Legislature(1995 - 1996)
03/01/1996 11:45 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE March 1, 1996 11:45 a.m. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Georgianna Lincoln MEMBERS ABSENT Senator Drue Pearce, Vice Chairman Senator Steve Frank Senator Rick Halford Senator Robin Taylor Senator Lyman Hoffman OTHER SENATE MEMBERS PRESENT Senator John Torgerson COMMITTEE CALENDAR SENATE BILL NO. 198 "An Act establishing the Homer Airport Critical Habitat Area." CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 191(FIN) "An Act relating to the management and disposal of state land and resources; relating to certain remote parcel and homestead entry land purchase contracts and patents; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 198 - See Resources minutes dated 2/21/96 and 3/1/96. HB 191 - No previous action to consider. WITNESS REGISTER Roy Hoyt, Jr. P.O. Box 2121 Homer, AK 99603 POSITION STATEMENT: Opposed SB 198. Paul K. Seaton 58360 Bruce Dr. Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Marla McPherson P.O. Box 3585 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Daisy Leebitter 60385 Skyline Dr. Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Jan Eagle P.O. Box 2285 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Kathleen Moore 4631 Kachemak Bay Dr. Homer, AK 99603 POSITION STATEMENT: Commented SB 198. Gino DelFrate, Wildlife Biologist Department of Fish and Game 3298 Douglas St. Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Bob Moss P.O. Box 774 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Mildred Martin P.O. Box 2652 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Joel Cowper P.O. Box 3585 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Nancy Lord P.O. Box 558 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Dennis Leach Homer City Council P.O. Box 1414 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Elizabeth Webb Pratt Museum Homer Society of Natural History 3779 Bartlett St. Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Lynn Whitmore Homer Fish and Game Advisory Committee P.O. Box 355 Anchor Pt. AK 99556 POSITION STATEMENT: Supported SB 198. Jim Reardon 413 E. Lee Dr. Homer, Ak 99603 POSITION STATEMENT: Supported SB 198. Ron Drathman P.O. Box 12 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Nina Faust Box 846 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Edgar Bailey P.O. Box 2994 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Harry Gregoire P.O. Box 241 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Ken Castner P.O. Box 558 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Pam Brodie P.O.Box 1134 Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Garner McGinty Homer, AK 99603 POSITION STATEMENT: Supported SB 198. Brent Johnson HC 2, Box 508 Clam Gulch, AK 99568 POSITION STATEMENT: Opposed HB 191. Ron Swanson, Deputy Director Division of Land Department of Natural Resources 3601 C St., Ste.1122 Anchorage, AK 99503-5947 POSITION STATEMENT: Supported HB 191. Bill Ward Ward Farms P.O. Box 350 Soldotna, AK 99669 POSITION STATEMENT: Commented on HB 191. Lauren Moss Prince William Sound Setnetters Association P.O. Box 869 Girdwood, AK 99587 POSITION STATEMENT: Opposed HB 191. David Sanden P.O. Box 210306 Auke Bay, AK 99821 POSITION STATEMENT: Commented on HB 191. Joe Chuckwuk P.O. Box 8 Dillingham, AK 99576 POSITION STATEMENT: Opposed HB 191. Kim Rice Egegik Setnet Association P.O. Box 331 Girdwood, AK 99587 POSITION STATEMENT: Opposed HB 191. Marv Ebnet, President Ugashik Setnetters Association P.O. Box 110370 Anchorage, AK 99511 POSITION STATEMENT: Opposed HB 191. Dee Pearson P.O. Box 669 Kodiak, AK 99615 POSITION STATEMENT: Opposed HB 191. Don Fox P.O. Box 2971 Kodiak, AK 99615 POSITION STATEMENT: Opposed HB 191. Pat Jones P.O. Box 544 Cordova, AK 99574 POSITION STATEMENT: Opposed HB 191. John Thomas P.O. Box 284 Cordova, AK 99574 POSITION STATEMENT: Opposed HB 191. Kimberly Peterson P.O. Box 240102 Douglas, AK 99824 POSITION STATEMENT: Opposed HB 191. Tom Bursch P.O. Box 2582 Homer, AK 99603 POSITION STATEMENT: Commented on HB 191. Lauren Carlton P.O. Box 198 Homer, AK 99603 POSITION STATEMENT: Opposed HB 191. Will Bishop P.O. Box 1455 Homer, AK 99603 POSITION STATEMENT: Opposed HB 191. Virginia Adams, President Northwest Kodiak Setnetters P.O. Box 870 Kodiak, AK 99615 POSITION STATEMENT: Opposed HB 191. Hugh Malone Kenai Peninsula Fishermen's Association 119 Seward St., #3 Juneau, Ak 99801 POSITION STATEMENT: Opposed HB 191. Nelle Murray Alatak Basin Setnetters Association P.O. Box 21 Kodiak, AK 99615 POSITION STATEMENT: Opposed HB 191. LaQuiata Yatsik P.O. Box 13 Kodiak, AK 99615 POSITION STATEMENT: Opposed HB 191. Nora Sutton P.O. Box 91756 Anchorage, AK 99503 POSITION STATEMENT: Opposed HB 191. Al Bauman, President Quinhagak Setnetters Association P.O. Box 92895 Anchorage, AK 99509 POSITION STATEMENT: Opposed HB 191. Paul Vick 642 Liten Elv Way Fairbanks, AK 99712 POSITION STATEMENT: Opposed HB 191. Pete Murray P.O. Box 2181 Kodiak, AK 99615 POSITION STATEMENT: Opposed HB 191. Representative Al Austerman State Capitol Bldg. Juneau, AK 99801-1182 POSITION STATEMENT: Commented on HB 191. Kathy Dugan Department of Natural Resources 3601 C Street Anchorage, AK 99503 POSITION STATEMENT: Commented on HB 191. ACTION NARRATIVE TAPE 96-22, SIDE A Number 001 SB 198 HOMER AIRPORT CRITICAL HAB. AREA CHAIRMAN LEMAN called the Senate Resources Committee meeting to order at the Homer LIO at 11:45 a.m. and announced SB 198 to be up for consideration. SENATOR LINCOLN thanked them all for attending the meeting and hoped that the bill would be moving out right away. She asked Senator Leman why there was a Finance Committee referral if there was a $0 fiscal note. SENATOR LEMAN answered that the Resources Committee doesn't issue fiscal notes on bills. ROY E. HOYT, JR. said he had been a pilot since 1942 and in aviation for many years. He has a detailed knowledge of the Homer Airport and its surroundings. Thirty two years ago in the military he was in an accident caused by Canada geese coming through the windshield of a plane. A goose hit his student in the head breaking his neck and killing him. He thought it was irresponsible to have a critical habitat near the airport within city limits. It is impossible to enhance the area for moose without enhancing it for birds, too. He thought the residents of Homer should vote on it. Number 106 PAUL K. SEATON, supported SB 198. He said they had been trying to enhance the winter moose habitat by planting willows in the area on private lands and other lands. This would aid in the local effort that has been ongoing to improve the moose habitat. SENATOR LEMAN asked if what they were doing would enhance the bird population. MR. SEATON answered that he didn't think it would enhance it at all. MARLA MCPHERSON supported SB 198 and said every time she has flown into the airport at Homer in the winter she has counted 30 - 40 moose in the area. She thought the area should be preserved. She didn't think the issue of birds should be of concern. Number 158 DAISY LEEBITTER said she had been an Alaskan for over 41 years and supported SB 198 because of the educational, recreational, and tourism values associated with it. Through the years she has led people through the edge of the wetlands areas through the 11 acres of land trust and she has had a lot of public support so that trails were established and an observation platform was built. Number 202 JAN EAGLE said she was a new resident of Homer and said she moved there to live because of the beauty of the habitat, the wildlife, and the birding. She commented that it seems we need to learn to share habitat as both humans and animals exist and use the same areas. SENATOR LEMAN noted that there was a provision stating that it is subject to the authority of the Department of Transportation and Public Facilities to prohibit or remove an activity, installation, or object on the land that may enhance bird habitat on or in the vicinity of the Homer Airport. Another section says that neither the Department of Fish and Game or any other person may create, develop, or enhance bird habitat within the Homer Airport Critical Habitat Area. He thought that was a good point. KATHLEEN MOORE said her concern was with being able to continue multiple use of lands. She said she and her family use trails that go from Kachemak Bay to East Road. She said that moose are around the town only when the snow is too deep to be somewhere else unless there are problems with predation when they are calving. She supported Mr. Hoyt's concern with accidents from birds flying into planes and suggested that when people see large flocks of geese near the airport to let the airport know. SENATOR LEMAN asked Senator Torgerson if he knew of anything in this bill that would preclude that kind of activity. SENATOR TORGERSON replied, but the recording was indistinct (background noise). SENATOR LEMAN said they would look it over and make sure she would not be restricted. DAVE VANDERBRINK said he had been a member of the Wetlands Task Force. His primary interest from long observation is that there is a great deal of summer time moose habitat and very little for winter. That is his primary interest in establishing more area in the lower elevations for the moose to attempt to survive. He didn't think the bird problem would be of any great concern so long as managers don't make things too neat, for instance, making the grass too short which attracts geese. He didn't see how birds would be more of a problem in the future than they are now. GINO DEL FRATE, ADF&G Wildlife Biologist, testified, but the recording was indistinct due to background noise. Number 359 BOB MOSS supported SB 198 based on 50 years of watching changes and developments in the Homer area. He thought the point had been reached that this legislation was needed. He said they are working with the whole ecological system, not just one part. He said this issue has support from the city fathers and from the Division of Forestry. MILDRED MARTIN supported SB 198. She said many moose died in the winter of 1992 because the snow was too deep up on the mountain. She thought it was vital that they preserve the habitat for them and recognize the fact that everytime someone builds they are losing habitat. She said local support is very strong. Number 447 JOEL COWPER said he supported creating the habitat area for moose and for other species, as well. He thought everything should be done to protect the area. He said the birds were not a problem now. SENATOR LEMAN said it looked like it wasn't likely that the legislature would be able to fund any significant effort to enhance habitat. NANCY LORD supported SB 198. She was concerned that the session was half over and the bill was still in its first committee of referral. DENNIS LEACH, Homer City Council, said whenever testimony was taken on this issue, it was favorable. He explained that Homer is in the process of changing its main focus of economy from commercial fishing to tourism. There is a tremendous future there in tourism, but it's going to take some work. That particular herd of moose represents the vast majority of the watchable wildlife on the Peninsula. ELIZABETH WEBB, Pratt Museum Homer Society of Natural History, said they supported SB 198. She read a letter from the Society, representing about 800 members, reviewing the proposal for formation of a critical habitat area for the Beluga Wetlands. The board members were unanimously in favor of the proposal. She paraphrased comments from Dr. George West, a local ornithologist regarding bird populations and the aircraft hazard issue. He said when their task force was formed there was a healthy colony of 40 pairs of arctic Aleutian terns nesting in the marsh. Since that time the number of nesting terns has dwindled to two to three pairs. There are several species of duck which nest there, also. When there were more nesting birds in the area the task force was not aware of any trouble with aircraft. He assured everyone that even with critical habitat status there would continue to be increased pressure on habitat and birds from recreational use, so there would be even fewer birds, not more birds, to present a hazard to aircraft in the years to come. The effect of designating the Beluga Wetlands with critical habitat status will benefit the moose more than the birds. LYNN WHITMORE said he is co-chairman of the Beluga Wetlands Task Force and is the chairman of the Homer Fish and Game Advisory Committee. He strongly supported SB 198. JIM REARDON, a 40-year resident of Homer and a 46-year resident of Alaska, said he managed the wildlife department of the University of Alaska in 1950 and worked for the ADF&G for 12 years. He has also worked at the Homer Airport. He said the problem with the birds down there is that they seem to be diminishing and he didn't see how the critical habitat area would increase the danger from bird strikes by airplanes using the Airport. RON DRATHMAN, Kenai Peninsula Borough Assembly (KPBA), said there's really nothing you can do about the situation. It's not good to have an airport near developed land and if it is out of town there will be some animals around it. He said he thought we are fighting a losing battle against development, but we should do something to protect the area. NINA FAUST, Kachemak Bay Conservation Society, strongly supported SB 198. She thought it was a good idea to set aside areas of habitat for the economic infrastructure associated with tourism. Number 573 EDGAR BAILEY, Homer wildlife biologist, supported previous testimony of Jim Rinehart and George West. Being from California he has seen what has happened cumulatively with the lost habitat and if we don't use some foresight we are going to have the same thing happen in Alaska that is occurring in California. TAPE 96-22, SIDE B Number 580 He said the key wintering areas are what are in short supply. He thought this was an outstanding opportunity to look at cumulative impacts and have foresight and safeguard a very key area which is only a little more than a square mile. It is very essential for wintering moose populations. MR. BAILEY thought passage of this bill was extremely important and he didn't think there would be any real problem with birds because with the surrounding loss of habitat the bird problem is actually diminishing. HARRY GREGOIRE said there was a bird problem at the airport and they would continue to have a problem with enhancing the moose habitat. He said there was an accident at the airport that wasn't recorded. He said the economic base is dependent upon the airport. He said they need to make jobs. He found that $87 million dollars of land within the city limits of Homer is either State, federal, or Borough - non-taxed. That is one fourth of their total lands. DOT want to take another 600 feet (300 acres) which would wipe out the commercial D-2 property. MR. GREGOIRE said he was concerned about the airport's ability to function, but he didn't think SB 198 would keep it from being able to function. KEN CASTNER, Homer resident and private pilot, said he does a lot of his flying around Beluga Lake. He said the summer wind in Homer comes in from the Southwest and the proposed critical habitat area is his approach into Beluga Lake and he sees moose there most of the time. Moose aren't a big problem. He said that Beluga Lake is not the wildest place he flies in and out of. There are a lot of places that have animals and birds, especially large birds like swans, loons, and cranes, but that is just a factor in being an Alaskan pilot. Pilots carry experiences and relations of experiences around with them so they don't run into the same problems. Bird avoidance is part of the skills that you build. He really didn't see what the alternative was to making this a critical habitat. He would object to putting a tower up there for the approach to Beluga Lake. Short of killing every bird in the area he really didn't know how to avoid that problem. PAM BRODIE supported SB 198. She spends a lot of time out of doors and thought it was important to keep the area open to the moose. An unidentified Homer City Council member (Jack) wanted Homer to be a town where people could come in and see a herd of moose. He said the area on the north side of the runway and the small areas to the south are specifically targeted by moose. As pressures around these areas increase the population of birds decrease. We are stewards not only for now, but for generations to come. GARNER MCGINTY said he had been in Alaska for 50 years and had been all over. Moose and bird habitat is all over Alaska. He said there are two choices here. Either everyone moves out and lets the moose and birds have it or we have to work together. SENATOR TORGERSON thanked everyone for their participation at the meeting. SENATOR LEMAN also thanked his staff, Mary Vollendorf, and Eric Musser, staff to Speaker Gail Phillips, for their help. Number 451 SENATOR LEMAN recessed the meeting at 12:55 p.m. TAPE 96-23, SIDE A Number 001 HB 191 MANAGEMENT OF STATE LAND AND RESOURCES SENATOR LEMAN reconvened the Resources meeting at 2:55 p.m. at the Kenai LIO and announced CSSSHB 191(FIN) to be up for consideration. He said he intended to take testimony on sections 24, 25, and 26 which contain the changes proposed by the Department of Natural Resources in the operation of the shore fisheries program. He had met with the Department and expressed his concerns about what this would do with the program that he believes is operating fairly successfully and is paying for itself. REPRESENTATIVE THERRIAULT, prime sponsor, commented that HB 191 is a housekeeping measure that attempts to clarify certain Title 38 statutes governing DNR. It is intended to bring greater efficiency to the management of State lands without sacrificing public involvement in making the decisions. This bill revises the remote cabin permit program to a program that will allow for either the sale or lease of land for a remote cabin sight. This permit program was never put into action because of the associated administrative costs with a minimal return to the State. This program is just one example of proposed changes intended to give DNR the tools necessary to dispose of State land more efficiently. The CS also includes a section clarifying that the sale of State land does not obligate the State to provide additional services. HB 191 changes the shore fisheries program to allow a reasonable rate of return to the State for the use of State lands for setnet sites. He spoke with Senator Leman and Mr. Swanson, DNR, to understand their concerns regarding the shore fisheries section of the bill . It was not his intent to have a $300 shore fishery lease go up to $5,000. He has talked with Senator Leman about the possibility of tagging the lease to some reflection of the value of the property as it reflects the value of the permit being used. He would be willing to consider a percentage of the value that would be at a less than one percent or perhaps they could consider the existing $300 to be a floor and then have an upper limit of no more than $1,000. The lease payment that would be generated based on the percentage that would be set in statute would be somewhere between that floor and ceiling, but nowhere close to the $5,000 people are fearful of. REPRESENTATIVE THERRIAULT said many sections of the bill are to allow the public to utilize that State resource at a fair market value. He said he thought there was a way to address the concerns with the homesteading provision and allow people to choose to continue their homestead under the old statutes or the new statutes, but not allow them to pick and choose between sections. In the DNR budget review, the shore fisheries issue has come up and in the current year funding for the program has been zeroed out. If this legislation passed, it would be accompanied by a fiscal note reflecting money put back into the budget for continuation of the program. Number 199 SENATOR LEMAN noted that Representative Alan Austerman was in attendance at the Kodiak LIO. BRENT JOHNSON said he does land surveying and has a small business of drawing shore fishery lease diagrams for setnetters in Bristol Bay, Kodiak, Prince William Sound, and other Cook Inlet locations. He said this legislation would hurt his business because it deters fishermen from applying for shore fishery leases. MR. JOHNSON said his family holds five shore fishery leases. These leases have accomplished a very good purpose in the setnet industry by giving fishermen stability. Section 24 says it would eliminate the unique leasing process for setnet sites which need a unique leasing process. The "higher value leases could be awarded at auction" language will be opposed by all setnetters because they are opposed to any system that would auction off sites where a person who has fished a sites for years will be disenfranchised from it by being outbid. Fishermen who lease sites often move rocks, stakes, and things away from their nets. They also install permanent anchors and make improvements that increase the value of their own sites. He thought it might be a good idea to tie the value of the lease to the permit renewal which fluctuates according to the value of the industry and area. Number 239 REPRESENTATIVE THERRIAULT pointed out that the value of the permit would fluctuate with the market and it is an average around which they are trying to structure. He thought the language could be tightened up to ensure that an existing lease holder would be able to continue without fear of having someone take a lease out from under them. That is not his intention. SENATOR LEMAN noted that language in the bill did provide for maintaining that integrity throughout the term of the lease, but it doesn't address the issue of lease renewal. SENATOR LEMAN noted that Representative Ivan joined the Committee at the Dillingham LIO. RON SWANSON, DNR, said it has been in statute for many years that if a person has a lease, they will be able to renew it without competition. There is some confusion, though, because it refers to section 38.05.102 which deals with long term leases. They have always interpreted that statute to say we should treat the short term set net leases the same as a long term lease when it comes up for renewal. MR. SWANSON agreed with Representative Therriault that the $5,000 reference is in no way intended to apply to the shore fishery lease. The $5,000 limit and the 10-year limit is scattered throughout Title 38. If the lease is for under 10 years, under $5,000 they can negotiate the lease. Over that it has to go to competitive auction. That is why the shore fishery leases were established for under 10 years. He said they are open to different ideas regarding the fees. Their intent is to figure out a more equitable way to charge for the use of State lands rather than to just cover administrative costs. They also feel that they don't want to be "counting fish" and they don't want to punish the person who fishes a site very hard compared to a person who goes out for one or two openings. Regarding the new applications for an area coming in, it doesn't happen very often, where they must determine the most eligible person for the site. A competitive bidding situation would be used only in extreme cases. Number 325 REPRESENTATIVE THERRIAULT assured people he would be willing to structure the language so if there is a temporary lapse and if a person has held the lease for a long time and wants to renew, there is a finding that person is the most eligible and could reestablish that lease. MR. SWANSON reiterated that is their intent. SENATOR LEMAN noted they may want to retain some of the old language in section 24. MR. SWANSON added that they wanted to make it "may" instead of "shall." If they are put in the situation where they cannot make a determination, they are forcing them to go one way. They want an option in the rare case that they can't figure it out. BILL WARD, Ward Farms, said he thought the statute should retain the "shall" status because the individuals need to have the assurance that as land comes available and as they need the opportunity to expand their base of operations they will be able to do so. He added that SB 162 should "dove tail" with actions in this bill. LAUREN MOSS, Prince William Sound Setnetters Association, said they feel the revisions to HB 191 are not necessarily needed. They feel if the system works, why fix it. It's efficient and simple and she didn't think it would reduce the cost. She didn't see how auctioning off the high line set nets would really raise any money. She reminded them that they are talking about a fishery, not real estate. MS. MOSS told Representative Therriault that it appears to them that the budget line for the shore fishery is being held hostage to these provisions and asked him if that was a misconception. Number 409 REPRESENTATIVE THERRIAULT replied that the Governor zeroed out the funding for the program and he is trying to make the budget numbers work. Right now the expense of issuing the permits can be covered, but now the statute doesn't allow the expense of adjudicating any of the permits. He also said that many of the people who are testifying today mistakenly believe that they are going to shift everything over to an auction. That is not the intent at all. If a person has a lease, they will be able to continue that lease for as long as they want to. He didn't think there would be that much change in the program. They are talking about a floor on the amount they would pay for the lease and he is willing to consider a ceiling so that the price will not go through the roof. The auction will only come into effect when there is a dispute DNR cannot make a determination of who is the most qualified applicant for a lease. SENATOR LEMAN commented that he and the legislature know that is his intent, but the legislation as currently written does not say that. Number 426 DAVID SANDEN said his concern was with the 4,000 people who applied for homesteads last year and of that number 53 received homesteads. He wanted to know if they would be put under the old law or the new law. He is also concerned with the effective date of the legislation and how that would affect the staking period which is normally from June 15, 1996 - August 14, 1996. He suggested that there be something in the staking packet allowing them to choose which law they want to go with. SENATOR LEMAN replied that was the intention of the Department and the bill's sponsor. MR. SWANSON also replied that was absolutely their intent if this legislation passes. JOE CHUCKWUK said his concern was what affect the auction would have on existing fishermen in the Bristol Bay area and elsewhere. Historically there has been enough effort by foreign companies to attempt to take over the fishery in Alaska. This makes fishermen very suspicious when leases are auctioned off to the highest bidder. Number 489 KIM RICE, Egegik Setnetters Association, said they feel as other people who testified that the system they have now works. He thought it might change a lot of people's minds if the real intent were put down, because everyone was reacting to the $5,000. He said that right now the program is paying for itself and he would be willing to pay for the added administrative costs to keep the program as it is. However, people would drop their leases if they cost too much more and then the system would fall apart. With the system now, people respect each other. MARV EBNET, President, Ugashik Setnet Association, said that people are struggling with the costs they have now. Additional costs in the setnet industry would cause people to drop their leases. DEE PEARSON said she had setnetted on her site in Kodiak since 1947 with her family and she believed the bill was very unfair to setnetters. She said they only use a rock to tie to and they don't fish on State lands; they fish in deep water and are required to tie to something above high water. That is the only time they use the land. She feels they are already paying quite a bit and they are being singled out as setnetters to pay more. If the State needs money she thought they should do it on a more equitable basis. She said the Kodiak Wildlife Refuge System makes their situation a little different than others in the State. They have fairly large investments in their shore facilities having been there so long. They are all small businesses and employ a lot of young people who are working their way through school. She said that she pays her help well and felt that another expense was more than she could stand. She was definitely against auctioning off the sites. She didn't see any language that addressed the sale of a site. DON FOX, Kodiak resident, concurred with Ms. Pearson's statements. He said a lot of their shore support facilities are on Wildlife Refuges which they pay $250 per year for use of. The values of their permits are approximately $120,000 and they use a rock about 10 ft. big. To charge a one percent fee of that would probably be $1,200. He closed asking why fix something that's not broken. Number 567 MR. SWANSON clarified that they don't deal with the sale of permits. The person who has the lease deals with it and they honor the lease. PAT JONES, Cordova setnetter, said sections 24, 25, and 26 should remain as they were. She said the program has been working and giving fair value to the State and she didn't see any reason to change it. JOHN THOMAS said his family had a setnet in Prince William Sound for a number of years and he felt the system was working quite well. KIMBERLY PETERSON opposed HB 191. She said she and her husband are Kodiak setnetters from the Alatek Bay District where her husband had been fishing since 1964. They bought their sites before limited entry was established and they have been traditional sites since the 1940's. TAPE 96-23, SIDE B Number 580 MS. PETERSON said they got shore fishery water leases to avoid the political contentions in offshore fisheries with the advent of limited entry. They paid for surveying and an attorney and applied for shore leases. The fees for the leases at that time was $150; now they are $300. She agreed that they should pay for the services they are receiving. A few years ago in Alatak there was a conflict and they had to get their sites resurveyed and their point of attachment monumented since they go under water. All of the fishermen involved paid for everything, even for DNR to come down. Now, she said, they are being told they want to charge more per year for their leases and when they have to get them reissued the fee could be based on the market value of the sites; and if they don't pay they lose their sites to the highest bidder. She also understood that the yearly lease payment would be based on the market value of their permits and she asked why some fishermen should pay more for the same service. Number 556 TOM BURSCH, Homer resident, said he and his wife setnet in Bristol Bay near Nugashik and their operation makes a substantial contribution to the State's economy. He thought there was confusion with the auction terminology and if they are talking about a $1,000 ceiling on the leases, he didn't see where the auction wording should even come in. He said other methods needed to be looked into of resolving conflicts over leases, like using a private arbitrator and having the loser pay. LAUREN CARLTON thanked the committee for the opportunity to speak and said she represented herself and Eric Beeman who has setnetted with his family for 30 years at Kalgin Island. She said they understand the frustration in DNR with conflicts over sites. She suggested beginning a mediated program because Mr. Beeman is in that situation right now. She is really concerned with section 27, the auction section. She said the three year permit process is very important because they need to know in advance how much gear and crew they will need. She thought the auction should be completely removed. MS. CARLTON said the way she hears it is that the biggest costs are over arbitration in certain site conflicts. WILL BISHOP, Homer resident, said most points have already been made a couple of times, but he said the wording he sees is too vague. The system works, so leave it alone. He pointed out that site values change each year with fish prices, weather, and all sorts of things. Number 488 KIMBERLY PETERSON repeated her testimony as the transmission was cut off the first time. VIRGINIA ADAMS, Northwest Kodiak Setnetters, said they represent about 80 permits. She pointed out that just having the tremendous participation from setnet groups testifying indicates the pervasiveness of interest on this issue and she hoped the consensus would be noticed by the committee. She said the shore fishery program was established to preserve the fishing opportunities to those fishing traditional areas as well as to add stability to the State setnet fishery. Awarding a shore fishery lease to a high bidder in the case of a new or contested lease would actually create instability within the setnet fishery and may contribute to shore fishery disputes. They appreciate the difficulty the Division of Lands has in resolving conflicting claims and their desire for a solution in the form of a law. This solution is ill conceived. Her group is working on an alternative proposal or approach to this issue. She suggested they solicit the opinions of the different setnet organizations around the state. Number 420 HUGH MALONE, Kenai Peninsula Fishermen's Association, thanked them for having a full hearing on this issue. This legislation would bring uncertainty to the business investments connected with a shore fisheries lease. If it is the intent that the present lease holder should have priority, that should be specified in the legislation. The second point he wanted to make concerned the potential increased cost to shore fisheries lease holders under this proposal. He said there has been no clear reason given for the potential increase in costs. If the program is about breaking even now and if the director has the ability to set the administrative costs of the program, collecting costs through this mechanism beyond that seems inappropriate. The fisheries resource does contribute now to the State's economy in a number of ways, principally through the raw fish tax. The industry is facing a fairly dramatic price drop in the value of our salmon and even though it's not intended, this legislation could put people out of business. Number 391 NELLE MURRAY, Alatak Setnetters Association, said she was confused about this legislation because it seems that the original reasoning behind it is no longer valid. When this program was introduced the shore fisheries lease program was running a deficit. Since that time, the yearly lease payments have doubled and there's one less person in the lease office. It seems as if there is widespread concern about the conflicts that occurred in the lease program; last year there were five (out of 1,344 leases). She felt this legislation was a way to raise revenue for the general fund. She looked up the statutes referenced in section 24 and 38.05.070 says negotiated leases are not eligible for a preference. Historical use has been the backbone of the fishery long before the shore fishery lease program was instituted. If past use is no longer an important factor, the people who are going to be hardest hit are those who have been in it the longest. Another statute that bothers her is 38.05.102 that states when your lease is up for renewal, the State can renew at its appraised market value. This could vary widely from year to year. The legislature should try to provide a stable environment for independent fishermen. The focus should be on assisting businesses to create a strong economic base. This legislation will put older well established village people out of the fishing business in favor of the younger more aggressive fishermen. It will create new proposals before the Board of Fish as people try to save their businesses. Number 350 YAQUIATA YATSIK, Kodiak setnetter, opposed HB 191. It singles out the setnetters to provide extra money to DNR. She asked why people who have been in the setnetting business for hundreds of years be required to possibly have to bid for their right to fish areas that have been fished by their parents and grandparents. A lot of sites are not listed as registered sites. HB 191 is a monster that would require more money for DNR and the Division of Wildlife Protection. NORA SUTTON, Bristol Bay setnetter, agreed with everything everyone has said. She said this legislation would cause disarray in every part of the setnet industry. She has heard Mr. Swanson say it is not their intent to do certain things, but everything is working very well the way it is. Number 325 AL BAUMAN, President, Quinhagak Setnetters Association, said this program was originally established in 1963 when fishermen asked for help. The shore fishery program was created bringing order, procedure, and stability to a volatile business. He said they presently have a means of settling conflicts amicably and cost efficiently. MR. BAUMAN said the shore fishery lease program is voluntary. The bill, as written, has no method for appraising value. Tying a lease fee to the limited entry permit would discourage people from obtaining or maintaining leases. He would like to see any fees this program generates to be dedicated back to it and not siphoned off to some obscure program. SENATOR LEMAN informed Mr. Bauman that these fees can't be dedicated. PAUL VICK said he setnets on the west side of Kodiak. He added to the comments made today that this bill would create a new level of conflict on both the beach and in the court room. He said he pays fees in eight different places, to license his skiffs, a limited entry permit fee, a shore lease fee, a fee for having his cabin on a refuge, a business license, and he is taxed on the cabin and the land that he doesn't even own; he pays a 3.67 percent tax on his fish, plus the cannery charges another 3 percent. He said this is a fishery and not a land use situation. MR. VICK said he was appalled that this bill made it through the House without the fishing community being made aware of it. PETE MURRAY, setnetter from the south end of Kodiak, said that most of what he wanted to say has already been said. He pointed out that the value of permits doesn't always go up. If they were to go down, DNR would be severely underfunded. REPRESENTATIVE AUSTERMAN asked that the record be corrected to show that contrary to what was testified to early in the hearing, the Governor's proposed budget cut new revenues from shore leases at $300,000. The budget has not been "zeroed out" for the shore fish lease program. KATHY DUGAN, DNR, said she wanted time to assimilate all the comments. REPRESENTATIVE THERRIAULT commented that many times intentions are not clear in legislation and he would be willing to tighten the language to make sure that what they are intending to do is very clear. He thought most of the comments today were based on a misunderstanding of why the $5,000 was included in the language and whether all leases would go to a competitive bid process. He wanted also to make sure that a person could sell their lease to another person with their permit. He wanted this to apply only to new areas or when a person lapses their lease. Attaching the fee to the value of the permit is a way of tracking the market fluctuations. If they establish a floor on the current $300, many individuals would pay no increase for their yearly lease. He would certainly be willing to talk about a ceiling for additional insurance. He said he would work with everyone to make sure as many concerns as possible are extinguished. He gave examples of how fair market value is used in business transactions and said he thought that was a fair value to use. SENATOR LEMAN thanked everyone for their participation and adjourned the meeting at 4:37 p.m.