Legislature(1995 - 1996)
04/12/1995 08:08 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE April 12, 1995 8:08 a.m. MEMBERS PRESENT Representative Joe Green, Co-Chairman Representative Bill Williams, Co-Chairman Representative Scott Ogan, Vice Chairman Representative Alan Austerman Representative John Davies Representative Pete Kott Representative Irene Nicholia MEMBERS ABSENT Representative Ramona Barnes Representative Eileen MacLean COMMITTEE CALENDAR SB 93: "An Act relating to the disposal of state land along the Dalton Highway; and providing for an effective date." HCSSB 93 MOVED OUT OF COMMITTEE HB 258: "An Act relating to compensation for agents who sell licenses and tags for the Department of Fish and Game." HEARD AND HELD SB 3: "An Act relating to an antitrust exemption for persons engaged in the fishing industry." SB 3 MOVED OUT OF COMMITTEE WITNESS REGISTER RON SWANSON, Director Division of Land Department of Natural Resources 3601 C Street, Suite 1122 Anchorage, AK 99503 Phone: 762-2692 POSITION STATEMENT: Answered questions regarding SB 93 TERESA SAGER, Legislative Assistant Senator Mike Miller Alaska State Legislature State Capitol, Room 125 Juneau, AK 99801 Phone: 465-4976 POSITION STATEMENT: Answered questions regarding SB 93 SAM KITO, Legislative Liaison Department of Transportation & Public Facilities 3132 Channel Drive Juneau, AK 99801 Phone: 465-3904 POSITION STATEMENT: Answered questions regarding SB 93 REPRESENTATIVE CON BUNDE Alaska State Legislature State Capitol, Room 108 Juneau, AK 99801 Phone: 465-4843 POSITION STATEMENT: Prime Sponsor HB 258 GERON BRUCE, Legislative Liaison Alaska Department of Fish and Game P.O. Box 25526 Juneau, AK 99811-5526 Phone: 465-4100 POSITION STATEMENT: Supported HB 258 and answered questions regarding HB 258 SENATOR JIM DUNCAN Alaska State Legislature State Capitol, Room 119 Juneau, AK 99801 Phone: 465-4766 POSITION STATEMENT: Prime Sponsor SB 3 BRUCE SCHACTLER, Representative Area K Seiners Association P.O. Box 2254 Kodiak, AK 99615 Phone: 486-4686 POSITION STATEMENT: Supported SB 3 KRIS NOROSZ, Executive Director Southeast Alaska Seiners Association Petersburg, AK 99833 Phone: 772-3520 POSITION STATEMENT: Supported SB 3 SCOTT MCALLISTER, Representative Southeast Alaska Seiners Association Juneau, AK Phone: 463-5831 POSITION STATEMENT: Supported SB 3 DEAN PADDOCK, Representative Bristol Bay Driftnetters Association P.O. Box 21951 Juneau, AK 99802 Phone: 463-4970 POSITION STATEMENT: Supported SB 3 DWIGHT PERKINS, Special Assistant Office of the Commissioner Department of Labor P.O. Box 21149 Juneau, AK 99802 Phone: 465-2700 POSITION STATEMENT: Answered questions regarding SB 3 JERRY MCCUNE, President United Fishermen of Alaska 211 Fourth Street, No. 112 Juneau, AK 99801 Phone: 586-2820 POSITION STATEMENT: Supported SB 3 DONNA PARKER, Fisheries Specialist Department of Commerce & Economic Development P.O. Box 110804 Juneau, AK 99811 Phone: 465-5464 POSITION STATEMENT: Supported SB 3 and answered questions regarding SB 3 PREVIOUS ACTION BILL: SB 93 SHORT TITLE: DISPOSAL OF LAND ALONG THE DALTON HWY SPONSOR(S): SENATOR(S) MILLER,Green,Sharp; REPRESENTATIVE(S) James,Kott JRN-DATE JRN-PG ACTION 02/21/95 350 (S) READ THE FIRST TIME - REFERRAL(S) 02/21/95 350 (S) RES, FIN 02/23/95 386 (S) COSPONSOR(S): GREEN 02/27/95 (S) RES AT 03:30 PM BUTROVICH RM 205 02/27/95 (S) MINUTE(RES) 02/28/95 418 (S) RES RPT CS 4DP 1NR SAME TITLE 02/28/95 418 (S) ZERO FISCAL NOTE (DNR #1) 03/15/95 617 (S) FIN RPT 3DP 2NR (RES)CS 03/15/95 618 (S) PREVIOUS ZERO FN (DNR #1) 03/15/95 (S) FIN AT 09:00 AM SENATE FINANCE 532 03/15/95 (S) MINUTE(FIN) 03/16/95 (S) RLS AT 12:00 PM FAHRENKAMP ROOM 203 03/16/95 (S) MINUTE(RLS) 03/20/95 697 (S) RULES TO CALENDAR 3/20/95 03/20/95 704 (S) READ THE SECOND TIME 03/20/95 704 (S) RES CS ADOPTED UNAN CONSENT 03/20/95 704 (S) ADVANCED TO THIRD READING UNAN CONSENT 03/20/95 704 (S) READ THE THIRD TIME CSSB 93(RES) 03/20/95 705 (S) PASSED Y12 N6 E2 03/20/95 705 (S) EFFECTIVE DATE PASSED Y18 N- E2 03/21/95 726 (S) RESCINDED ACTION IN PASSING UNAN CONS 03/21/95 726 (S) BEFORE THE SENATE IN THIRD READING 03/21/95 726 (S) RETURN TO SECOND FOR AM 1 UNAN CONSENT 03/21/95 726 (S) AM NO 1 FAILED Y6 N12 E2 03/21/95 727 (S) AUTOMATICALLY IN THIRD READING 03/21/95 727 (S) PASSED Y14 N4 E2 03/21/95 728 (S) EFFECTIVE DATE FAILED Y12 N6 E2 03/21/95 728 (S) RESCINDED ACTION FLG TO ADOPT EFD UNAN C 03/21/95 728 (S) EFFECTIVE DATE PASSED Y16 N2 E2 03/21/95 729 (S) TRANSMITTED TO (H) 03/22/95 833 (H) READ THE FIRST TIME - REFERRAL(S) 03/22/95 833 (H) RESOURCES, FINANCE 04/03/95 1009 (H) CROSS SPONSOR(S): JAMES 04/07/95 (H) RES AT 08:00 AM CAPITOL 124 04/10/95 (H) MINUTE(RES) 04/11/95 1270 (H) CROSS SPONSOR(S): KOTT 04/12/95 (H) RES AT 08:00 AM CAPITOL 124 BILL: HB 258 SHORT TITLE: HUNTING/FISH LICENSE VENDOR COMPENSATION SPONSOR(S): REPRESENTATIVE(S) BUNDE JRN-DATE JRN-PG ACTION 03/15/95 743 (H) READ THE FIRST TIME - REFERRAL(S) 03/15/95 743 (H) FISHERIES, RESOURCES, FINANCE 03/20/95 823 (H) FSH REFERRAL WAIVED 04/07/95 (H) RES AT 08:00 AM CAPITOL 124 04/12/95 (H) RES AT 08:00 AM CAPITOL 124 BILL: SB 3 SHORT TITLE: ANTITRUST EXEMPTION FOR FISHERMEN SPONSOR(S): SENATOR(S) DUNCAN, Zharoff, Hoffman, Taylor, Halford, Lincoln, Pearce, Donley, Salo, Leman; REPRESENTATIVE(S) Ivan, Grussendorf JRN-DATE JRN-PG ACTION 01/06/95 13 (S) PREFILE RELEASED - 1/6/95 01/16/95 13 (S) READ THE FIRST TIME - REFERRAL(S) 01/16/95 13 (S) RES, JUD 01/17/95 35 (S) COSPONSOR: ZHAROFF 01/25/95 (S) RES AT 03:30 PM BUTROVICH RM 205 01/25/95 (S) MINUTE(RES) 01/27/95 (S) RES AT 03:30 PM BUTROVICH RM 205 01/27/95 (S) MINUTE(RES) 01/31/95 (S) FIN AT 07:00 AM SENATE FINANCE 532 02/01/95 133 (S) COSPONSOR: HOFFMAN 02/03/95 (S) RES AT 03:30 PM BUTROVICH RM 205 02/03/95 (S) MINUTE(RES) 02/05/95 (S) FIN AT 07:00 AM SENATE FINANCE 532 02/06/95 180 (S) RES RPT 5DP 02/06/95 180 (S) ZERO FISCAL NOTE (LABOR #1) 02/22/95 (S) JUD AT 01:30 PM BELTZ ROOM 211 02/27/95 (S) JUD AT 01:30 PM BELTZ ROOM 211 02/27/95 (S) MINUTE(JUD) 02/28/95 417 (S) JUD RPT 3DP 2NR 02/28/95 417 (S) ZERO FN (LABOR #1) 02/28/95 425 (S) COSPONSOR(S): TAYLOR 03/02/95 (S) RLS AT 11:25 AM FAHRENKAMP RM 203 03/02/95 (S) MINUTE(RLS) 03/07/95 516 (S) RULES TO CALENDAR 3/7/95 03/07/95 521 (S) READ THE SECOND TIME 03/07/95 522 (S) COSPONSOR(S): HALFORD, LINCOLN, PEARCE, 03/07/95 522 (S) DONLEY, SALO, LEMAN 03/07/95 521 (S) ADVANCED TO THIRD READING UNAN CONSENT 03/07/95 522 (S) READ THE THIRD TIME SB 3 03/07/95 522 (S) PASSED Y18 E2 03/07/95 525 (S) TRANSMITTED TO (H) 03/08/95 632 (H) READ THE FIRST TIME - REFERRAL(S) 03/08/95 632 (H) FISHERIES, RESOURCES, JUDICIARY 03/08/95 666 (H) CROSS SPONSOR(S): GRUSSENDORF, IVAN 03/20/95 (H) FSH AT 05:00 PM CAPITOL 124 03/20/95 (H) MINUTE(FSH) 03/22/95 851 (H) FSH RPT 2DP 1NR 03/22/95 851 (H) DP: ELTON, MOSES 03/22/95 851 (H) NR: AUSTERMAN 03/22/95 851 (H) SENATE ZERO FISCAL NOTE (LABOR) 2/6/95 04/12/95 (H) RES AT 08:00 AM CAPITOL 124 ACTION NARRATIVE TAPE 95-49, SIDE A Number 000 The House Resources Committee was called to order by Co-Chairman Green at 8:08 a.m. Members present at the call to order were Representatives Green, Williams, Ogan, Austerman, and Kott. Members absent were Representatives Barnes, Davies, MacLean, and Nicholia. SB 93 - DISPOSAL OF LAND ALONG THE DALTON HIGHWAY CO-CHAIRMAN JOE GREEN noted at the end of the last hearing on SB 93 there were concerns expressed. He recalled the question was asked if there is anything which can be done in the conveyance for priority use or is that an encumbrance the department cannot convey when conveying to a Native corporation. He wondered if there was any merit in doing that so in the future, if Yukon Pacific came across some land conveyed between now and the time they are ready to take ownership of the land, the construction of a pipeline would not be impeded. RON SWANSON, DIRECTOR, DIVISION OF LAND, DEPARTMENT OF NATURAL RESOURCES (DNR), replied for any lease the department issues, the department could do that with a stipulation but land conveyed to the borough would be unencumbered land and the department could not do that. He said the desire is the department would deal with that provision before the land is conveyed to the borough and if they would accept it with an encumbrance, that would be fine but he did not suspect they would. REPRESENTATIVE SCOTT OGAN asked if the right-of-ways are in place for the natural gas pipeline. MR. SWANSON stated the application is in place but the right-of-way is not in place. REPRESENTATIVE OGAN asked if there is anything in SB 93 which would impede Yukon Pacific's ability to build a pipeline. MR. SWANSON replied no. CO-CHAIRMAN GREEN noted for the record that Representative DAVIES had joined the committee. Number 096 REPRESENTATIVE JOHN DAVIES said he had raised concerns at the last hearing on SB 93 about being realistic. He noted along with opening the Dalton Highway and the opportunities which may be provided, there are responsibilities the state has. He questions how the state's declining revenues are going to cover the costs of providing for those responsibilities. He thought this might be one instance where a toll should be considered and the simplest way to do that is to establish a one-way toll on the E.L. Patton Bridge at the Yukon River. REPRESENTATIVE DAVIES noted the Department of Transportation (DOT) has taken time to consider a toll. He said he also discovered that the department does have, in statute, the authority to impose tolls on any highway in the state of Alaska. He stated this is such a unique situation--the costs are large and the difficulty of maintenance with the remoteness of the area are going to be a significant drain on the general fund of the state, especially if some sort of additional revenue source, relating to the operation, is not considered. He said in reviewing DOT's materials, he noted the department has estimated a high cost for implementing a toll. REPRESENTATIVE DAVIES made a MOTION to AMEND CSSB 93(RES) on page 1, line 1, after "Highway": insert "and to a toll for use of the bridge across the Yukon River". On page 4, after line 12: insert new bill sections to read: "*Sec. 2. AS 19.40 is amended by adding a new section to read: Sec. 19.40.220. TOLL. The commissioner shall establish by regulation a toll for use of the E.L. Patton Bridge across the Yukon River at the southern terminus of the highway. *Sec. 3. AS 19.40.290 is amended to read: Sec. 19.40.290. DEFINITIONS. In this chapter, (1) "department" means the Department of Transportation and Public Facilities; (2) "highway" means the secondary highway from the southern terminus of the E.L. Patton Bridge across the Yukon River to the Arctic Ocean." Renumber the following bill section accordingly. REPRESENTATIVE OGAN OBJECTED for discussion purposes. REPRESENTATIVE DAVIES said he is not interested in a toll whose only purpose is to pay for the collection of the toll. He hoped the department could consider an automated means of collecting tolls, which would reduce administrative costs considerably over existing estimates. REPRESENTATIVE ALAN AUSTERMAN expressed concern about how the department would handle the proposed toll. He noted the majority use of the highway is commercial use. He wondered if there would be a higher fee for trucks. He also asked if traffic counts had been done to determine usage of the highway and could the costs be determined based on that count. REPRESENTATIVE DAVIES replied the department does have traffic counts. He said with an assumption the department would impose a toll based on a linear number based on the number of axles, the estimate is the toll would be $20 for a passenger vehicle and $50 for a truck. CO-CHAIRMAN BILL WILLIAMS asked if the sponsor supports the amendment. TERESA SAGER, LEGISLATIVE ASSISTANT, SENATOR MIKE MILLER, PRIME SPONSOR, stated Senator Miller does not support the amendment. He mentioned the impact a toll would have on industry as well as the private traveling public. Senator Miller wanted the committee to consider the impact of allowing the commissioner to establish the toll through regulation and to also consider whether or not this amendment would fit within the title of the bill. REPRESENTATIVE DAVIES said the amendment would amend the title of the bill. CO-CHAIRMAN GREEN noted it had been brought to his attention that an amendment to a bill introduced in the other house is not in order if the amendment requires a change in the title of the bill. SAM KITO, LEGISLATIVE LIAISON, DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES, stated the department already has the statutory authority to put in place regulations for imposing a toll at the bridge or on a highway. He noted the department has reviewed that option extensively and it is something the commissioner may take another look at. CO-CHAIRMAN GREEN said his concern is that if the use of the highway is currently commercial and Alyeska has been taking care of activities along the road now, there could be a significant impact if a toll is charged every time Alyeska crosses the bridge. MR. KITO stated that was another issue brought up in the study. He noted the department did sign an agreement with Alyeska that the department will not charge them for the use of the road. He said the department might be able to collect from noncommercial users only. Number 278 CO-CHAIRMAN GREEN asked if the department has an estimate on the number of noncommercial users of the road. He wondered if there is enough traffic to offset the costs needed to administer a toll gate. MR. KITO replied in the study the department did, the costs would be taken care of by the toll for the Yukon River Bridge. He said 70 percent of the revenue generated would go to pay for the administrative costs of the program. REPRESENTATIVE OGAN clarified that Alyeska Pipeline and their subcontractors or people servicing the pipeline would not be required to pay a toll. MR. KITO said that is one of the interpretations of the agreement the department has with Alyeska. REPRESENTATIVE AUSTERMAN asked what kind of agreement does the department have with Alyeska. He noted the road was put in to service the North Slope and now it is a state road, with the state maintaining it. He asked if the state runs graders up and down the road. MR. KITO explained the road was built with some participation of federal highway funding. He said there was an agreement that when the pipeline was open to service, the road would be turned over to the state and the state would be responsible for maintenance of the road for the term of the usage of the pipeline. He noted an Attorney General Opinion from 1976 reviewed the possibilities of a full closure of the road once the pipeline had been built, and a full opening once the pipeline had been built. The decision was made in 1978 to go with a regulatory restriction on the use of the road. MR. KITO said from 1978 until 1990 the Dalton Highway was a permitted road. He reiterated the state has responsibility for the road and the road has federal funding. He stated as long as the road is open, the state can put federal money into repairing it. He noted the road was legislatively opened to Dietrich camp in 1991 and was only closed from Dietrich camp up to Prudhoe Bay. Number 329 REPRESENTATIVE DAVIES clarified the agreement provided that the state not impose a toll on the use of the road. MR. KITO said the toll was not to be assessed against Alyeska Pipeline as a user of the road. REPRESENTATIVE DAVIES stressed that agreement needs to be honored in any regulations that might be adopted. (Representative NICHOLIA joined the committee.) REPRESENTATIVE AUSTERMAN asked if the Chairman was ruling the amendment out of order. CO-CHAIRMAN GREEN said he wanted to get as much discussion on the amendment as possible, so there would be a record of the discussion should the subject come up again. REPRESENTATIVE OGAN clarified that 70 percent of the tolls would be absorbed in administrative costs. He wondered what kind of tolls would be charged. He also questioned how much revenue would be generated above and beyond administrative costs. MR. KITO replied if the toll is only at the bridge, the tolls collected would only service the bridge. He reiterated 70 percent of the tolls collected would go to administrative costs and 30 percent would go to maintenance of the bridge. He added that because of the department's arrangement with the federal highway administration and because of the way the department's regulations are set up, the department would not be able to use any of the toll money for public safety or emergency services until the department fulfilled its requirement to maintain the bridge. He said the same situation would occur with a toll on the highway itself. Number 378 CO-CHAIRMAN GREEN asked what the toll amount would be. MR. KITO replied the recommended toll in the study completed one and one-half years ago was $20 for passenger vehicles and $40-$50 for truck traffic not part of the Alyeska group. REPRESENTATIVE PETE KOTT stated that depending on the amount of traffic crossing the Yukon River, the toll could increase or decrease. He asked if someone crossed the bridge and went to Old Man versus going up to Prudhoe Bay, would the toll be the same. MR. KITO responded the toll would be the same providing the toll was imposed for the Yukon River Bridge, as the toll would be solely for that facility and not the entire road. Therefore, anyone crossing the bridge would be paying for the use of just the bridge. REPRESENTATIVE KOTT asked if the receipts generated by the toll would go into the general fund. MR. KITO stated the receipts would go into the general fund and the department would be responsible for administering the toll, which would come out of the departmental budget. REPRESENTATIVE KOTT felt the recommended tolls are too high for crossing a bridge. He said he would much rather see a toll at the Canadian/Alaskan border, thereby capturing every individual coming into the state at a much reduced rate. Number 421 CO-CHAIRMAN WILLIAMS felt the committee is discussing something that really cannot be dealt with in the committee. He requested the Chairman to rule the amendment out of order. CO-CHAIRMAN GREEN reiterated the reason he was taking input on the amendment was to establish a record. He noted Uniform Rule 24 (d) says the amendment is out of order. He requested the maker of the amendment to withdraw it. REPRESENTATIVE DAVIES WITHDREW his MOTION. REPRESENTATIVE AUSTERMAN made a MOTION to MOVE HCSSB 93 as amended, with attached fiscal note, out of committee with individual recommendations. REPRESENTATIVE DAVIES OBJECTED for the purpose of discussion. REPRESENTATIVE DAVIES wondered if the committee would consider a letter of intent requesting the commissioner to continue his consideration of revenue generation as a result of the highway opening. REPRESENTATIVE AUSTERMAN said he is a strong believer in user fees but putting the burden of the toll on the individual user rather than on the full use of the road would be inappropriate. He stated if the agreement was not in place allowing industry to be exempt from tolls, he would probably agree with a toll. REPRESENTATIVE DAVIES WITHDREW his OBJECTION. CO-CHAIRMAN GREEN asked if there were any other objections. Hearing none, the MOTION PASSED. HB 258 - HUNTING/FISH LICENSE VENDOR COMPENSATION Number 484 REPRESENTATIVE CON BUNDE, PRIME SPONSOR, stated the purpose of HB 258 is to place a cap on the amount of compensation vendors receive for selling hunting, sport fishing, trapping licenses and tags. Currently, the state of Alaska compensates vendors by allowing them to retain 5 percent of the fee charged for each hunting and fishing license or tag, plus additional compensation at a later date. He noted the additional compensation received by the vendor amounts to $50 per year or $1 per tag or license, whichever is greater. REPRESENTATIVE BUNDE told committee members HB 258 limits vendor compensation to $10,000 per year. The result of the cap will be a Fish and Game fund savings of $312,104 per year. He said the new cap will, in varying degrees, affect only 4 percent of the vendors throughout the state. The vendors will lose some of their state subsidy, but will retain the ability to draw business by continued sales of licenses and tags. He stressed HB 258 saves state money while allowing vendors to recover their actual expenses. Additionally, vendors may continue to sell fish and game licenses both as a service and as an item that will increase customer traffic in their store. He urged committee members to pass HB 258. REPRESENTATIVE KOTT declared a conflict of interest as his wife works for the number one vendor in the state. He said he will abstain from voting on the bill. REPRESENTATIVE BUNDE noted he had worked for a sporting goods store and written licenses in the past. He said in the summer he currently works for a company that sells many licenses, particularly to nonresidents and noted the company would probably lose approximately $1,000 a year in compensation through HB 258. Number 540 REPRESENTATIVE AUSTERMAN expressed opposition to HB 258. He agreed that selling licenses generates traffic into a store, but also generates a headache due to employees having to take extra time to perform the service. He added that selling licenses does generate more money for the stores but also takes the burden off the Alaska Department of Fish and Game (ADF&G). He wondered if some stores would quit offering the service if they were on the borderline of being capped. CO-CHAIRMAN GREEN asked if HB 258 passed and a person who always got his license at a particular store arrived at the store after the cap has been reached and has to go somewhere else, will this create havoc with the person who is planning to go fishing at 6:00 p.m. and has to go somewhere else. He wondered if a store will stop issuing licenses after the cap is reached. Number 570 GERON BRUCE, LEGISLATIVE LIAISON, ADF&G, stated a store would continue to sell licenses, regardless of whether or not their compensation is capped. He said he cannot imagine a store only selling licenses up to the $10,000 cap. CO-CHAIRMAN GREEN noted that some vendors would be selling 80 percent of their licenses with no compensation. He wondered if those stores would continue to provide the service, especially convenience type stores that stay open later. REPRESENTATIVE BUNDE stated the cap applies to each vendor, not a corporation, so each store could sell up to the $10,000 cap. He urged committee members to think about the competitive nature of the retail business and how important the service aspect is. He noted in Representative Green's scenario where a store sells licenses and suddenly does not sell them, he felt the adverse customer reaction would not be something the store would be inclined to generate. CO-CHAIRMAN GREEN noted the fiscal note indicates with capping the compensation, the vendors will continue to sell licenses because the fee that would have been paid, will not be paid and will come back to ADF&G. Number 615 REPRESENTATIVE AUSTERMAN felt HB 258 asks 4 percent of the vendors to supplement ADF&G's budget. He did not know why 4 percent of the vendors in the state were being asked to supplement ADF&G's budget, when the remaining vendors were not. REPRESENTATIVE BUNDE felt the volume of the demand for licenses will continue and people will continue to go where they can get the service. He said that foot traffic generates a lot of income for retail outlets. He asked why is the state of Alaska subsidizing certain retail outlets to a much higher level than what it is going to cost them to write the licenses and not subsidizing the others. He noted it takes about one minute to write a license. He added there is some record keeping involved which does take time. He pointed out that an employee spends his other 59 minutes doing store work and stores do not hire people to write licenses. REPRESENTATIVE DAVIES said he is puzzled by what the purpose is of HB 258. He asked if the purpose is to raise money for ADF&G or is it to beat 4 percent of the vendors over the head. He assumed the purpose is to raise money and if that is true, it seems like there are two other options which could raise equivalent amounts of money and would be more fair. The first is to uniformly decrease the rate of compensation for all vendors. The other option is to add 25 cents to each license which would raise the $300,000. He reiterated there are other ways to accomplish the desired goal. Number 669 REPRESENTATIVE BUNDE stated there are two purposes for HB 258. The first is to allow ADF&G to have more money but the overriding purpose is to reduce the state subsidy. He stressed it does not cost $35,000 for the number one vendor to write licenses. He added there is also an economy of scale involved. The mom and pop stores that only write a few hundred dollars worth of licenses per year would be unfairly impacted by reducing everyone's compensation. REPRESENTATIVE OGAN thought it takes more than one minute to complete a license. He said a store will make a lot less money than if that same clerk was handling a transaction on a retail sale. He noted the state just recently raised license fees a couple of years ago. He felt the agreement between the public sector and private sector and having the private sector help the state is good. TAPE 95-49, SIDE B Number 000 REPRESENTATIVE BUNDE said most people fill out their own licenses. He felt it is not a complicated process. He stated it is not his desire to penalize private enterprise, as they deserve their opportunity but he is not sure he wants to continue subsidizing them with state money. REPRESENTATIVE KOTT asked Mr. Bruce how long had it been since the state implemented the 5 percent compensation. MR. BRUCE replied he was not sure but said it had been there for quite some time. REPRESENTATIVE KOTT noted the 5 percent is not something which was recently done and he assumed the costs when it was implemented were much lower than they are today. He said if the state is looking at privatizing many aspects of government, it is a bad message to send that yes the state wants an entity to sell a license, compensating that entity a dollar but two years from now the state may only compensate that entity 25 cents. He stressed it takes more than one minute to complete a license. He noted his wife has said she wished her store did not even issue licenses because they are a pain. Number 075 REPRESENTATIVE BUNDE stated if it was not important to provide the service, most stores would not do it. He questioned whether or not the state has to continue to subsidize the vendors at the current level for them to provide the service. He said many of the larger vendors would write licenses at no compensation just to have the traffic. CO-CHAIRMAN GREEN wondered if Representative Bunde is using the word subsidy differently for the first $10,000 and not after that point. REPRESENTATIVE BUNDE said a private entity is not expected to subsidize the state, but rather it should be a wash. He stated he had done research and had looked at capping the compensation at $5,000 but that did not seem fair. He noted it costs between $8,000 and $11,000 to write licenses and he decided that a $10,000 cap seemed like a fair compensation for the average time a vendor would spend writing licenses. REPRESENTATIVE DAVIES stated the sponsor is focusing on the fact it does not cost as much to write licenses or that vendors are compensated in other ways. He said if that is the case, the committee should be more even-handed about reducing the benefit. He added if 13,000 unit sales is compared to a total compensation of $35,000, that is $3.00 a unit for the processing of a single license. Most of the estimates he has seen for processing a single piece of paper is closer to $10. He felt the vendors are already subsidizing the state. He pointed out there is no evidence that there is a gross over-compensation going on which needs to be reduced. REPRESENTATIVE KOTT clarified that Representative Davies feels his second approach, raising license fees by a small amount, would be more appropriate since the goal is to raise more money for ADF&G. Number 148 MR. BRUCE said there is an advantage to increasing revenues to the Fish and Game fund with HB 258. He felt Representative Bunde has an argument about the efficiency involved and whether or not there is a subsidy occurring to the larger vendors. To answer that question definitely, some sort of analysis would need to be done to determine the actual cost of issuing a license. He noted that the person issuing the license is the one who does the most work filling out the license. MR. BRUCE stated the department does have a request in the form of an amendment to HB 258 having to do with the effective date. He said it would be much more orderly for any transition dealing with licenses to occur at the beginning of the calendar year because the department's license contracts are signed on a calendar year, the stock is issued on a calendar year, etc. He told committee members the department would like to see an effective date on HB 258 that would be January 1 of the year it was enacted. REPRESENTATIVE BUNDE noted it was not long ago the licenses in Alaska were doubled and he encouraged committee members to talk with constituents before suggesting an increase in license fees. He said in his personal opinion, licenses in Alaska are a bargain as compared to other states. REPRESENTATIVE KOTT stated he has talked to a number of his constituents and they have all suggested an increase in nonresident tags. Number 212 REPRESENTATIVE IRENE NICHOLIA stated HB 258 would only provide a one-time savings and would only reduce the number of vendors. She felt vendors would not take employees time to complete licenses as it would be a loss to the value of what their employees are there for. She said ADF&G would probably have to install an office to sell licenses. REPRESENTATIVE OGAN observed the committee has a problem with capping the compensation at $10,000. He suggested that some sort of sliding scale might be more appropriate and more palatable. REPRESENTATIVE BUNDE stated vendors below $10,000 do not get $10,000 but only get their normal compensation per unit up to $10,000. He said if the committee prefers, he will do more research and come back to the committee with a proposed committee substitute. REPRESENTATIVE KOTT said his concern is not a sliding scale but rather the fact there is a processing fee involved. If that fee is three dollars, that is a bargain for the state. He stated he would like to hear testimony or see letters from a few of the top vendors. CO-CHAIRMAN GREEN announced HB 258 will be held for further consideration. CO-CHAIRMAN GREEN passed the gavel to Co-Chairman Williams. SB 3 - ANTITRUST EXEMPTION FOR FISHERMEN Number 301 SENATOR JIM DUNCAN, PRIME SPONSOR, stated SB 3 will allow fishermen to form associations to collectively negotiate raw or processed fish with processors. The bill does not authorize processors to agree among themselves on the prices they will pay fishermen; it only covers collective bargaining between fishermen and a processor, or group of processors. SENATOR DUNCAN said a state antitrust exemption is a first step to stabilizing Alaska's fishing industry. While this exemption applies only to state antitrust laws, it is necessary to gain congressional approval for a federal exemption, so fishermen and processors could negotiate prices. He stated once the legislature has approved SB 3, the state, fishermen and processors would be in a position to request the federal exemption. He pointed out that the attitude toward a federal exemption may be favorable now that Alaska's Congressional delegation is in the majority. SENATOR DUNCAN told committee members in order to permit collective bargaining, fishermen must be allowed to market and sell their fish as a group. He said current state antitrust law does not mention whether fishermen could collectively sell their raw catch or fish products, although it permits them to form associations to catch and prepare their fish for market. SB 3 clarifies this ambiguity, making state law consistent with federal law, which expressly permits fishermen to collectively engage in more activities, including marketing their fish. He pointed out that incongruities between current state and federal law make it possible for some fishermen's organizations to be in compliance with federal antitrust law, yet breaking state law, or be in compliance with state antitrust law and violating federal law. SENATOR DUNCAN said state legislation such as SB 3, and pursuit of a corresponding federal exemption were recommended in the 1993 Alaska attorney general's report on the Bristol Bay sockeye salmon industry. He noted the fishing industry is Alaska's largest private employer, and affects every segment of the state's economy, from small coastal villages to the state's general fund. He stressed collective bargaining between fishermen and processors will help stabilize commercial fishing prices, bolstering local and state economies. He stated stable raw fish prices will promote stable consumer prices for processed seafood products, which means greater sales of Alaska seafood. CO-CHAIRMAN GREEN recalled that Senator Duncan had said SB 3 would be in line with state antitrust but not with federal antitrust. SENATOR DUNCAN stated SB 3 addresses the state antitrust laws and gives an exemption on the state level, which is the first step needed to be taken. He explained congressional approval needs to be gained as a second step for federal exemption. CO-CHAIRMAN GREEN clarified if SB 3 passes and an exemption from state antitrust was possible, that could not be exercised until a federal exemption was granted. SENATOR DUNCAN responded that is correct. He said it probably would not happen overnight but with the state's Congressional delegation in the position they are in, they could actively pursue it and get it accomplished. CO-CHAIRMAN GREEN noted SB 3 establishes a price floor. He assumed the price floor was based on American dollars. He expressed concern about transactions with foreign operations and the fluctuation of the ratio of dollars to a particular foreign currency. He asked if there was a price floor based on American dollars, there was a large amount of fish to sell and the foreign currency exchange rate changed, would there be a chance of violating that floor if the fish was sold because the foreign currency dropped 10 percent. He wondered if by having a price floor, there will be problems with the currency exchange. SENATOR DUNCAN stated SB 3 does not really establish a price floor. He said once the exemption is gained at the state and federal level, it will allow fishermen, through associations, to collectively negotiate for raw fish prices with processors. He explained SB 3 does not necessarily establish a price floor but establishes a process where fishermen can be involved in establishing what the price will be by negotiating. CO-CHAIRMAN GREEN asked if that would occur once a year. SENATOR DUNCAN said it would occur at least once a year. Number 409 CO-CHAIRMAN WILLIAMS asked how SB 3 would affect the bonus fishermen receive at the end of the year. BRUCE SCHACTLER, AREA K SEINERS ASSOCIATION, testified via teleconference and said SB 3 is a very important bill. SB 3 gives fishermen the opportunity to be involved in a business-like manner with the processors at all levels of price negotiations. He stated as the world markets and everything from the retail buyers to the wholesale buyers change, fishermen need to be able to have some type of input and relationship with those buyers. MR. SCHACTLER stated to do business in this manner presently, fishermen have to go outside the state of Alaska. He said fishermen are contracted to do business as a marketing organization in the state of Washington. He explained SB 3 will allow fishermen to do business like everyone else in the world. He stressed SB 3 does not set a floor or ceiling and does not force anyone to do business in any particular way but just gives fishermen the opportunity to do business the way the rest of the world does. He urged support for SB 3. Number 460 KRIS NOROSZ, EXECUTIVE DIRECTOR, SOUTHEAST ALASKA SEINERS (SEAS), testified via teleconference and stated SEAS fully supports SB 3. She stated SB 3 serves two purposes. First, SB 3 clarifies ambiguities currently found in state law concerning fishermen's ability to collectively market their catch. Second, SB 3 moves fishermen closer to obtaining a much needed federal exemption, so fishermen and processors would be allowed to negotiate prices. She stressed passage of SB 3 would put the state's fishing industry in a much better position to request such an exemption from the federal government. She pointed out this type of progressive action is an important and critical step toward stabilizing commercial fishing prices. The result will be a greater value for Alaska seafood products, which will directly benefit both the state and local economies. She urged committee members to support SB 3. SCOTT MCALLISTER, REPRESENTATIVE, SEAS, said many people involved in the various fishing organizations support SB 3. He stated SB 3 is viewed as a forward-minded bill and fishermen look forward to the benefits it will provide if adopted. He pointed out SB 3 provides a catalyst to bond the salmon industry. The antitrust exemption will allow fishermen and processors to consolidate their interest in the marketplace and negotiate prices competitively from a unified position of power in markets worldwide. He noted fishermen do not currently operate under a law allowing them to do that. Other fish producers in the world already enjoy this type of marketing advantage. MR. MCALLISTER stated there is no better example to Alaskans than the Norwegians cooperative marketing worldwide of their salmon products. As fish farmers, they do not compete with each other for markets and ultimately discount their product just to sell product. They go into the marketplace as a total block of product. He said SB 3 potentially will allow these types of blocks of Alaska salmon products to form in the world marketplace and truly be competitive. He stressed SEAS urges the passage of SB 3. He pointed out SB 3 could prove to be the most significant commercial fisheries legislation to cross Capitol Hill since statehood. SB 3 will put the fishing industry in a position of power to market its products worldwide. Number 523 DEAN PADDOCK, REPRESENTATIVE, BRISTOL BAY DRIFTNETTERS ASSOCIATION (BBDA) said BBDA is not an association having negotiated prices and is not a marketing organization but is very concerned about the issues related to marketing. He stated it is the intent of the sponsor of SB 3 to smooth the present process which is notable for a total lack of process. At the present time, fishermen are price takers and operate under a very restrictive set of legal constraints. He noted fishermen see SB 3 as something which will free up those legal constraints and allow them to join with the processors as price makers. MR. PADDOCK said the market relationship between fishermen and those to whom they sell their product has been changing in recent years. He stated there was a time when the costs of the processor were closely guarded proprietary secrets but now every fishermen has a good idea, if interested, what all those costs are. He recalled that a couple of years ago fishermen urged the legislature to vote in a 1 percent assessment, a percentage of which was dedicated to providing all the permit holders in the state with salmon market information, which they now are receiving. MR. PADDOCK stressed SB 3 is badly needed and gave an example of an incident which occurred several years ago. He stated if fishermen have the ability to participate more in a process such as envisioned by SB 3, unfortunate situations will be avoided. Number 600 DWIGHT PERKINS, SPECIAL ASSISTANT, OFFICE OF THE COMMISSIONER, DEPARTMENT OF LABOR, stated the department supports SB 3. He said SB 3 would allow fishers to form associations to negotiate fish prices. He noted AS 16.10.280 provides that the Department of Labor serve as the mediator of disputes between fishers and fish processors on the price to be paid for salmon. The department's experience has revealed that the inability of fishers to form associations to negotiate with processors has been a primary factor in such disputes such as the 1991 Bristol Bay strike. MR. PERKINS stated SB 3 would provide a mechanism to stabilize raw fish prices and thereby protect Alaskan fishers and processors from the debilitating and extreme fluctuation in fish prices. He said a stable fishing industry will have a direct and positive effect on the Alaskan economy. He felt it is only reasonable that Alaska fishers and processors have the legal ability to protect themselves and this important resource from price setting by outside interests. REPRESENTATIVE KOTT noted on page 2, line 12, fishermen would be able to set the minimum price. He asked if a processor did not meet that minimum price collectively, could fishermen in Alaska take their product to a foreign processor. MR. PERKINS said the department would be there to mediate disputes between the two groups. He did not know if fishermen could take the product to an outside market. TAPE 95-50, SIDE A Number 000 JERRY MCCUNE, PRESIDENT, UNITED FISHERMEN OF ALASKA (UFA) said SB 3 is a straightforward bill. He stated Section 1 cleans up collective bargaining. He noted previously there was a union but in the 1940s, the federal government decided there could no longer be a union because there were no employees. Therefore, fishermen had to go to collective bargaining and change the way they did business. The rules were set in a way that fishermen would have to go talk to each individual processor for price. He explained Section 2 adds more to collective bargaining if there is someone to collective bargain with. He added SB 3 provides the opportunity to go to the federal government to change the federal antitrust laws, so fishermen can talk to more than one processor. MR. MCCUNE noted with the passage of SB 3, fishermen still cannot talk to more than one processor at a time because they are still under the umbrella of the federal antitrust laws. However, SB 3 does provide the opportunity to go to Congress. He said the minimum price fish pricers will accept for the sale of processed aquatic products does not bind anyone to anything. He explained this language would work well if a fisherman formed a partnership with a processor and they agreed what they would sell on the wholesale market. He pointed out this language does not have anything to do with foreign processors, as those processors are only considered when the U.S. processors close the door and say they will not buy any fish. He urged passage of SB 3. Number 075 DONNA PARKER, FISHERIES SPECIALIST, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT (DCED), expressed support for SB 3 and urged passage. She stated SB 3 will promote price stability and product development, important for the state to recover its market share, not only in the world, but especially in the domestic marketplace. She said after the 1991 Bristol Bay strike, former Governor Hickel organized a salmon strategy tax force which DCED was asked to head. She noted that several recommendations were developed and strategies launched. MS. PARKER said what was learned was that the price declines were caused by a radical increase in world supplies which drove the price down. Salmon was particularly displaced by farmed salmon, which went from zero production to as much production as Alaska does (one-third of world production) within a single decade. She stated the price, quality and supply of farmed salmon is stable making it very attractive in the marketplace, which is why it has been successful in displacing Alaska in the marketplace. She pointed out that Alaska wild salmon has its advantages as well-- there is a huge supply, it is favored in certain marketplaces, and it is produced at a lower cost. MS. PARKER told committee members the state does have disadvantages in not being able to provide consistency of price, supply and quality. She said that was discussed by the salmon strategy task force and the four-prong strategy developed was to expand the state's marketing efforts, increase product options to consumers, increase the consistency of quality, and reduce the cost of production. She stated SB 3 goes a long way toward accomplishing each of those goals. MS. PARKER said at this time it is difficult for the Alaska seafood industry, because of the way it is organized, to invest the risk, resources, and capital in producing new products. That has been overcome by the unique organization of the community development quota (CDQ) groups program and the aquaculture associations. She stated because of their nonprofit corporate status, they are able to get into agreements with their harvesting partners. She noted that three of the CDQ groups have done that and have spearheaded product development of salmon through vertical integration. Those groups enter into price agreements with their harvesting partners that allow vertical integration and risk sharing, which permits the processors to take on that risk. They have provided markets not existing for pink salmon in Norton Sound or coho in Bristol Bay when the processors have left or there was not enough reason for them to stay. MS. PARKER stated price stability is very important because entities such as a health care facility or a family style food chain has price ceilings on what they are going to offer their consumers and cannot change their menu every month. She said those entities cannot live with the fluctuations of price the Alaska seafood industry is famous for, which has made those entities reluctant to risk their participation in using new Alaska seafood products. She noted salmon is particularly volatile. MS. PARKER told committee members SB 3 will allow the rest of the fishing industry to engage in the types of projects the CDQ groups are now able to do. She urged passage of SB 3. MS. PARKER noted the task force investigated why the prices in Canada for wild salmon were higher than those in Alaska. One of the things determined was that Canada has antitrust exemptions and has long-term price agreements three years long. She added that Canada's pink salmon prices are stable and are 113 percent higher than Alaska's price. Number 204 MS. PARKER said to answer the question about bringing foreign processors in, under the Magnuson Act, the state is required to show there is not enough domestic processing capacity. She noted that DCED and ADF&G make that investigation. She stated the restrictions are quite defined and it is not a light matter to allow a foreign processor into domestic waters. She did not feel SB 3 would have any relationship to that issue. CO-CHAIRMAN GREEN said, "if all the antitrust things are put aside momentarily, if you have a group of fishermen who can establish a price...then you talked about vertical integration where some of these fishermen would contract with downstream users...are those two statements contrary to each other?" MS. PARKER responded there are many ways to work in the marketplace. She assumed that most of this would be long-term price agreements between the fishermen and processors and might include things that are profit-sharing arrangements in the wholesale sale. She stated she cannot imagine fishermen being involved in the wholesale sale except to share in the risk of profit or loss, unless they hire processors to custom process their product and sell it themselves. CO-CHAIRMAN GREEN said, "you have a horizontal agreement and then part of those people would go in a vertical contractually...stay independent contractors but work with processors to come up with a value-added product at the end." MS. PARKER stated she was explaining what the CDQ groups are doing or are proposing, which is not to say it would be done in the same way...it would be difficult to do something that vertically integrated. She sees versions of that happening quite easily. She said each year there is a bidding process and stressed it is important for people to unload their inventory very quickly because of cold storage costs, risks on the commodity market, etc. MS. PARKER pointed out it is an expensive and risky proposition to hold on to an inventory and add value to it. She explained these types of agreements share that risk and profit and make it more attractive because the price is more stable. When the price is stabilized, it is possible to enter into other agreements that guarantee a supply, which is very important. There can also be agreements on quality. When reducing risk, the cost of production is lowered. She reiterated SB 3 addresses the entire range of strategies developed to help Alaska recover its market share. CO-CHAIRMAN GREEN said, "Vertical integration sounds like a good idea. I was just wondering if it is competing with the ability for the fishermen at one end of this vertical agreement to establish a price...does that then hamper the vertical integration of a group that belongs to that. If they are part of the fishing group that establishes a dollar a pound and this group over here says well because we are fully integrated year-round and all the benefits you said, we could trace back an 80 cents a pound to the fishermen here because he has other benefits, does that compete with what they were doing horizontally." MS. PARKER replied it gives fishermen the potential to become more active participants and players in the seafood industry. She said while it is expected that most of the agreements will begin with a base price for one year, it will evolve into a multi-year price and a risk and profit sharing arrangement. She stated a group of fishermen can decide what they want to do. If they want to do it for one year, they go with one group and a base price. If they want to share profit and loss risk, they negotiate with another processor. CO-CHAIRMAN GREEN clarified fishermen are not locked in. MS. PARKER responded that is correct. REPRESENTATIVE DAVIES asked Ms. Parker when she was comparing Canadian prices to Alaska's prices, was she talking about what the fishermen get or the prices they get for their product. MS. PARKER stated she was talking about the prices fishermen get. She said the price currently for pink salmon is 13 cents a pound as opposed to 30 cents a pound in Canada. She noted in the 1980s when Alaska's prices were high, Canada's price was lower but they had the stability allowing them to run their businesses better and allowing their customers to have a better expectation of the price. Number 340 REPRESENTATIVE DAVIES noted having higher prices would not necessarily be an advantage for being competitive in the world market. He clarified that Ms. Parker was saying that more important than the price is some sense of long-term stability. MS. PARKER said that is correct. She noted stability is very important to the Japanese who are Alaska's biggest customer and buy over 80 percent of the state's products. She stated SB 3 would help the state expand its domestic marketplace and enable the state to be less reliable on the Japanese. CO-CHAIRMAN GREEN made a MOTION to MOVE SB 3, with attached fiscal note, out of committee with individual recommendations. CO-CHAIRMAN WILLIAMS asked if there were any objections. Hearing none, the MOTION PASSED. ADJOURNMENT There being no further business to come before the House Resources Committee, Co-Chairman Williams adjourned the meeting at 9:55 a.m.