Legislature(1995 - 1996)
04/12/1995 08:08 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ 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
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.
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