FISHING PERMIT BROKERS
CHAIR SEATON announced that the first order of business would be
HOUSE BILL NO. 22, "An Act relating to commercial fishing permit
brokers; and providing for an effective date."
Number 0089
REPRESENTATIVE BRUCE WEYHRAUCH, Alaska State Legislature,
sponsor of HB 22, began his testimony by asking that no action
be taken on the bill at this time but that today's meeting be
used to introduce and bring issues to the committee's attention.
He stated that the bill was introduced in order to address a
problem that occurred in Homer in which a boat broker had stolen
money. He explained the broker's role, saying that fishing
quotas are obtained from the National Marine Fisheries Service
and that the quota is in the form of a certificate that can be
sold to another fisherman. A broker is used to facilitate that
transaction.
REPRESENTATIVE WEYHRAUCH told the committee that the broker in
the Homer area took money from fishermen, put it into an
account, and used it for personal reasons. The fisherman who
wanted to sell the quota didn't get the money for his
transaction because the broker was using the money for her own
purposes. She was caught, found guilty of theft, and sent to
prison; however, in the meantime, fishermen were "out their
money." The original intent of the bill was to use some
mechanism such as having brokers post a bond, so that if
fishermen were wronged by a broker, at least a portion of the
money could be recovered through the use of the bond.
Number 0428
REPRESENTATIVE WEYHRAUCH cautioned that the committee should be
aware that brokers are used in roughly 40 to 55 percent of
federal fish certificate transfers, so it is a fairly important
industry. He said he was unsure and didn't have the information
as to how often brokers were used to facilitate the transfer of
state permits such as limited entry permits. He said it was
important for the committee to realize that almost all brokers
operate ethically and honestly, and that this bill is not an
indictment of the broker industry. Many brokers use trust
accounts, in which money from the person buying the share goes
into a trust account, and the money is thereby treated properly.
He reiterated that this bill is designed to address one severe
problem that harmed fishermen in the Homer area.
Number 0548
REPRESENTATIVE WEYHRAUCH continued that when he talked further
with brokers in the Juneau area, the Division of Occupational
Licensing, and the Commercial Fisheries Entry Commission (CFEC),
issues affecting brokers and agencies became apparent, and he
said he is interested in simplifying the bill so that it won't
be unnecessarily burdensome to those involved in the brokering
business. He reiterated that although HB 22 doesn't address an
industry-wide problem, the focus on a specific broker may be
helpful in shedding light on a weakness within the system,
indicating that perhaps this should be addressed as a public
policy matter.
Number 0600
JOHN MITCHELL, Owner, Alaska Permit Services, testified that he
has been involved with the brokerage business of Alaskan limited
entry permits for over 20 years, and said that he fully supports
the principal concept of the bill, although he remains concerned
that important aspects including bonding and reciprocity issues
be addressed properly. He said that this is a very complicated
business that takes place in an area with cultural concerns,
distribution issues, and language challenges. Events transpire
over a calendar year that contains sensitive deadlines and in
which the documentation must meet the high standards of various
government agencies of authority, he said. Mr. Mitchell stated
that fiduciary duties must be maintained at all times, saying
that his role is subject to a demanding standard of performance,
as required by law.
CHAIR SEATON asked for an explanation of what was meant by
"language issues."
MR. MITCHELL responded that in dealing with permits, one also
deals with a varied public, inclusive of Native Alaskans,
Italians, and people of different ethnic and cultural origins.
CHAIR SEATON asked if Mr. Mitchell dealt with both federal and
state permitting.
MR. MITCHELL replied that he only dealt with state permitting.
Number 0783
REPRESENTATIVE GUTTENBERG asked if brokers were usually involved
with both state and federal permitting or if they more often
addressed one type of permitting or the other.
MR. MITCHELL responded that the majority of brokers combined
state and federal permitting services.
Number 0829
BRUCE TOLLACK, Co-Owner, Tidewater Brokerage, Inc., began his
testimony by commenting that the letter by Bill De Vries of
Alaska Boats & Permits, Inc., included in the committee packet,
was well written. He said that after the incident had occurred
in Homer, he had gone to an insurance agent, assuming that there
would be a problem of lack of trust in the industry, but did not
find that to be a problem. He told the committee that he would
have difficulty providing the equity necessary to post a bond,
and pointed out that established real estate agents only have a
$10,000 bond. He wondered, if HB 22 became regulation, if it
would be applicable to all brokers, resident and non-resident,
or if it would only apply to the four brokers who were Alaskan
residents. He also mentioned that while this pertained to
permit brokers, not to individual fishery quota (IFQ) or vessel
brokers, in reality, most brokers "do a little of everything."
He reiterated that his two main issues were: fairness in
comparison with other industries, and the issue of residency.
He said he doesn't really have a solution to the problem of what
to do when "somebody goes astray" and added that posting a bond,
as has been suggested, may be prohibitive to some brokers who
want to remain in business.
CHAIR SEATON said the committee is looking into the difference
between a bond and utilizing a trust account, and asked for
feedback.
MR. TOLLACK replied that he had absolutely no problem using a
trust account, and considered it to be the only proper method,
adding that it would be very unethical to use a personal
account. He offered that he has a trust account with Wells
Fargo and has had that account since the beginning of his
business, which was eight years ago.
Number 1130
STUART RICKEY, Owner and Operator, Rickey & Associates,
testified that he had been in business since 1977 and said that
his business involves brokering quota shares and permits. He
said he supports HB 22 and hopes to work with Representative
Weyhrauch to further address the scope of the bill.
Number 1180
REPRESENTATIVE WILSON asked for his input regarding the amount
of money involved with bonding.
MR. RICKEY replied that the amount was workable, but was high
compared with others in the brokerage industry. He wondered why
the bond was 10 times the amount of that for a real estate
broker.
CHAIR SEATON asked how Mr. Rickey felt about a requirement for
the use of a trust account rather than putting that money in a
personal account.
MR. RICKEY replied that he, in fact, had a trust account.
Number 1264
CHRIS GARCIA, Cook Inlet Fishermen's Fund, testified that he had
mixed feelings about HB 22. He said that in light of how the
cost of bonding can hurt small businesses, the $50,000 bond
doesn't come close to covering the costs of most of the
transactions that usually take place. He said that the Senate
version of this bill was asking for a $100,000 bond, and that in
his opinion he believed that either an escrow or a trust account
would be the smartest way to handle the situation because of
protecting both the buyer and the seller. He explained that the
bonds could become very prohibitive and that even if a person
went out of business, that bond would need to be maintained for
a certain amount of time.
Number 1375
MARY McDOWELL, Commissioner, Commercial Fisheries Entry
Commission (CFEC), Alaska Department of Fish & Game (ADF&G),
testified that in the 30 years that limited entry has been in
effect in Alaska, this was the first incident that they know of
in which people had lost such money, and said that "certainly,
one time is too many." She wondered whether HB 22 should also
cover vessel brokering, since most brokers are involved with
vessels as well as with permits and quota shares, with the
vessel often being the most valuable piece in the package. She
suggested that the $50,000 bond was a very high amount for
smaller brokers, and that it might be wiser to go with demanding
that anyone in the brokering business in the state use escrow
agents or trust accounts so that the money wasn't available to
one's personal account.
Number 1518
MS. McDOWELL told the committee that CFEC has a regulation in
place that allows for the conducting of hearings and the
suspension of a broker's ability to do business if there is
misconduct. She noted that these actions prevent such a person
from doing transactions, but does not recoup anyone's money.
CHAIR SEATON asked about delays involved in the permitting
process in which the money resides in an interest-bearing,
personal account for quite a while. Utilization of a trust
account might get rid of this propensity for the delaying of
transactions, he said. He asked if there had been many
complaints regarding delays.
Number 1639
KAREN (TAFFY) WELLS, Licensing Project Leader, Commercial
Fisheries Entry Commission (CFEC), Alaska Department of Fish &
Game (ADF&G), said that a broker could submit a transfer and
there could be a delay of 60 days while the notice of intent
becomes effective. Or, she said, a delay could result if there
was a problem with obtaining the necessary information.
MS. McDOWELL suggested that it would be useful to further define
the term "broker" to clarify exactly who would be covered by the
provisions within the bill. She said it would also be useful
for the broker to be required to sign something indicating that
he/she understands the statutes and regulations governing the
transfer of permits and IFQs.
CHAIR SEATON asked if it was within Ms. McDowell's authority to
implement her suggestion.
MS. McDOWELL responded that if it were made mandatory that a
person had this "extra layer of requirements," then it would
probably be useful to have statutory direction.
Number 1814
REPRESENTATIVE KOTT referred to a testifier's earlier comment
regarding fair treatment of in-state versus out-of-state
brokers, and asked how this is currently being handled.
MS. McDOWELL responded that business is currently being done
with approximately one dozen brokers, some handling just a few
transactions a year, and some being major firms. She said she
thought that roughly half were in state, although the out-of-
state firms tend to be the bigger firms. She said her
understanding was that whatever requirements were being
considered in this bill would be requirements pertaining to
conducting business in Alaska, regardless of the broker's home
base. She stated, "We can't discriminate against who is acting
as a broker, just like we can't discriminate, under the
constitution, against who is buying or selling a permit."
REPRESENTATIVE KOTT asked if there was a requirement for a
broker's physical presence to be in Alaska.
MS. McDOWELL responded that this was a paper transaction,
requiring a notarized signature. She said that often the
transactions were between Alaskans, although they may be handled
by a brokerage located in Seattle.
REPRESENTATIVE WILSON asked if any people who do business in
Alaska, even if they live in Seattle, would have to "go by our
rules."
MS. McDOWELL confirmed that she understood this to be so.
Number 1992
RICK URION, Director, Division of Occupational Licensing (DOL),
Department of Community & Economic Development (DCED), suggested
that the bill is currently fairly cumbersome and that there is a
simpler solution, at least for the buying and selling of limited
entry permits, whereas transferring of the federal IFQs might be
more difficult. He said he didn't want to "pass off this
responsibility to Mary McDowell," but that it would be fairly
simple to require that all sales and permits go into either an
escrow or trust account. He said the division would work with
the sponsor and the Department of Law to come up with a solution
that could more readily be adopted.
CHAIR SEATON asked if the bill includes a broad range of
permits, including IFQs.
Number 2050
REPRESENTATIVE WEYHRAUCH responded that the bill was intended to
be broadly applied; if someone is doing business in the state
and is representing people who are fishing in Alaska, and if a
substantial amount of that business involves the use of federal
fishing, then that person would be subject to the restrictions
and provisions contained in the bill. He pointed out that the
broker from the Homer area who stole the money was involved with
taking money relating to federal fishing permits.
CHAIR SEATON clarified that the bill's intent didn't just
pertain to Alaska-issued permits, but covered other permits too.
REPRESENTATIVE WEYHRAUCH agreed, saying this was similar to an
out-of-state corporation's needing to register in Alaska. He
agreed that it might be worthwhile to explore CFEC's and DOL's
comments regarding a required statement to indicate that brokers
understand Alaska's laws and regulations.
REPRESENTATIVE WILSON commented that using a trust account might
be a "simple thing to do" and that it would be wise to make sure
that this gets done.
CHAIR SEATON ascertained that there was no further testimony.
He then announced that HB 22 would be held over.
HB 89-FISH HANDLING AND DELIVERY STANDARDS
CHAIR SEATON announced that the next order of business would be
HOUSE BILL NO. 89, "An Act relating to standards for chilling
and delivery of commercially caught salmon; and providing for an
effective date." [The bill was sponsored by then-Representative
Gary Stevens, who'd been appointed as Senator on February 19.]
Number 2215
SENATOR GARY STEVENS, Alaska State Legislature, speaking as the
sponsor of HB 89, introduced the bill by acknowledging the
problems the salmon industry is facing because of competition
from farmed salmon. He said, to that end, last year the
legislature established the Joint Legislative Salmon Industry
Task Force ("Task Force"), and as the appointed chair of the
quality subcommittee, he has listened to people from around the
state - experts as well as people involved in the industry - and
it has become clear that if there were one single thing to be
done that could improve the quality of the salmon, it would be
chilling the salmon as soon after they were caught as possible.
He said that fish farms chill fish more readily and more
conveniently than is currently being done with wild salmon.
Number 2337
SENATOR GARY STEVENS continued that many improvements have been
made to the handling of fish but there are still problems that
can lead to damaged, bruised, or gaping fish. He explicitly
told the committee "not all the answers are here" in HB 89,
emphasizing that there are a lot of difficulties involved with
mandatory chilling. He referred to the cost and difficulties
accompanying the installation of refrigeration equipment. He
reiterated that the main problems include the cost of mandatory
chilling and the issue of "staging." In addition, he mentioned
other problems such as the possibility that perhaps products
like canned salmon don't need to be chilled.
SENATOR GARY STEVENS told the committee that fishermen wondered
whether going to this great expense of chilling their fish would
result in receiving more money for the fish. He acknowledged
that HB 89 addresses enormous problems and that it involves
adding additional costs to the processing of fish at a time when
the industry is in crisis, the markets are in jeopardy, and the
prices are low. He concluded by saying that in the final
analysis, in order to be competitive with farmed fish, the
product must be the highest quality product it can possibly be
in order that the markets can be retrieved.
Number 2517
REPRESENTATIVE WILSON asked for a definition of "staging."
SENATOR GARY STEVENS replied that as "we move westward" this
process may have to take place over a period of years, or in
stages. To mandate that every delivered fish must be chilled,
as of today, would cause enormous problems. Although chilling
could probably be done in Southeast Alaska and in Kodiak, in
Western Alaska there is less equipment, less infrastructure, and
less access to ice. Staging means recognizing that it's best to
accomplish the goal in stages.
Number 2589
REPRESENTATIVE HEINZE asked if there is currently a standard for
mandatory chilling.
SENATOR GARY STEVENS replied that there is not such a mandatory
standard; however, many processors require chilling in order to
accept the fish. Standards have been established, but there is
not a mandatory requirement.
REPRESENTATIVE HEINZE referred to a video that was watched
several weeks ago that showed salmon being placed into fresh
water and then delivered directly to the processor; this
resulted in the grading going up, perhaps by 80 percent. She
asked what the link was between the icing of fish and the
resultant grading of fish.
Number 2633
SENATOR GARY STEVENS replied that this was the video from the
Chignik Cooperative [meeting of 1/31/03], and confirmed that
from what he had seen, the quality of the product was higher
this year than it has been in years past. He said the Chignik
Cooperative was able to deliver the fish more quickly and also
to deliver it alive; it would be problematic to implement this
procedure throughout Alaska, although it was possible in that
particular location.
REPRESENTATIVE HEINZE asked about the correlation between using
more ice and having a higher grade of fish.
SENATOR GARY STEVENS confirmed that to a certain extent, there's
a direct correlation between chilling and the quality of the end
product, although "you wouldn't want to go too far," he added.
CHAIR SEATON informed the committee that there had been an
increase in quality in fish, not only from the Chignik
Cooperative, but also from the common-property fishery in that
area. He suggested that this was related to the short duration
of the fishery, resulting in the fish being delivered in smaller
batches. He pointed out that there were a number of
complicating factors contributing to the equation's end result.
Number 2743
REPRESENTATIVE GUTTENBERG referred to the goal of producing a
higher quality product and asked, "Why doesn't the market take
care of this?"
SENATOR GARY STEVENS replied that in many places the market has
requirements and will not buy fish unless it has been chilled;
it's a standard that many processors have established. He
referred to a meeting in Seattle with quality control
representatives from different processors who expressed the
ensuing difficulty that would be involved in saying to
fishermen, "If you don't chill your fish, we won't buy it, and
you'll have to go elsewhere." The obvious difficulty would be
that those fishermen might then take their business to a more
available processor.
REPRESENTATIVE GUTTENBERG asked what assurances fishermen might
have that increased quality would result in an increase in
price.
SENATOR GARY STEVENS replied that this question hit upon a key
issue and that there were no assurances. But, he cautioned, if
care wasn't taken to ensure that Alaskan fish were of a high
quality, there would be no assurance of a market continuing in
the future.
Number 2865
CHAIR SEATON commented that one issue was whether the result of
making additional efforts would result not in more money, but in
less money. He said that if a product form, such as canned
fish, was such that the canner could not retrieve any more money
for the product that he is selling, then icing, chilling, and
special handling would result in just bearing additional costs.
He said that in working with product forms such as filleted,
fresh, or frozen fish, [people have found that] chilling offers
a qualitative difference at the wholesale end.
SENATOR GARY STEVENS said there are both short- and long-term
issues to be addressed, that is, looking at this year's fishing
season versus looking ahead to years down the road. He noted
that the high quality standards are now being set by the farmed
fish and asked, "What is going to happen to our industry if we
are not competitive with farmed fish?"
REPRESENTATIVE WILSON commented that the Alaskan product won't
be bought unless it matches the farmed fish product, saying that
although it's not necessarily a win-win situation right now,
down the road it will become so.
TAPE 03-9, SIDE B
Number 2956
CHAIR SEATON offered that he was not sure about this idea of
competing with farmed salmon because consumers buy Alaskan
salmon for reasons such as the flavor or because the fish is
wild and not inoculated. He reiterated that farmed fish have
changed the market, but this doesn't mean that Alaskan red or
silver salmon fillets should necessarily be sold at the same
price that Costco is selling farmed fish.
SENATOR GARY STEVENS offered that what he meant by "competing"
was not to be interpreted as competing at the same price, but as
competing in the marketplace. He said he thought it was
important to recapture a share of the market that's been lost.
He pointed out that the Alaskan salmon are in the best possible
condition and freely arrive on our shores, whereas fish farms
have to breed, raise, feed, and contain the fish until they're
ready to be processed. He said that there are many positive
aspects and qualities to wild Alaskan salmon, such as the high
content of omega-3s [omega-3 fatty acids], being environmentally
friendly, and not being drugged in order to be disease-free.
REPRESENTATIVE HEINZE agreed that the niche would entail
marketing the salmon as wild salmon and also educating the
public as to the antibiotics and other aspects involved in the
processing of farmed fish. She said that this marketing effort,
combined with producing a higher-grade salmon, would be a two-
pronged effort that would afford Alaska an even better shot.
Number 2793
SENATOR GARY STEVENS agreed and said that there's a need for
awareness of what's occurring in the farmed fish market. He
said that today in Juneau, at Costco, there are beautiful farmed
fish fillets, individually frozen in bags, that just need to be
thawed and cooked. He said the market has changed in the last
10 years and that, hopefully, people will pay more money for a
quality wild fish.
REPRESENTATIVE WILSON said she agreed 100 percent, mentioning
that society wants convenient and quick products, but will pay
more for a quality product if it's desired; she emphasized that
it was important for the quality of the product to remain high.
SENATOR GARY STEVENS said the quality subcommittee of the Task
Force thought this issue to be enormously important and wanted
to bring it forward to the legislature to discuss and address
further.
Number 2627
CHAIR SEATON questioned what enforcement mechanism was being
envisioned by the Task Force to ensure that quality standards
would be met.
SENATOR GARY STEVENS replied that he didn't have an answer to
that question.
CHAIR SEATON said that the two options for mandatory chilling
that he could envision would be to either penalize the person by
price or by preventing participation; he said he didn't see
either of these options as being within the structure of what
the legislature would be inclined to do.
SENATOR GARY STEVENS confirmed this as a conundrum, saying that
the Task Force hopes that the legislature could provide
assistance regarding enforcement, should the decision be made to
pass the bill.
Number 2467
CHERYLL SUTTON, Staff to the Joint Legislative Salmon Industry
Task Force, Alaska State Legislature, introduced Phelan Straube
as the staff person assigned to the Quality Subcommittee of the
Task Force. She reiterated that there is clear recognition that
the bill, in its current form, should not be adopted because of
issues that still need to be solved. She reported that the
processing sector had similarly questioned the logistics of
enforcement and that at this point in time the subject has not
been adequately addressed. She said that there is some
confusion relative to mixing [U.S. Food and Drug Administration]
Hazard Analysis and Critical Control Point (HACCP) planning-
process standards with chilling standards, explaining that the
HACCP program is a safety-based program within the Department of
Environmental Conservation (DEC) and is not designed for these
issues; it is a marketing tool in that people ask, "Do you have
a HACCP program in place?" And, of course, now, everyone does
have one in place.
Number 2290
CHRISTINE RYAN, Acting Director, Division of Environmental
Health, Department of Environmental Conservation (DEC), said the
division oversees seafood processing and food safety inspections
for the state. She said the division has similar concerns
regarding how enforcement mechanisms would be encouraged. She
pointed out that the division's focus was on matters of safety,
whereas the issues of quality were more often addressed by the
Alaska Seafood Marketing Institute (ASMI). She explained that
the division's only mechanism of enforcement would be to issue a
ticket or a fine and that at this time, the division doesn't
interact with fishing boats in any way, but does work with the
processors. She questioned the standard for prompt delivery and
wondered how setting this standard for promptness might be
measured.
CHAIR SEATON asked if the division interacted with direct market
vessels.
MS. RYAN confirmed that this was the case.
Number 2141
JAMES SHULWALTER, Commercial Fisherman, testified that he has
been involved with fishing for his entire life and is now semi-
retired and draws social security. He strongly expressed his
opinion that this issue of getting the best quality of fish -
and therefore the best price - should be determined by the
processors and the fishermen rather than the Task Force. He
testified in opposition to HB 89, repeating that it wasn't the
job of the Task Force to make regulations that would interfere
with private business.
Number 2047
CHRIS GARCIA, Cook Inlet Fishermen's Fund, testified in strong
opposition to HB 89. He said the state doesn't need a new
department to enforce a law that doesn't need to be enforced in
the first place, and that it would be very costly to all
involved. He said that if this issue were left up to the
industry, it would be taken care of, pointing out that some
areas in the state already require chilling. He stated that the
industry is already "crippled" and doesn't need additional
restrictions. He added that even with regard to the offering of
loans, the paying back of those loans would add another
unnecessary burden for fishermen. He emphasized that this bill
would help to kill the industry and that the best thing to do
with HB 89 is to "kill this before it becomes a monster" and
before a bigger bureaucracy and budget are created. He said to
accomplish mandatory chilling, some of the vessels would need to
be replaced because necessary modifications would cost more than
the worth of the vessel. He said that the farmed-fish industry
would die on its own if it wasn't being supported by the
government.
CHAIR SEATON repeated that the intent was not to move HB 89
out of committee at this time.
[Elise Hsieh of the Department of Law was available to answer
questions.]
Number 1782
LAURA FLEMING, Public Relations Director, Alaska Seafood
Marketing Institute (ASMI), Department of Community & Economic
Development (DCED), told the committee that last year the board
met, looked at the results of quality surveys - surveys that had
been conducted every five years for the past fifteen years or so
- and acknowledged that voluntary education efforts were not
working. She testified that the quality of the product was not
improving fast enough to remain competitive with the world
market. A Quality Symposium was established, and after this
issue was addressed last spring, a list of recommendations was
forwarded to the ASMI board that was then reviewed this past
September. She said that those quality recommendations were
adopted and could be found in the committee packet. She
explained that ASMI is a marketing agency, not a regulatory
agency, but has recognized that something further must be done
and suggests that all of the standards be adopted.
MS. FLEMING continued that the Task Force reviewed the
recommendations and then selected one item to move forward,
which was "chilling." She encouraged the committee to review
ASMI's "Quality Recommendations" in the committee packet, and
she distributed pictures of fish that demonstrated gaping - a
separation of the tissue - which is a common occurrence
resulting from fish not being properly chilled. In conclusion,
Ms. Fleming said that 25 years ago when she moved to Juneau, the
produce at the market was not of the same quality as today's
produce, and that similarly, today's consumers do not need to
buy fish of a lesser quality for a premium price.
Number 1488
REPRESENTATIVE BERKOWITZ said that although this was being
considered solely as an Alaskan problem, Alaskan salmon are a
large percentage of the entire American salmon production. He
said it seems that the federal government should bear some
responsibility in assisting Alaska in transitioning to a higher
quality product and asked if there were any initiatives through
which the federal government might be in a position to help
Alaskan fishermen to upgrade the quality of the product, either
through loans or otherwise.
MS. FLEMING responded that she believes that the majority of the
federal government's focus is on food safety rather than on a
quality product. However, she said she believed that there are
funds that could potentially be directed to this effort - funds
that pertain to the disastrous salmon market conditions.
REPRESENTATIVE BERKOWITZ stated that this wasn't just an Alaskan
problem, but was an American problem as well, and that if there
was any way to encourage the federal government's involvement,
that should be done because this was too big of a problem for
"us to fix by ourselves."
Number 1464
REPRESENTATIVE WILSON expressed her concern that the offering of
additional loans to fishermen may not be helpful because
currently, there are fisherman who are struggling just to stay
current on their present loans, and that offering them
additional loans might only be contributing to their struggle.
Number 1404
GREG FISK, Fisheries Development Specialist, Office of Fisheries
Development, Division of Community and Business Development,
Department of Community & Economic Development (DCED), commended
Senator Gary Stevens for encapsulating the need for elevating
the quality of Alaskan fish as well as for highlighting the
problems involved with implementation. In response to
Representative Heinze's previous question as to whether there is
a direct link between chilling and quality, he said that there
is actually a quantifiable link. He referred to Bristol Bay as
the state's largest sockeye fishery and said that without any
real changes happening in the handling of fish over the past
decade, the grading of "number one" fish has slid from an
average of above 70 percent to the mid-30 percentile. He
explained that there has not been any actual changes in the
fish, but rather, this is a market response, based on world
standards. He mentioned John Lowrance, a Bristol Bay processor,
who only uses chilled fish and has a grading of "number one"
fish that are in the mid-70s.
Number 1257
MR. FISK continued that beyond the scope of enforcement, a
chilling mandate could assist with setting a focus and achieving
a goal of producing a higher quality fish. He referenced the
codfish industry in the eastern United States in which fish used
to be unloaded with pews, or sticks, that were inserted into the
fish in order to throw them aboard. For years, there were
attempts to eliminate this practice by voluntary standards, but
that didn't work because "habits are hard to break." He said
that now, since it's against the law, nobody pews fish anymore
and the quality of the fish has gone up. He said that setting a
standard for chilling sets a goal that can be worked towards.
He acknowledged that this is a national problem and said that
currently, monies are available, principally through agencies
like the Economic Development Administration (EDA). He said
that identification of this as a major problem could help to
provide the necessary clout to be used in working with EDA to
focus their funding on solving this problem.
REPRESENTATIVE BERKOWITZ expressed his concern that the overall
problem lands disproportionately in different parts of the state
and also according to the differing fisheries.
MR. FISK responded that cost is a big issue and that fortunately
there is no need to go to RSW [refrigerated sea water]. He said
that the cost in areas such as Bristol Bay for small gillnet
vessels for a modern system ranges from $17,000 to $30,000. He
mentioned the slush-bag system, an interesting solution that had
been developed in Homer that has been tried in Bristol Bay and
seems to work very well, noting that vessels can be converted
for as little as $2,000 per boat. He said the Community
Development Quota (CDQ) Program in Bristol Bay is working hard
on this and is trying to convert the local boats so that they
won't be left behind if a mandate like this is put into place.
He referred to ASMI's survey which relates progress that has
been made in chilling, and referenced the Arctic-Yukon-Kuskokwim
Region (AYK), saying that progress in this area was due largely
to the outfitting of skiffs, small vessels, and even setnet
sites with bag systems that allowed for the use of ice - adding
that this process could be done relatively inexpensively.
Number 1027
CHAIR SEATON asked whether there were further questions. He
then said the bill would be held over and the record would
remain open if people wanted to submit anything in writing.
[HB 89 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at
9:50 a.m.
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