Legislature(1995 - 1996)

04/12/1995 08:08 AM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                               
 SPONSOR(S): SENATOR(S) MILLER,Green,Sharp; REPRESENTATIVE(S)                  
 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                    
 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                   
 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                                                                
 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                                                                
 SPONSOR(S): SENATOR(S) DUNCAN, Zharoff, Hoffman, Taylor, Halford,             
 Lincoln, Pearce, Donley, Salo, Leman; REPRESENTATIVE(S) Ivan,                 
 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,                  
 03/07/95       522    (S)   DONLEY, SALO, LEMAN                               
 03/07/95       521    (S)   ADVANCED TO THIRD READING UNAN                    
 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)                   
 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              
 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.                                                               
 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                   
 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.            
 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              
 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                
 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           
 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            
 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                   
 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                
 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                                                                    
 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               
 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              
 CO-CHAIRMAN GREEN wondered if Representative Bunde is using the               
 word subsidy differently for the first $10,000 and not after that             
 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                 
 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           
 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             
 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                   
 CO-CHAIRMAN GREEN announced HB 258 will be held for further                   
 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                                                                    
 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            
 Number 523                                                                    
 (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                                                                    
 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                     
 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                                                                    
 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                                                                    
 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               
 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.                                                      
 There being no further business to come before the House Resources            
 Committee, Co-Chairman Williams adjourned the meeting at 9:55 a.m.            

Document Name Date/Time Subjects