Legislature(2003 - 2004)

02/24/2004 01:35 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 24, 2004                                                                                        
                           1:35 p.m.                                                                                            
TAPE(S) 04-14                                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bettye Davis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
SENATE BILL NO. 315                                                                                                             
"An Act relating to the administration of commercial fishing                                                                    
entry permit buy-back programs."                                                                                                
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 322                                                                                                             
"An Act relating to the rate of the salmon enhancement tax."                                                                    
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
BILL: SB 315                                                                                                                  
SHORT TITLE: ENTRY PERMIT BUY-BACK PROGRAM                                                                                      
SPONSOR(s): SENATOR(s) STEVENS B BY REQUEST OF SALMON INDUSTRY                                                                  
TASK FORCE                                                                                                                      
                                                                                                                                
02/11/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/11/04       (S)       L&C, FIN                                                                                               
02/24/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 322                                                                                                                  
SHORT TITLE: SALMON ENHANCEMENT TAX                                                                                             
SPONSOR(s): SENATOR(s) STEVENS B BY REQUEST OF SALMON INDUSTRY                                                                  
TASK FORCE                                                                                                                      
                                                                                                                                
02/11/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/11/04       (S)       L&C, FIN                                                                                               
02/24/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Ms. Cheryl Sutton                                                                                                               
Staff to Senator Ben Stevens                                                                                                    
Alaska State Capitol                                                                                                            
Juneau AK 99801-1182                                                                                                            
POSITION STATEMENT: Commented on SB 315 for the sponsor.                                                                      
                                                                                                                                
Mr. Frank Hohman, Commissioner                                                                                                  
Commercial Fisheries Entry Commission (CFEC)                                                                                    
Alaska Department of Fish and Game                                                                                              
8800 Glacier Highway, Suite 109                                                                                                 
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supports SB 315.                                                                                          
                                                                                                                                
Mr. Ken Duckett, Executive Director                                                                                             
United Southeast Alaska gillnetters Association                                                                                 
PO Box 22427                                                                                                                    
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Commented on SB 315 and opposes SB 322.                                                                   
                                                                                                                                
Ms. Kate File                                                                                                                   
Juneau AK                                                                                                                       
POSITION STATEMENT: Opposes SB 322.                                                                                           
                                                                                                                                
Mr. E.J. Cheshier                                                                                                               
Prince William Sound aquaculture Association                                                                                    
Cordova AK                                                                                                                      
POSITION STATEMENT: Supports SB 322.                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-14, SIDE A                                                                                                            
                                                                                                                                
              SB 315-ENTRY PERMIT BUY-BACK PROGRAM                                                                          
                                                                                                                                
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting  to order  at 1:35  p.m. Present  were Senators                                                               
Gary Stevens, Ralph  Seekins, Hollis French and  Chair Con Bunde.                                                               
Senator Bettye Davis was excused.  The first order of business to                                                               
come before the committee was SB 315.                                                                                           
                                                                                                                                
MS. CHERYL  SUTTON, Staff  to Senator Ben  Stevens and  the Joint                                                               
Legislative  Salmon  Industry  Task  Force,  said  SB  315  is  a                                                               
recommendation of  the task force  and provides language  for the                                                               
Commercial Fisheries  Entry Commission  (CFEC) to fund  a buyback                                                               
program.  If CFEC  was able  to receive  monies from  any source,                                                               
those monies might  have to be paid back, but  currently there is                                                               
no process in statute under which that could happen.                                                                            
                                                                                                                                
CHAIR BUNDE asked if buybacks were on the horizon anywhere.                                                                     
                                                                                                                                
MS. SUTTON  replied that the  only buyback being  discussed right                                                               
now is  in the  Southeast seine fishery,  which has  been dealing                                                               
with  Senator Ted  Stevens on  the federal  level. They  have not                                                               
moved forward  under the state  law. She  thought one of  the big                                                               
reasons  they  hadn't moved  forward  is  because laws  governing                                                               
buybacks  are not  in place  at the  state level.  "We have  been                                                               
attempting to repair this statute  over the last several years so                                                               
that if that case comes up, we would have a workable statute."                                                                  
                                                                                                                                
SENATOR RALPH  SEEKINS asked  if she was  talking about  a state-                                                               
funded program.                                                                                                                 
                                                                                                                                
MS. SUTTON  replied no and  that an optimum numbers  study, which                                                               
would determine  whether too many  permits existed in  a fishery,                                                               
would need to  be completed first. The  proposed legislation also                                                               
provides for an assessment of up to  7 percent on the value of an                                                               
individual fisherman's fish ticket sales to fund the program.                                                                   
                                                                                                                                
SENATOR  SEEKINS asked  if language  stating the  commission will                                                               
cease  a buyback  once the  optimum number  has been  reached has                                                               
been in statute before.                                                                                                         
                                                                                                                                
MS. SUTTON replied no.                                                                                                          
                                                                                                                                
SENATOR GARY  STEVENS said the  optimum numbers study  might show                                                               
that there  aren't enough permits  in a  fishery as well  as show                                                               
there are too many.                                                                                                             
                                                                                                                                
MS. SUTTON  followed up  on the  issue of  the optimum  number of                                                               
permits saying  that one  number was  an unreasonable  concept so                                                               
the  statute was  changed to  reflect that  an optimum  number is                                                               
really a  range of numbers.  CFEC also  has the authority  to add                                                               
permits back into a fishery.                                                                                                    
                                                                                                                                
CHAIR  BUNDE  said  SB  315   is  not  intended  to  present  the                                                               
development of fisheries resources, but rather to optimize them.                                                                
                                                                                                                                
MS.  SUTTON  agreed  that  it would  benefit  all  Alaskans,  but                                                               
particularly those in the coastal regions.                                                                                      
                                                                                                                                
MR.  FRANK  HOHMAN,   Commissioner,  Commercial  Fisheries  Entry                                                               
Commission  (CFEC), supported  Ms.  Sutton's  comments and  added                                                               
that this measure would make  fleet consolidation somewhat easier                                                               
to accomplish.  The reason for  looking into  fleet consolidation                                                               
is  that  the   economic  return  in  some   fisheries  might  be                                                               
diminishing. An  optimum number  of permits  could be  found that                                                               
would represent  how many fishermen  and boats could  harvest the                                                               
resource  in an  efficient  manner and  still  have a  reasonable                                                               
economic return.                                                                                                                
                                                                                                                                
     The optimum number  can tell you if there  are too many                                                                    
     permits in  the fishery or  too few in the  fishery. In                                                                    
     either  case, we  are  told by  the  statutes that,  if                                                                    
     there are  too many  permits, then  we can  establish a                                                                    
     buyback program to  reduce the number of  permits to an                                                                    
     optimum number.  If there are  too few permits  after a                                                                    
     study, then we  can provide more permits  and sell them                                                                    
     back into the fishery to bring that number up.                                                                             
                                                                                                                                
CHAIR BUNDE asked  how the state would reinject  permits into the                                                               
market.                                                                                                                         
                                                                                                                                
MR. HOHMAN  replied that  CFEC would probably  do an  analysis of                                                               
the value of the existing permits  and figure out an average cost                                                               
and make  them available using  a currently unspecified  method -                                                               
first come first  served basis, a lottery, a  high bid, something                                                               
like that.  The 1 to  7 percent assessment  would go into  a fund                                                               
over a  period of  years and  when it reached  a point  where the                                                               
required number  of permits could  be bought back, CFEC  would go                                                               
ahead and buy them back.                                                                                                        
                                                                                                                                
Since establishing  the fund would  take a while, the  task force                                                               
discussed  borrowing money  for the  buyback and  then paying  it                                                               
back with the  assessment money. But under that  scenario, if the                                                               
upfront money was used to  buy back permits, current statute says                                                               
the assessment has to stop. That's how this bill came about.                                                                    
                                                                                                                                
     All it says is that  once you reach the optimum number,                                                                    
     you can continue the assessment  until repayment of any                                                                    
     debt that  the commission had to  establish the buyback                                                                    
     program in the beginning.                                                                                                  
                                                                                                                                
MR. HOHMAN  said that  the commission  has no idea  of a  fund of                                                               
money out there  for this purpose and also that,  if grant monies                                                               
were used, they would not have to be paid back.                                                                                 
                                                                                                                                
CHAIR BUNDE asked if there was any opposition to this program.                                                                  
                                                                                                                                
MR. HOHMAN answered that he was not aware of any.                                                                               
                                                                                                                                
SENATOR GARY STEVENS asked how an optimum number is defined.                                                                    
                                                                                                                                
MR. HOHMAN  replied that an  actual optimum number would  be very                                                               
hard to  find, but a  couple of years  ago, the CFEC  changed the                                                               
definition from one number to a range of numbers.                                                                               
                                                                                                                                
CHAIR  BUNDE questioned  how the  CFEC would  determine what  the                                                               
range is.                                                                                                                       
                                                                                                                                
MR. HOHMAN  replied that  the CFEC would  do a  complete economic                                                               
analysis of the fishery.                                                                                                        
                                                                                                                                
SENATOR HOLLIS FRENCH asked if it  is true that there is no money                                                               
in the buyback fund currently.                                                                                                  
                                                                                                                                
MR. HOHMAN replied that is right.                                                                                               
                                                                                                                                
SENATO  FRENCH asked  if the  assessment would  begin only  after                                                               
some monies are put into the fund and a buyback had taken place.                                                                
                                                                                                                                
MR. HOHMAN replied that the  optimum number for the fishery would                                                               
have to be established first.                                                                                                   
                                                                                                                                
SENATOR FRENCH  asked if  the 1  to 7  percent assessment  was in                                                               
statute.                                                                                                                        
                                                                                                                                
MR. HOHMAN replied yes and that  language was put into statute to                                                               
accommodate the dedicated funds issue.                                                                                          
                                                                                                                                
SENATOR FRENCH asked  once the buyback is done,  does CFEC intend                                                               
to totally repay  the fund with the assessment or  just the costs                                                               
of operating the buyback program.                                                                                               
                                                                                                                                
MR. HOHMAN answered:                                                                                                            
                                                                                                                                
     It depends on how we got  the money. If the money was a                                                                    
     grant from  somewhere, then we  wouldn't have  to repay                                                                    
     it.  It  would  be,  like  you say,  the  cost  of  the                                                                    
     program.   If  the   fund   was   established  by   the                                                                    
     Legislature and it  needed to be repaid,  then we would                                                                    
     continue it until we could repay.                                                                                          
                                                                                                                                
SENATOR  FRENCH recapped  that absent  a gift  of money  to do  a                                                               
buyback, he  envisions this program  being some kind of  loan. He                                                               
asked if the assessment would  apply to just the affected fishery                                                               
or statewide.                                                                                                                   
                                                                                                                                
MR. HOHMAN  replied that the  assessment would be applied  to the                                                               
affected fishery.                                                                                                               
                                                                                                                                
SENATOR FRENCH asked how he  imagined "reasonable" costs would be                                                               
figured out.                                                                                                                    
                                                                                                                                
MR. HOHMAN answered  before CFEC would even enter  into a buyback                                                               
program,  it  would  have  to   promulgate  regulations  and  the                                                               
assessment process would be in those.  It would be a very visible                                                               
process.                                                                                                                        
                                                                                                                                
SENATOR FRENCH said he thought it sounded like a good idea.                                                                     
                                                                                                                                
MR.  KEN DUCKETT,  Executive  Director,  United Southeast  Alaska                                                               
Gillnetters  Association (USAG),  said  his  members really  were                                                               
undecided  about  supporting  this legislation.  One  concern  is                                                               
that, as  the various  different ideas  for the  buyback programs                                                               
have developed, a number of  them have contained votes that would                                                               
occur  by the  permit  holders. Some  call for  a  majority or  a                                                               
number of  different percentages, but  SB 315 does not  require a                                                               
vote of the people who would be affected by a buyback program.                                                                  
                                                                                                                                
     We think at the very  minimum that it's prudent to have                                                                    
     at least a  vote of 50 [percent] and a  plurality of 50                                                                    
     percent of the permit  holders that would approve going                                                                    
     into  this program.....  I'm sure  it's fine  that they                                                                    
     would promulgate regulations and  have hearings, but as                                                                    
     you  know, there's  a lot  of  fishermen and  a lot  of                                                                    
     people  in  the  general  public, some  of  which  will                                                                    
     participate in a hearing such  as that and others will,                                                                    
     even if it affects them,  will sit on the sidelines and                                                                    
     won't  participate.  We  think, definitely,  that  some                                                                    
     kind of  vote of  the people who  would be  affected is                                                                    
     prudent in this situation.                                                                                                 
                                                                                                                                
MR. DUCKETT outlined another concern his members have.                                                                          
                                                                                                                                
     In the  mid-70s, if you  had told people that  we would                                                                    
     be  where we  are  today with  prices  and our  current                                                                    
     situation  in the  salmon market,  folks wouldn't  have                                                                    
     really believed you - that  things could change as much                                                                    
     as they have changed. So,  the point that I'm making is                                                                    
     the  way  this thing  is  structured  now, with  the  7                                                                    
     percent   assessment   on  fishermen,   you're   asking                                                                    
     fishermen to  buy permits back  out of the  fishery. If                                                                    
     we  see a  big change,  say the  farmed fish  - they're                                                                    
     going to  have too many  PBCs or whatever have  you, or                                                                    
     we have  a market condition  that goes back  to earlier                                                                    
     times and  we see a  significant increase in  prices in                                                                    
     our fish,  which a lot  of us hope would  happen, maybe                                                                    
     additional permits want to be added to the fishery.                                                                        
                                                                                                                                
     That  situation could  happen just  like the  situation                                                                    
     happens that  makes us want  to reduce the  number now.                                                                    
     It's not fair in our  assessment that the fishermen are                                                                    
     assessed  for  permits to  leave  the  fishery and  the                                                                    
     state  gets the  benefit of  selling permits  back into                                                                    
     the  fishery  if the  number  of  permits wants  to  be                                                                    
     increased later on. That really bothers us.                                                                                
                                                                                                                                
MR. DUCKETT  said USAG  does not want  to stand in  the way  of a                                                               
fleet that  wants to reduce the  number of its permits  and hopes                                                               
the  Southeast seiners  are  successful.  Implementing a  buyback                                                               
program with a federal grant  is totally different than assessing                                                               
fishermen to have their permits  bought back. "We think there are                                                               
some  inequities here  and  I  guess at  that,  I'll conclude  my                                                               
testimony."                                                                                                                     
                                                                                                                                
CHAIR BUNDE thanked him and  promised to have the sponsor reflect                                                               
on and address his questions when the bill comes up again.                                                                      
                                                                                                                                
SENATOR  BEN STEVENS,  sponsor  of  SB 315,  who  arrived in  the                                                               
middle of  Mr. Duckett's testimony,  said he sponsored  this bill                                                               
at the request  of the Commercial Fisheries  Entry Commission and                                                               
wanted a chance  to clarify Mr. Duckett's questions  now. He said                                                               
there are two programs:                                                                                                         
                                                                                                                                
     One does require a vote  of the fishermen in the region                                                                    
     and the  other one  would allow  the CFEC  to implement                                                                    
     the program. So, there are  two mechanisms for buyback.                                                                    
     One  is a  CFEC-run  buyback developed  by the  optimum                                                                    
     yield; the other  one is a buyback  that's initiated by                                                                    
     the regional association.                                                                                                  
                                                                                                                                
CHAIR  BUNDE  said Mr.  Duckett  was  also  concerned that  if  a                                                               
buyback program is  funded by fishermen in a  certain fishery, if                                                               
on the  flip side, additional  permits were issued by  CFEC, that                                                               
profit  would go  back to  the state.  He, personally,  could see                                                               
that the  state could  issue permits at  no expense,  which would                                                               
decrease the  value of  existing permits, but  he didn't  know of                                                               
any  mechanism whereby,  if the  state  issued a  new permit  for                                                               
$10,000,  that  money  would  end up  being  distributed  to  the                                                               
members of the fishery.                                                                                                         
                                                                                                                                
SENATOR  STEVENS said  that is  one  of the  complexities of  the                                                               
situation right now.                                                                                                            
                                                                                                                                
     You have to have an optimum  study in order to buy back                                                                    
     the permits to retire them.  It's just which way you do                                                                    
     it. If  the optimum study  says that the state  can buy                                                                    
     them back,  then the  state can  assess a  buyback fund                                                                    
     and  then  retire  the  permits  for  $10,000.  If  the                                                                    
     association  would buy  back  the  permits, they  would                                                                    
     also  retire  the permits.  The  question  is, can  the                                                                    
     permits  that are  bought back  be  retired and  that's                                                                    
     what the  bill is designed  to do  - to make  sure that                                                                    
     that is correct  - that when you buy  the permits back,                                                                    
     the  CFEC is  not  forced  to put  them  back into  the                                                                    
     market.                                                                                                                    
                                                                                                                                
CHAIR  BUNDE thought  he had  heard testimony  earlier indicating                                                               
that,  if the  fishery expands,  those permits  would not  be put                                                               
back into the  market and another study would have  to be done to                                                               
offer new permits.                                                                                                              
                                                                                                                                
SENATOR  STEVENS replied  that the  CFEC could  be forced  by the                                                               
court to  issue permits back  again, but they wouldn't  come from                                                               
the buyback pool. "[The permits]  would come from another interim                                                               
use issuance."                                                                                                                  
                                                                                                                                
CHAIR BUNDE said that he would hold the bill for further work.                                                                  
                                                                                                                                
                 SB 322-SALMON ENHANCEMENT TAX                                                                              
                                                                                                                                
CHAIR CON BUNDE announced SB 322 to be up for consideration.                                                                    
                                                                                                                                
2:10 p.m.                                                                                                                       
                                                                                                                                
SENATOR BEN  STEVENS, sponsor of SB  322, said it relates  to the                                                               
salmon   enhancement  tax,   which  is   available  to   regional                                                               
aquaculture  associations. Statute  allows regional  associations                                                               
to tax  themselves at 1  to 3 percent  of their harvest  value to                                                               
help pay for the operations of their hatcheries.                                                                                
                                                                                                                                
SB 322 is  the result of the hatchery subcommittee  of the Salmon                                                               
Task Force  that he chaired. The  hatchery subcommittee discussed                                                               
the fact that  with the declining values in some  of the regions'                                                               
salmon  harvest, the  2 percent  that is  being collected  is not                                                               
paying  for  the  operational  costs  of  those  hatcheries.  The                                                               
subcommittee suggested increasing the tax  range up to 10 percent                                                               
so the  associations could vote  to assess themselves to  pay for                                                               
the operating  costs of  the hatcheries  producing fish  in those                                                               
regions. After discussions  with a couple of people,  he added in                                                               
the larger  numbers of 15, 20  and 30 percent to  allow regionals                                                               
to super-assess themselves to pay  down large capital debts. Some                                                               
private non-profit  hatcheries have already gone  through periods                                                               
of high  self-assessment to pay  down on capital costs  and those                                                               
hatcheries are operating  at very low-cost recovery  rates to the                                                               
benefit of  the local harvesters.  He referenced  supporting data                                                               
in the committee's packets.                                                                                                     
                                                                                                                                
SENATOR  FRENCH asked  what was  the estimated  value of  fish in                                                               
1993.                                                                                                                           
                                                                                                                                
SENATOR  STEVENS answered  that the  statewide value  of fish  in                                                               
1992  was about  $167  million  and in  2003  it  was about  $197                                                               
million with a five-year average  of about $315 million. The 2002                                                               
figure is  the low  point of the  modern commercial  fishery. The                                                               
important  thing about  the  bill is  that  it allows  hatcheries                                                               
under  a regional  aquaculture association  to  vote to  increase                                                               
their assessment if they choose.                                                                                                
                                                                                                                                
MS.  KATE  FILE,  Juneau  resident,   opposed  SB  322  with  the                                                               
following testimony:                                                                                                            
                                                                                                                                
     My family  is a  fishing family  in a  unique position.                                                                    
     Our boat and permit are  paid for. If this proposed tax                                                                    
     were implemented, we would have  to consider whether or                                                                    
     not it would be cost  effective for our crew and family                                                                    
     to fish  salmon. For those  fishers who have  loans, it                                                                    
     would be almost impossible  to make expenses, pay their                                                                    
     crew and  take home income  to live on for  the winter.                                                                    
     Several  fishermen I  have talked  to say  that SB  322                                                                    
     would completely wipe out their profit margin.                                                                             
                                                                                                                                
     I  believe this  bill could  work, but  in a  different                                                                    
     format. This bill is missing  a major component. Please                                                                    
     bear  with me  as I  start from  the beginning.  SB 322                                                                    
     would  stop the  practice of  taking cost  recovery for                                                                    
     regional  hatcheries,  like   SNRRA  and  SSRRA,  while                                                                    
     allowing  non-regionals,  like  Kake,  DIPAC  and  Port                                                                    
     Armstrong, to continue the practice of cost recovery.                                                                      
                                                                                                                                
     As you look at the  information provided to you by [The                                                                    
     Department of]  Fish and Game  on 'The  Alaska Hatchery                                                                    
     Commercial  Common Property  and Cost  Recovery Return'                                                                    
     handout, you  will see the  regionals are  within their                                                                    
     salmon  enhancement allocation  goals. In  contrast, it                                                                    
     is  the non-regionals  who are,  in some  cases, taking                                                                    
     far and  above the  Board of fish  suggested allocation                                                                    
     goals for cost recovery.                                                                                                   
                                                                                                                                
     In  the Board  of Fish  findings, the  suggested salmon                                                                    
     enhancement allocation goals for  cost recovery are for                                                                    
     regionals  -  70  percent to  common  property  and  30                                                                    
     percent  for  cost recovery.  Also  keep  in mind  that                                                                    
     regionals  receive  a  3  percent  aquaculture  tax  in                                                                    
     Southeast Alaska. For  the non-regionals, the suggested                                                                    
     salmon  allocation  goals  are  60  percent  to  common                                                                    
     property [fisheries] with 40  percent to cost recovery.                                                                    
     Non-regionals receive  no aquaculture  tax and  have no                                                                    
     taxing authority.                                                                                                          
                                                                                                                                
     As you can see, it  is not the regionals' cost recovery                                                                    
     practices  that are  affecting your  average commercial                                                                    
     fisher. It is the non-regionals  who are taking far and                                                                    
     above   the  suggested   salmon  allocation.   In  some                                                                    
     hatchery  operations you  will  see 74  percent and  89                                                                    
     percent being  taken for  cost recovery  purposes. This                                                                    
     practice is harmful to commercial fishers.                                                                                 
                                                                                                                                
     The  component  that  is  missing   to  SB  322  is  to                                                                    
     regionalize all  non-regional hatcheries. The  only way                                                                    
     taxing  fishers to  replace cost  recovery is  going to                                                                    
     work is if  you eliminate all cost  recovery fishing in                                                                    
     that region.                                                                                                               
                                                                                                                                
     To benefit  the fishers  of Southeast Alaska,  we would                                                                    
     need to take all hatcheries  in the region and create a                                                                    
     single  regional association.  This would  also benefit                                                                    
     the  region   by  decreasing   overhead  administrative                                                                    
     costs.                                                                                                                     
                                                                                                                                
     I  ask  that serious  consideration  be  given to  this                                                                    
     suggestion. Many  fishers feel  that, if the  bill were                                                                    
     amended in  this way, it  would go  a long way  to help                                                                    
     stabilize  the  salmon  industry. It  would  also  help                                                                    
     hatcheries  reach  their  full   potential  and  be  of                                                                    
     benefit to the commercial fisher.                                                                                          
                                                                                                                                
     This  bill, as  it is  written now,  will not  help the                                                                    
     commercial  fleet.   It  will  make  a   bad  situation                                                                    
     disastrous. I  ask that you  not approve SB 322  in its                                                                    
     current form.                                                                                                              
                                                                                                                                
CHAIR BUNDE  responded that the  fishermen in each  fishery would                                                               
have  to  vote to  assess  themselves  and  asked if  that  would                                                               
address any negative  concerns that she has.  "Obviously, if this                                                               
is  going to  cause people  to have  a negative  cash flow,  they                                                               
would vote no, wouldn't they?"                                                                                                  
                                                                                                                                
MS.  FILE  replied that  she  didn't  understand his  point.  She                                                               
thought the regionals are not  the problem. "Unless you eliminate                                                               
a cost recovery across the board, this really doesn't work."                                                                    
                                                                                                                                
CHAIR BUNDE  sought to clarify  his position saying  if fishermen                                                               
find a serious  negative financial impact, they would  vote no on                                                               
the assessment.  She agreed.  He then asked  if that  didn't mean                                                               
she was  really in charge  of whether the assessment  happened or                                                               
not.                                                                                                                            
                                                                                                                                
MS. FILE replied:                                                                                                               
                                                                                                                                
     Ultimately we are, but unfortunately  there is a lot of                                                                    
     apathy out there  and I know quite a  few fishermen who                                                                    
     get ballots in  the mail and things like  that and they                                                                    
     don't even  open them anymore.  They just toss  them in                                                                    
     the garbage. Yes, you're right;'  it is the fishermen's                                                                    
     responsibility.                                                                                                            
                                                                                                                                
CHAIR  BUNDE politely  exhorted her  to urge  those fishermen  to                                                               
start reading their mail.                                                                                                       
                                                                                                                                
MS. FILE said, "I'm working on it. I'm trying."                                                                                 
                                                                                                                                
CHAIR BUNDE thanked her for her testimony.                                                                                      
                                                                                                                                
MR.  KEN DUCKETT,  Executive  Director,  United Southeast  Alaska                                                               
Gillnetters  Association  (USAG),  opposed SB  322.  The  fishery                                                               
cannot afford  any more direct  taxes on its gross.  Fishermen do                                                               
not  want any  chance for  additional taxes  to be  levied. "They                                                               
don't want to let the cat out of the bag."                                                                                      
                                                                                                                                
TAPE 04-14, SIDE B                                                                                                            
                                                                                                                                
CHAIR  BUNDE   asked  if  fishermen   have  to  vote   to  assess                                                               
themselves, wouldn't the ultimate decision lay in their hands.                                                                  
                                                                                                                                
MR. DUCKETT replied that is  correct, except Southeast Alaska has                                                               
three  different fleets  - 1,000  trollers,  400 gillnetters  and                                                               
approximately 400 seiners.                                                                                                      
                                                                                                                                
     That   different   population  would   obviously   have                                                                    
     different  motives  for  voting different  ways....  In                                                                    
     theory what  you say is true,  but my guys that  I talk                                                                    
     to are not interested in  increased taxes, they are not                                                                    
     interested in any additional  assessment on their gross                                                                    
     and,   quite  frankly,   they're   not  interested   in                                                                    
     participating in  a campaign  one way  or the  other to                                                                    
     try to  convince some other people  to do it or  not to                                                                    
     do it.                                                                                                                     
                                                                                                                                
CHAIR  BUNDE  doggedly  pointed  out  that  if  hatcheries  can't                                                               
support themselves,  the state has  divorced itself  of providing                                                               
that funding. "It's  between the devil and the deep  blue sea, if                                                               
that's not a bad analogy for fishermen."                                                                                        
                                                                                                                                
MR. DUCKETT came  back saying that he has also  been on the board                                                               
of  directors  for  the  Southern  Southeastern  Alaska  Regional                                                               
Aquaculture Association (SSRAA) for 16 years. He explained:                                                                     
                                                                                                                                
     Fishermen basically  control the  boards, at  least for                                                                    
     the regional  associations. There are  certainly people                                                                    
     at large and folks  that represent other boat interests                                                                    
     and  subsistence  interests,  but the  predominance  of                                                                    
     people on these boards  are commercial fishermen. SSRAA                                                                    
     has entered  into a program  of trying to get  our debt                                                                    
     under  control, pay  our debt  down. In  fact, we  have                                                                    
     been successful over the last  five years, in part, due                                                                    
     to  some help  from  [The Department  of] Commerce  and                                                                    
     Economic  Development where  we have  been able  to cut                                                                    
     our debt load  from about $14 million to  just about $6                                                                    
     million at this point in  time. So, we've been somewhat                                                                    
     successful.  We've had  some good  seasons  and a  good                                                                    
     marketing program that helped us on this.                                                                                  
                                                                                                                                
     But right now,  our general manager, John  Berg, did an                                                                    
     analysis at  a meeting we had  about a week ago  and if                                                                    
     we were to try and  cover all operating costs plus debt                                                                    
     retirement with an assessment  on fishermen's gross and                                                                    
     completely eliminate cost recovery,  it would take over                                                                    
     50  percent of  the gross  that the  fishermen make  to                                                                    
     cover that.  We think  that the cost  recovery program,                                                                    
     the  way it's  currently  structured,  is a  reasonable                                                                    
     program. It works, at least  it certainly works for the                                                                    
     regionals.                                                                                                                 
                                                                                                                                
MR. E.J.  CHESHIER, Prince William Sound  Aquaculture Association                                                               
(PWSAC), said  the association generally supports  new tools that                                                               
allow fishermen to  control their destiny and this  does open new                                                               
options for them.                                                                                                               
                                                                                                                                
     I  think you  kind  of hit  the nail  on  the head.  If                                                                    
     fishermen don't want  to change the way  they are doing                                                                    
     things, they  don't have to  vote for that.  That's one                                                                    
     reason that this bill doesn't scare us here.                                                                               
                                                                                                                                
CHAIR BUNDE thanked him for his testimony and said he would set                                                                 
SB 322 aside for another week so that the questions could be                                                                    
worked out. He asked the sponsor if he had any final comments.                                                                  
                                                                                                                                
SENATOR BEN STEVENS sought to convince the committee with these                                                                 
closing comments:                                                                                                               
                                                                                                                                
     Fishermen are  being taxed this  rate anyway.  The cost                                                                    
     recovery for the  fish that are produced  by a hatchery                                                                    
     that they don't get to  catch, competes with their fish                                                                    
     in  the market  and  competes with  their  fish in  the                                                                    
     capacity  of the  local processing  facility that  is a                                                                    
     tax on their  production. The intent of the  bill is to                                                                    
     allow  more  fish  to  be  caught  by  the  independent                                                                    
     fishermen, therefore increasing his  bottom line. If at                                                                    
     some point in time they  have to do a super-accelerated                                                                    
     assessment in  order to achieve that,  that's what this                                                                    
     bill permits.                                                                                                              
                                                                                                                                
     To respond  to Ms. File's comments,  she's right. There                                                                    
     is  a large  portion  of the  hatchery production  that                                                                    
     does not fall under  the jurisdiction of this language.                                                                    
     That is  another issue to  be attacked at  another day.                                                                    
     Her comments are  correct, but the portion  of the bill                                                                    
     that does fall  under this jurisdiction in  the bill is                                                                    
     intended  to increase  the amount  of  fish that  those                                                                    
     individuals  are allowed  to catch  and allows  them to                                                                    
     catch it instead of a  cost recovery process that takes                                                                    
     place.                                                                                                                     
                                                                                                                                
SENATOR STEVENS concluded saying he looked forward to having                                                                    
more discussions on this issue.                                                                                                 
                                                                                                                                
CHAIR BUNDE  thanked Senator Stevens  for his testimony  and said                                                               
SB  322 would  have another  hearing  next week.  There being  no                                                               
further business to  come before the committee,  he adjourned the                                                               
meeting at 2:30 p.m.                                                                                                            

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