Legislature(1997 - 1998)
01/28/1998 03:35 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE
January 28, 1998
3:35 P.M.
MEMBERS PRESENT
Senator Rick Halford, Chairman
Senator Lyda Green, Vice Chairman
Senator Loren Leman
Senator Bert Sharp
Senator Robin Taylor
Senator John Torgerson
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator John Torgerson
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 33
Supporting passage of S. 1221, the "American Fisheries Act," by the
United States Congress.
PREVIOUS SENATE COMMITTEE ACTION
SJR 33 - No previous action to consider.
WITNESS REGISTER
Senator Jerry Mackie
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Sponsor of SJR 33.
Mr. Ron Dalby, Employment Manager
American Seafood At-Sea Processors
P.O. Box 1431
Palmer, AK 99645
POSITION STATEMENT: Opposed SJR 33.
Ms. Michelle Ridgway
119 Seward St., #9
Juneau, AK 99801
POSITION STATEMENT: Supported SJR 33.
Mr. Dave Benson, Director
Government Affairs
Tyson Seafoods
P.O. Box 79021
Seattle, WA 98119
POSITION STATEMENT: Supported SJR 33.
Mr. Joe Plesha
Trident Seafoods
5303 Shilshole Ave. N.W.
Seattle, WA 98107
POSITION STATEMENT: Supported SJR 33.
Mr. Vince Curry
Alaska Prime Resources Consultant
P.O. Box 201429
Anchorage, AK
POSITION STATEMENT: Opposed SJR 33.
Mr. Henry Mitchell
Mitchell, Inc./Tyson Seafoods
900 W. 5th Ave.
Anchorage, AK 99502
POSITION STATEMENT: Supported SJR 33.
Mr. Jim Ingram
P.O. Box 851
Dillingham, AK 99576
POSITION STATEMENT: Opposed SJR 33.
Mr. Al Burch
Draggers Association
P.O. Box 884
Kodiak, AK 99615
POSITION STATEMENT: Supported SJR 33.
Mr. Eugene Asicksik, President
Norton Sound Economic Development Council
Kouskov St
Kodiak, AK 99615
POSITION STATEMENT: Commented on SJR 33.
Ms. Tammy Pound
Unalaska, AK 99685
POSITION STATEMENT: Opposed SJR 33.
Mr. Tiny Shasteen
Unalaska, AK 99685
POSITION STATEMENT: Opposed SJR 33.
Mr. Kenny Wilson
P.O. Box 766
Dillingham, AK 99576
POSITION STATEMENT: Opposed SJR 33.
Mr. Oliver Holm
P.O. Box 3865
Kodiak, AK 99615
POSITION STATEMENT: Supported SJR 33.
Mr. Jeff Stephan
United Fisheremen's Marketing Association
P.O. Box 2917
Kodiak, AK 99615
POSITION STATEMENT: Supported SJR 33.
Mr. Chris Berns
P.O. Box 26
Kodiak, AK 99615
POSITION STATEMENT: Supported SJR 33.
Mr. Ron Selby, Mayor
Kodiak, AK 99615
POSITION STATEMENT: Supported SJR 33.
ACTION NARRATIVE
TAPE 98-1, SIDE A
Number 001
SJR 33 - SUPPORT AMERICAN FISHERIES ACT
CHAIRMAN HALFORD called the Senate Resources Committee meeting to
order at 3:35 p.m. and announced SJR 33 to be up for consideration.
SENATOR MACKIE, sponsor of SJR 33, said he introduced this
legislation to put Alaska on record in support of Congressional
initiative S. 1221 or the "American Fisheries Act" which preserves
American control of the commercial fisheries in our nation's 200
mile economic zone and improves the conservation of those
resources.
The act would increase the U.S. ownership standard for vessels
fishing in U.S. waters and close a loophole in the commercial
fishing reflagging prohibitions that allowed at least 14 additional
large factory trawlers in waters off Alaska. The bill would also
phase out all large factory ships whose size and harvesting power
threaten conservation management goals and responsibilities.
Alaskan fishermen and on shore processors have struggled to gain a
foothold in these new and valuable fisheries off of our own shores.
The State has directly assisted in this development through loans
and tax incentives. It is estimated that at least $80 million was
spent in bottomfish facilities alone in the 1986 to 1991 period of
the State's tax incentive program. In addition to allowing
expanded harvesting opportunities to Alaskan fishermen, this
development has extended the processing season in many communities
so that year-round jobs have replaced the seasonal, migrant worker
prone jobs. The year-round operations of Alaska's seafood industry
has further stabilized the economies of Alaska's major
transshipment and commercial centers.
The growth and presence of large, foreign controlled fishing fleets
in U.S. waters contradicts the very purpose and intent of the
original Magnuson-Stevens Act to control and Americanize the
harvest of offshore fish resources and protect them from depletion.
The current overcapitalization of the offshore harvesting capacity
threatens both the resources and our Alaskan economic stake in its
continued health. He believes that the success of Senator Stevens
in the passage of S.1221 is of foremost importance to the economic
interests of the State and its citizens. Moreover, it is critical
to the long term vitality and sustainability of our offshore marine
resources.
SENATOR MACKIE said Senator Stevens was not able to attend this
meeting via teleconference, but faxed a statement to be read into
the record. It's dated January 28, 1998. "Dear Senator Mackie:
Thank you for introducing SJR 33 in support of S. 1221, the
American Fisheries Act, the bill Senator Murkowski and I introduced
last September. Our bill has three primary purposes: (1) to
implement a meaningful U.S.-ownership standard for U.S. fishing
vessels; (2) to correct for misinterpretations of the 1987 Anti-
reflagging Act; and (3) to impose a permanent moratorium on the
entry of any more of the massive fishing vessels that have caused
significant conservation and economic problems in our fisheries.
As you move forward with the resolution, I thought it might be
useful to explain a little of the history behind S. 1221.
In 1976, Congress extended U.S. jurisdiction over fisheries to 200
miles through the Fishery Conservation and Management Act (what is
now called the Magnuson-Stevens Act, or "MSA"). In addition to the
goal of conserving the nation's fishery resources, the MSA gave
U.S.-flag fishing vessels a priority over foreign vessels in the
harvest of U.S. fishery resources. In 1986, Alaska fishing
communities brought to the attention of Congress a loophole which
allowed foreign investors to simply re-register their vessels to
fly the U.S. flag and receive the priority to our fish. Congress
acted quickly through the 1987 Commercial Fishing Industry Anti-
Reflagging Act to try to close this. Under the Anti-Reflagging Act,
a fishing vessel must meet a 51 percent ownership standard to
qualify for the Coast Guard fishery endorsement that allows vessels
to get the U.S. priority. Congress also attempted through the
Anti-Reflagging Act to close a loophole which at the time allowed
foreign-built vessels to qualify for U.S. fisheries using pieces of
steel from former U.S. vessels and calling themselves "rebuilt."
Unfortunately both the ownership and rebuild provisions of the
Anti-Reflagging Act were significantly misinterpreted by the Coast
Guard and the court system. These misinterpretations were among
the reasons that I, Senator Murkowski, and Senators from New
England, Southeast, and Gulf of Mexico states proposed S. 1221.
Without a clear distinction between U.S.-controlled vessels and
foreign-controlled vessels, there is no way to provide the U.S.
priority required by federal law. In 1992, the D.C. Court of
Appeals let stand an interpretation of the Anti-Reflagging Act that
gave all vessels already in the U.S. fisheries by 1987 or "rebuilt"
overseas by 1990, a permanent exemption to the U.S. ownership
requirement. Congress had intended for a limited exemption in the
Act to allow existing foreign owners to continue to operate vessels
under U.S.-flag until they sold those vessels, but not for the
vessels to be permanently exempted. S. 1221 would correct this by
eliminating all exceptions to U.S. ownership and by requiring all
U.S.-flag fishing vessels to comply within 18 months of enactment.
The bill would also raise the ownership standard to 75 percent, the
same standard used for other types of U.S.-flag vessels operated
commercially in U.S. waters.
This type of domestic harvest priority is embodied in Article 62 of
the United Nations Conference on the Law of the Sea and is the
recognized international law in the waters of every nation of the
world. Both Japan and Norway, for instance have laws which provide
a priority for their citizens in the fisheries off their shores.
Consistent with the requirements of the Law of the Sea, our federal
law requires that foreign vessels be allowed to harvest any portion
of the allowable catch which U.S. vessels cannot harvest. In
almost all U.S. fisheries, however, there are enough vessels above
the 75 percent U.S.-ownership standard to harvest the entire catch.
The limited exception to the foreign rebuild prohibition in the
Anti-Reflagging Act was also badly misinterpreted. When the Act
passed, Congress exempted from the prohibition any vessel for which
a contract had already been signed, provided that the same person
or entity who then held the contract also received delivery of the
rebuilt vessel by 1990. Congress did not want to fuel speculative
investment in U.S. hulls, or create transferable value in option
contracts for U.S. hulls that could qualify to be "rebuilt"
overseas into massive trawlers many times bigger than the original
vessel. Congress intended for the exemption to apply only to about
a half dozen vessels for which investments were known to already
have been made. Under the Coast Guard's interpretation of the Act,
however, an additional 18 vessels were allowed to be "rebuilt" into
massive factory trawlers in foreign yards. All 18 of these vessels
have been able to operate in the U.S. fisheries off Alaska - not
subject to even the existing U.S. ownership requirement.
S. 1221 would put the burden of solving the overcapitalization
problems created by these 18 vessels on the foreign owners of these
vessels. The bill specifies that any of the 18 vessels that were
not U.S.-owned as of September 25, 1997 can only remain in the
fisheries (as U.S. fishing vessels) if they become 75 percent U.S.
owned, and if the fishery license for a vessel of equal or greater
size is retired. This is less extreme than simply kicking them out
of the fisheries - it gives them a chance to sell stock or
otherwise cure their foreign ownership and remain in the fisheries
if another vessel in the fisheries, which might include another of
the 18 vessels, surrenders its fisheries license.
Opponents have suggested that S. 1221 will kick all factory
trawlers out of the U.S. fisheries. This is not true. The bill
will allow any factory trawler that entered the fisheries other
than through the foreign rebuild misinterpretation to remain in the
fisheries if it complies with the 75 percent U.S. ownership
standard within 18 months. The practical effect will be a
reduction in the factory trawler fleet of between 5 and 10 vessels,
with the remaining 50 or so factory trawlers allowed to stay in the
fisheries for the useful life of the vessel. No new vessels above
165 feet, 3,000 shaft horsepower, or 750 tons would be allowed to
enter the fisheries.
Certain opponents of S. 1221 have tried to argue that factory
trawlers and other fishing vessels above the size thresholds in S.
1221 are clean fishing operations. Factory trawler operators in
the mid-water pollock fishery, for instance, point to their discard
rate of 4.3 percent in 1996 (the most recent year for which
National Marine Fisheries Service statistics are available). They
correctly argue that this is a relatively low rate compared to
other fisheries (due primarily to the fact that mid-water pollock
do not tend to co-mingle with other species). However, their rate
is still more than three times the rate of smaller vessels in that
same fishery -- the catcher vessels in the mid-water pollock
fishery (most of which are below the size thresholds of S. 1221)
had a discard rate of only 1.4 percent in 1996! It's also
important to note that: (1) even at a discard rate of 4.3 percent,
mid-water pollock factory trawlers discarded 41.8 million pounds of
usable fish in 1996; (2) that these same vessles operate in other
fisheries where their inherently high discard rates have even
greater negative effects; and (3) their recovery rate for human-
consumption quality seafood is a third less than the recovery rate
for the same pollock processed on shore. Even as factory trawlers
begin making fish meal under the North Pacific "full retention"
plan, less benefit is being derived by Alaska and the nation than
if those pollock were processed on shore into seafood that could be
eaten by people.
It was an eye-opener for many Alaskans recently when some Seattle-
based factory trawler operators finally changed tactics after they
failed in 1996 to stop our federal amendments to protect fishing
communities, reduce bycatch and waste, and create a permanent
fishery allocation for western Alaska villages. The Seattle-based
companies finally dropped their law suit against the State's
landing taxes and began to try to expand shared benefits with
Alaska.
Thanks again for your efforts in the State Legislature to express
support for this bill that is so important to Alaska. With best
wishes, Cordially, Ted Stevens."
Number 220
SENATOR LEMAN agreed with Senator Mackie that this subject is hard
to understand. He also said that the on-shore processing has not
been as good as he was led to believe it was going to be nor was
the off-shore processing as bad as he was led to believe. He is
fully supportive of the Alaska fleet, especially the Alaskan owners
who want to trawl and have conflicts with fully utilizing their
vessels.
He is also concerned with ensuring that the on-shore processors and
ownership of them be examined to determine if we are benefiting
Alaska to the optimum extent possible.
SENATOR LINCOLN asked if S. 1221 was in its final form or was it
still being amended.
SENATOR MACKIE replied that he didn't believe it was in final form.
This is its introductory form. Mr. Trevor McCabe, Senator Stevens'
Chief Staff Member, said that this issue is very high priority and
they expect hearings to start in March.
SENATOR TAYLOR hoped there was a way to modify SJR 33 to take care
of problems with NMFS attempting to utilize exclusive fish habitat
zones. They have expanded their definition based upon the changes
Senator Stevens put in the Magnuson-Stevens Act. This might have
some cumulative effect on particulate matter flowing down the river
and into the Gulf.
SENATOR MACKIE responded that he would pass that on to Senator
Stevens who said he would be happy to talk to any Committee members
on the phone personally on this issue.
CHAIRMAN HALFORD said he didn't care to do anything that is going
to help anybody, big boat or small boat, drag a net on the bottom.
The next thing that is important to him is bycatch; then he's
concerned with where the impact goes in terms of communities and
the State of Alaska as a whole. He hoped that Senator Stevens was
after the maximum benefit to Alaska with a minimum damage to the
bottom.
SENATOR LEMAN added that he wanted to minimize the interception of
those stocks that have been so controversial in Alaska with other
user groups, especially as it impacts our management schemes within
State waters.
SENATOR MACKIE appreciated those concerns, but said he is trying to
stay narrowly focused on this legislation which deals with foreign
ownership loopholes.
Number 322
MR. RON DALBY, Employment Manager, American Seafood At-Sea
Processors, said the job loss, especially in western Alaska would
be immediate - 650 jobs this year and over 1,000 jobs next year.
CHAIRMAN HALFORD asked how many of those jobs were held by Alaskans
and western Alaskans.
MR. DALBY answered about 225 of the 650 Alaskan jobs are at sea.
Of the 225, 79 came from Alaskan villages west of Dillingham. The
"Arctic Storm" hires are centered around Bristol Bay and probably
have a much higher percentage of western Alaskans. Half the
balance of the 650 jobs are from southeastern towns.
CHAIRMAN HALFORD asked if he was telling him that an overwhelming
majority of the 650 people are Alaskans.
MR. DALBY said the 650 people are Alaskans.
SENATOR LINCOLN asked how many people total are out on the vessel
now.
MR. DALBY answered about 4,000.
SENATOR LINCOLN commented that meant 650 Alaskans out of 4,000.
MR. DALBY agreed and reiterated that the 650 Alaskan jobs would go
away.
SENATOR HALFORD asked why all the Alaskan jobs go away and not the
other jobs.
MR. DALBY clarified that all 4,000 would be put out of business,
but 650 of them are Alaskans. He explained that the number of
Alaskan hires would go to 1,000 next year at the current rate. He
had 700 applications for the 225 openings at his company this year.
Other contributions the off-shore processors have made to Alaska
besides the jobs are the steady stream of revenue paid to vendors
throughout the State, which is about $35 million from his company
alone. They spent it on fuel from the dock at Dutch Harbor and dry
dock overhauls at Ketchikan. And they paid nearly $1.5 million in
landing taxes for pollock in 1997. In the off-season they are able
to station some of their boats to provide alternative markets for
salmon fishermen in Bristol Bay for value-added processing, for
example. He expects they will pay $6 - $8 million to Alaskans
working at sea this year. They offer more than jobs; they offer
careers promoting from within the company. These jobs also fit
really well with a rural life style in Alaska allowing different
seasons to be free for subsistence fishing, berry picking, etc.
MR. DALBY said the at-sea processors have put more than $108
million worth of CDQ money into Alaska in the last six years. Most
of these western Alaskan communities are partnered with off-shore
interests.
SENATOR LEMAN asked if a person could make about $40,000 in an
abbreviated season.
MR. DALBY said the numbers were fairly good and that the processing
crews are paid in crew shares.
Number 427
SENATOR LEMAN commented that some people wonder if people who make
that kind of money should have a priority over people from another
part of the State who don't earn that much.
SENATOR MACKIE said some people assumed the entire factory trawl at
sea processing fleet was being eliminated, which this bill clearly
doesn't do; it affects about 5 - 10 vessels.
MR. DALBY replied that the boats that would be eliminated are the
largest ones with the largest crews. So if it's not the whole 650,
it will be the lion's share of them.
SENATOR LINCOLN asked about the 6 - $8 million per year in wages.
MR. DALBY clarified that he was just talking about American
Seafoods with that figure, not the whole fleet.
SENATOR LINCOLN asked what his companys' figures were for Alaskan
hire.
MR. DALBY answered 280 out of the 650.
SENATOR LINCOLN asked what his company's total employment was.
MR. DALBY replied that it was about 1,800.
SENATOR LINCOLN remarked that that was less than 20 percent
Alaskan. She asked to see a matrix of his company's Alaska hire.
She asked what they did with the incidental bycatch.
MR. DALBY responded that their bycatch is about 1 + - 2 percent.
According to skippers, about half of that is jellyfish. Federal
law says they are supposed to throw that over the side, but the at-
sea fleet has asked for permission and does process the odd salmon
or halibut that might come aboard for donation to food banks.
There are zero discards throughout the industry this year because
of the regulation that went into effect.
SENATOR LINCOLN asked what else they left for Alaskans other than
the 650 jobs and the fish landing tax.
MR. DALBY replied that they spend $35 million on various vendors
throughout the State. They buy millions of gallons of fuel at
Dutch Harbor and spend several million per year at the Ketchikan
Ship Yard. The fleet as a whole spends about $90 million in
Alaska.
SENATOR LINCOLN asked where was his point of hire.
MR. DALBY answered that contract signings take place in Seattle.
He offers jobs in Alaska, provides air fare to Seattle, and when
their contracts end and the ship docks back in Seattle after the
season, the company provides a ticket home.
SENATOR LINCOLN asked why it was necessary to go to Seattle to sign
their contracts.
MR.DALBY said part of it is logistics. Right now it's the most
convenient. As Alaska hire becomes more and more, they will look
at shifting some of that.
SENATOR LINCOLN asked if the Committee passed this bill, was he
concerned with what the final Steven's bill would look like.
MR. DALBY replied that he was and recommended waiting to see what
the final version looked like.
SENATOR TAYLOR said he has a constituent who works out of Unalaska
and he was very upset about the fact that Alaskan long shoremen
were not being used to move supplies off of his vessels.
MR. DALBY replied that they unload at Dutch Harbor.
SENATOR TAYLOR asked what percentage of his company was either
Alaska or U.S. owned.
MR. DALBY replied that the outright ownership was primarily
Norwegian.
SENATOR SHARP asked what the difference in quality was between
factory and shore based processors.
MR. DALBY answered that at-sea processed fish tends to bring a
higher price since the product is processed right away. For shore
plants, the product may be on a boat for a day or two before it's
delivered.
SENATOR SHARP asked if his ships did any bottom dragging.
MR. DALBY answered that a couple of vessels will do a cod trip
after the pollock "A" season is over, but it's not the traditional
dragging net, although it's going close to the bottom. Three or
four vessels will participate in a hake fishery off of Washington
and Oregon in May and June, which is similar to Bering Sea pollock.
SENATOR SHARP asked if smaller ships were just as capable as bigger
ships of efficiently doing a mid-ocean trawl.
MR. DALBY replied that they essentially drag the same gear.
CHAIRMAN HALFORD asked who was doing more of what.
MR. DALBY said there wasn't any difference to his knowledge.
TAPE 98-1, SIDE B
Number 565
CHAIRMAN HALFORD asked if there was any difference in damage to the
bottom.
MR. DALBY replied that he didn't think it was an issue.
SENATOR LINCOLN asked how many vessels they have in Alaskan waters.
MR. DALBY replied 15 vessels.
SENATOR LINCOLN asked for exact information about how many vessels
were fishing and where, and for the percentage of the Board of
Directors that was American.
Number 565
MS. MICHELLE RIDGWAY, Marine biologist, said she wanted to comment
on the benefits of the American Fisheries Act (AFA) and that she
strongly supported SJR 33. Senator Stevens' bill effectively
addresses the issue of reducing fishing capacity in the Bering Sea
which has positive conservation benefits like limiting the number
of vessels which can be more effectively controlled. Reducing the
intensity of the fishing effort will provide managers more options
for monitoring bycatch and adapting management strategy to protect
marine mammals as well as provide better in-season assessment of
other fishing activities. The AFA also limits the maximum size,
tonnage and horsepower of vessels allowed in the groundfish fishery
and, since horsepower limits the size of net these boats can fish,
it can be used to limit the pace of the fishery. Collectively,
these gear and vessel limitations will lead to better management of
the public's lucrative fishery resources and reduce the risk of
overfishing.
MS. RIDGWAY also commented that they don't have good data in
bycatch in the various fisheries right now. The last data analyzed
was from 1995. ADF&G's funding was reduced and 1996 - 97 hasn't
been done. She thought it would cost around $10 - $15,000.
SENATOR TAYLOR asked who she worked for.
MS. RIDGWAY replied she has a small consulting business in Juneau.
SENATOR TAYLOR said he and Senator Sharp are on the Fish and Game
subcommittee for Finance and thought ADF&G should have crunched
those numbers.
MR. DAVE BENSON, Director, Government Affairs, Tyson Seafoods, said
he fished for a living for 18 years, about 10 years trawling, and
supported SJR 33. AFA is designed to finally and fully accomplish
the goals of the Magnuson-Stevens Act passed in 1976. It
established exclusive U.S. management jurisdiction over all fishery
resources within the U.S. 200 mile zone and gave American fishermen
the first priority to harvest them. Customary with international
law, the U.S. established a policy of exercising sovereign rights
over fishery resources. Unfortunately, since 1987 this policy has
been progressively reversed. Today, foreign controlled vessels
harvest more than half the Bering Sea pollock quota. The AFA
addresses the biggest problem today in this industry of
overcapitalization. There are many negative consequences for the
economics and safety of the industry.
SENATOR GREEN asked him to define overcapitalization.
MR. BENSON replied too many boats chasing too few fish. The AFA
would directly address overcapitalization in four ways. First,
Title 1 would assure that once and for all only bonafide U.S.
citizens will benefit from the preference policy. Reduction in
capacity should be achieved first by eliminating foreign fishing
that is now conducted by foreign controlled companies under the
guise of an American flag. The bill would increase from 51 percent
to 75 percent the required level of U.S. citizenship of vessels
operating in U.S. fisheries and, more importantly, would require 75
percent of the control of the vessels to be held by bonafide U.S.
citizens. Additionally, the bill would establish a vigorous
enforcement regime to prevent further circumvention of legislative
intent by foreign controlled companies interested in preserving
their ill-gotten American preference.
Second, Title 2 would require those 18 foreign rebuilt high-
capacity vessels that entered the U.S. fisheries through a loophole
created by a misinterpretation of the Act to retire from the
fishery. This means about 5 - 10 vessels, not the entire fleet,
and a reduction of 20 - 30 percent of the current capacity of the
Bering Sea fleet.
Title 3 would prevent vessels that now operate under a foreign flag
in foreign fisheries, such as Russia, from reentering U.S.
fisheries. He estimates four or five large factory trawlers and
approximately 13 large crab catcher processors will be prevented
from entering or reentering North Pacific fisheries - three of
which are owned by his company.
Title 3 would also prevent the replacement of vessels over 165 ft.
This is known as the phase out provision of large vessels, since
they will be allowed to serve out their useful lives, but will not
be replaced except in cases of fire or sinking. Over time, this
will dramatically reduce the size of the fleet.
Opponents of this bill say that it will benefit Tyson at the
expense of its competitors, but that's not true since they will
lose three crab catcher processors in Russia that won't be able to
return to U.S. crab fisheries and they will be affected by the
phase out provisions because the majority of their fleet is over
the 165 ft. threshold. Tyson has been consolidating its fleet and
has been reinvesting millions in the Kodiak shore plant and
wouldn't be doing that if they had plans to take over the at-sea
pollock sector.
If industry consolidation and control is a concern, he suggested
looking at the Norwegian controlled at-sea company that now has the
distinction of owning the largest fleet in the U.S.
Hopefully, the AFA will give the Coast Guard greater authority to
enforce American control of vessels engaged in fishing. In spite
of current regulations, they are aware that many factory trawlers
are still controlled by foreign fish masters and have foreign
citizens controlling the top management positions of these vessels.
Tyson currently employees only U.S. citizens in those positions.
Opponents will say that thousands of jobs will be lost, but he
submitted that the same amount of fish will be caught although by
fewer vessels and by fewer crew, but the jobs that remain will be
proportionately longer, certainly more than 70 days per year. If
you make the choice to decapitalize, then you eliminate some jobs.
You can't have it both ways. His company started an Alaska hire
campaign in 1995, increasing it by 40 percent that year and have
increased it even more since then. They have about 800 employed at
sea and about 250 people employed in Kodiak. There are over 25
percent Alaskans in their work force.
SENATOR SHARP asked how many foreign nationals were working on
board.
MR. BENSON said he didn't know, but would find out for him.
SENATOR SHARP asked how many other boats were affected around the
U.S.
MR. BENSON replied that there was concern about the tuna fleet and
there were exemptions made in the bill for them, because they are
primarily a high-seas fleet. He added that one third of the at-sea
processing fleet supports this bill including two members of the
At-Sea Processors Association.
CHAIRMAN HALFORD asked about CDQ support.
MR. BENSON replied that Tyson is a partner with coastal villages on
the expanded CDQ groundfish that hasn't been implemented yet and
are also in the process of negotiating a 1998 pollock CDQ
arrangement with coastal villages. They have submitted a response
to a request for proposals to coastal villages for 99 -2000
pollock cycle. He explained that the difficulty with processing in
villages is that they have to pay a catcher vessel to go out and
catch the fish whereas a factory trawler catches and processes
right there. It's a matter of economy. If the intent is for the
CDQ villages to make the best arrangements, that's been the best
kind of arrangement.
SENATOR GREEN asked if there was any limitation to the number of
vessels that go out in that fishery and how that was determined.
MR. BENSON explained that there was a moratorium on new entry
established a couple of years ago by the North Pacific Fisheries
Council that is due to expire at the end of this year. In its
place they have instituted a system called limited license. So,
effectively there will be no new entrants in the North Pacific. In
other parts of the country, that doesn't exist and Senator Stevens'
bill addresses that in all parts of the country for large vessels.
SENATOR GREEN asked if that means that the total number of vessels
in Alaska in that industry would be 7 - 18 less.
MR. BENSON replied that was correct and he thought that would
provide the conservation benefit because some of those vessels are
fishing on the bottom. The discard and bycatch figures the
Committee heard were only for the mid-water pollock fishery and did
not address other fisheries.
SENATOR GREEN asked if S. 1221 passed, would the boats that were
permitted at day one have to reapply every year.
MR. BENSON replied that if you were permitted on September 25, 1997
when Senator Stevens introduced his bill, you would be fine, but
every year you will have to prove that you have 75 percent U.S.
citizenship and control of the company. Small vessels under 32 ft.
can get into the fishery, but it's already been established that
there are no more new entrants for large vessels in the North
Pacific.
CHAIRMAN HALFORD asked if there was any safety concern with setting
limits on size of vessels that go out into the Bering Sea.
MR. BENSON replied aside from weather conditions, he thought safety
was an issue because of the derby style of fishing that goes on
during an opening. Bigger is not necessarily better; not having a
choice about when to fish was an issue. He thought a smaller-more
orderly fishery would be easier to manage and therefore be safer.
Number 297
MR. JOE PLESHA, Trident Seafoods, said they are 100 percent
American owned and operate shore-based processing plants throughout
Alaska. Trident was one of the first companies to try to
Americanize the groundfish resources off of Alaska buying the first
Boder fillet machine that was used in Alaska that makes pollock and
cod into a marketable product. They strongly support SJR 33.
He informed the Committee in the late 1960s and early 70s foreign
boats dominated the bottom fisheries in our waters. In 1971,
Senator Stevens was the first member of Congress to introduce
legislation that expanded U.S. federal jurisdiction out to 200
miles. That legislation went nowhere until 1974, when Senator
Magnuson helped him get it going.
In 1976, the Fisheries Conservation and Management Act was enacted
and it created a preference for American flagged vessels. Under
this Act, the American fishing industry developed to the point that
it was utilizing 100 percent of all of the groundfish off of
Alaska. Then it was determined that it was legal for a foreign
owned corporation to flag a vessel as a U.S. vessel and just take
over the fishery. Senator Stevens was the very first senator in
1987 to introduce legislation which prohibited the reflagging of
the fishing vessels. That legislation had a grandfather provision
for people who had made substantial financial investments based on
the status quo and that provision was greatly abused and
misinterpreted. The legislation made it clear that if any vessel
was ever sold that was grandfathered, it would be required to be
owned by a bonafide U.S. corporation - a corporation that was not
only incorporated in the U.S., but owned by U.S. citizens. This
intent was never carried forward and the bill allowed foreign owned
fishing vessels to extend their domination of our fisheries to the
point where at least half of the groundfish is harvested by foreign
owned vessels again. The condition now is worse than any time
since the Magnuson-Stevens Act was passed 25 years ago.
That is the reason Senator Stevens introduced S. 1221 to
reincorporate the Americanization component of the Magnuson-Stevens
Act. This is not an anti-factory trawler bill, MR. PLESHA
emphasized. There are factory trawlers that built their vessels in
the U.S. with the understanding that that's what Congress was
encouraging. They are U.S. owned corporations and they will
continue to operate. The employment figures are important; it's
important that this industry hire Alaskans and the misconception is
that this bill somehow will decrease the amount of Alaskans that
are hired. He feared that the Alaskan hire issue was being used as
a political pawn.
MR. PLESHA exhibited a letter from a crew member during the B
season which pointed out that out of a crew of 130, only two were
Alaskans. And of the 16 vessels in the fleet, he alleged that
there were more Norwegians working for the company than Alaskans.
This is the kind of practice Senator Stevens wants to stop.
He said that last time he checked, Trident paid over $9 million in
taxes to the State of Alaska and a major component of that was from
their groundfish operations at Akutan and Sand Point. Their
investments in Alaska for groundfish processing is over $120
million. They don't have a choice of moving those to Russia. If
they fail, it will tell investors not to invest in Alaska because
they won't have the flexibility to go elsewhere if things don't
work out.
The City of Akutan has passed a resolution supporting Senator
Stevens' legislative effort. The Aleutians East Borough has also
passed a similar resolution. The CDQ group they are partnered
with, the Aleutian Pribiloff Community Development Association, has
passed a resolution supporting this effort, also.
He said if this issue comes down to who can spend the most money on
lobbyists, they will fail, because Shell Roki, one of the principal
owners of American Seafoods' parent corporation, is one of the
richest men in Norway, worth about $700 million.
In closing, he said that Senator Stevens has displayed a remarkable
instinct for what's beneficial for the United States and what's
beneficial to this State and Trident Seafoods supports him 110
percent.
Number 188
SENATOR LINCOLN said one of the things Senator Stevens said is that
the recovery rate for human consumption quality seafood is a third
less than the recovery for the same pollock processed on shore,
even as fish trawlers began making fish meal under the North
Pacific full retention plan. Less benefit is derived by Alaska and
the nation, if that pollock were processed on shore into seafood
that could be eaten by people. She asked him to comment on this.
MR. PLESHA said he didn't want to criticize factory trawlers, but
the truth is that the recovery of a factory trawler vessel to a
primary product is substantially less than the recovery that shore
plants receive for the same product. The reasons are fundamental.
They pay for the fish that are delivered to their plant, so there
is incentive to make sure they get the most revenue from each pound
of fish that's delivered to them. They have space at their plant
and enough equipment to make sure they get maximum recovery. Often
times factory trawlers lack the space for bunks for employees and
the machinery to process all that they catch when they catch it.
He said the differences are fairly dramatic.
SENATOR MACKIE asked if there were lots of opportunities from U.S.
owned shore-based operations to do joint ventures with CDQ
communities for them to realize the benefits of those
opportunities.
MR. PLESHA replied yes, and if this legislation passes, he thought
there would be numerous opportunities for CDQ groups who want to
participate in the off-shore industry. Only the St. Paul Island
Group that is partnered with American Seafoods would be opposed to
this legislation because they would be directly affected. Other
groups would not be impacted by the American ownership or the
American build requirements.
MR. MACKIE asked which CDQ group gets a negative impact.
MR. PLESHA explained that American Seafoods, the factory-trawler
company that is foreign-owned, would be negatively impacted by
Senator Stevens' legislation.
SENATOR SHARP asked where globally are the other pollock fisheries
that could sustain the large trawlers.
MR. PLESHA replied that these trawlers would likely go to Russia or
South American where they have a system of selling their fishing
rights. So they would have to somehow pay compensation for the
right to fish in those waters.
SENATOR LEMAN asked what he knew of foreign ownership of on-shore
plants and how that's impacting the industry and Alaskan economy
and asked him to comment on his company's Alaskan hire.
MR. PLESHA responded that there is foreign ownership of shore
plants, but he emphasized that Congress, the U.S. government, and
the State of Alaska have always encouraged investment in shore-
based processing facilities by foreign companies. In fact, the
foreign companies in Dutch Harbor who own shore plants were almost
told they had to invest if they wanted to maintain access to their
off-shore fishing quota in the mid-1980s. Contrast that with the
factory trawlers who were told we now want to eliminate all foreign
ownership and then a specific law was passed to make sure that
couldn't happen. There were efforts to circumvent that national
policy by taking advantage of the grandfather exception in the
Anti-Reflagging Act. Secondly, he pointed out that this country in
the international legal community has a long history of limiting
foreign ownership of fishing vessels and vessels in general. But
that long-standing precedent isn't the case for on-shore
investments. He thought there was a real difference between
resource extraction and processing of that resource.
MR. PLESHA said they had never tried to make a political issue of
Alaskan hire and that is suddenly something that is being
politicized and he thought people were being used to that regard.
They have an agreement with their CDQ group that anyone they
provide to them who is able to work will be found a job. Their
client in Akutan has over 50 salaried voters registered in the City
of Akutan. They have two people from the village, but the others
have lived and worked there so long that they are now registered to
vote.
There needs to be an effort to recruit Alaskans in this industry
whether Senator Stevens' bill passes or not.
TAPE 98-2, SIDE A
Number 001
MR. VINCE CURRY, Alaska Prime Resources Consultant, said he thought
Alaska benefits by the fact that we have viable and strong on-shore
and off-shore processing industries. He thought this was
essentially a debate about which of the dominant processors can
acquire the pollock to be delivered either to their plant or to
their factory trawler operation.
He urged the Committee to consider that we have a fully developed
fishery in the North Pacific, the Bering Sea pollock fishery, which
is the most valuable fishery we have in Alaska right now. He
thought it was good for the State to have two sectors that are
competing as hard as they can right now for lawmakers' attention
and relationships with Alaskans.
Data from the Department of Labor shows that the seafood processing
industry historically both off-shore and on-shore has been one of
the worst hirers of Alaskans in any industry. The targeted vessels
by this bill are the key producers for the off-shore fleet. It is
a difficult thing for Alaska to endorse a course of conduct that
will remove investments that have been made with Alaskans who have
joined in the enterprise.
An excerpt from the license limitation document profiles who owns
the vessels in the groundfish fishery. It does it by 60 ft, 60-125
ft., and above 125 ft. vessel lengths. Virtually every vessel that
participates in the Bering Sea pollock fishery is over 125 ft.
There is zero ownership in Alaska in the over 125 ft. category.
This supports the notion that in terms of the Bering Sea harvesting
this is not an Alaskan issue - unless you look at things like the
Norton Sound purchase of a factory trawler company where they are
harvesting the fish. The 60 and 60 - 125 ft. boats are largely in
the Gulf of Alaska which is a non-issue for this bill, because the
law of the federally managed fishery prohibits any factory trawler
from coming in and harvesting pollock in the Gulf of Alaska. So,
it's a non-issue in terms of Senator Mackie's constituents in
Kodiak.
In addition, he has charts reflecting the ownership of the vessels
over 125 ft. from 1992 - 97 which show that the shore plants have
been acquiring a greater share in ownership of the vessels that
they depend on to deliver them pollock.
He emphasized again that this is a processors' battle and asked
legislators to look where the Alaskan interests rise and fall
within the controversy.
An article from Fishing News International of June 97 reflects
that Westward Seafood's purchase of a factory trawler called the
Alaska Command is being converted into a catcher boat. These are
fine boats and are the kind you need to efficiently harvest pollock
and bring it to a plant. There is nothing inherently evil about a
factory trawler because the same kinds of vessels and gear are
being used to bring the same resource to the processor on-shore.
He said it is a constant game within the fishery to "throw mud at
another group to make them look bad."
Finally, one of the conclusions in a report from DCR&A on on-shore
off-shore allocation of the pollock CDQ program says that there
appears to be a substantial wage differential between each sector
with greater earning opportunities to CDQ residents in the off-
shore sector. The wages paid in the on-shore plants are often
barely above minimum wage. Often residents of a community where a
plant is located do not participate in the employment opportunities
these plants provide due to the high cost of living in rural
Alaska. Therefore, a large part of the on-shore plant's work force
is imported from other communities, states, or nations. He thought
we should pause and consider what kinds of opportunities there are
in the pollock industry for Alaskans. Because of the complexity of
this issue, it's hard to hear testimony from a few lobbyists from
the on shore and off shore plants and conclude that you know what
will be in the best interests of Alaska. He urged them to make a
full scale inquiry into this matter. S. 1221 will have many
hearings and there will likely be modifications to the bill. When
it's in its final form, they could then properly consider whether
it's something to endorse.
SENATOR MACKIE asked how many CDQ groups he knew that would be
affected by this bill.
MR. CURRY answered that the Norton Sound one would be affected.
SENATOR MACKIE interrupted to say that he talked to a person a
Norton Sound today who said they wouldn't be affected because they
are American owned.
MR. CURRY responded if plants no longer have to compete for CDQ
quota, then the quota that's out there will fall and that is one
way all CDQ communities will be affected. Secondly, other support
businesses would be affected without people returning to the
villages.
SENATOR MACKIE said he understood that there was only one group
that would be affected because it is foreign-owned.
MR. CURRY repeated that the issues are complex and we don't know or
understand all the ramifications yet.
MR. HENRY MITCHELL, Mitchell Inc., said he is here in conjunction
with the Tyson Seafood Group and has been with the Bering Sea
Fishermen's Association, which in the early 80's was one of the
main proponents attacking the major issues - the dominance of the
foreign fishery and the manipulation of the products of that
fishery to do things that were bad long-term. He briefly
reiterated the history of this issue and said S. 1221 would only
acomplish an element of decapitalization which is very important.
If there is reduction in capitalization, the participants who are
left there will still be major players. He thought there would be
at least a measure of moving toward sanity in these fisheries.
Many of the bigger boats that were owned by other entities went
bankrupt. A great portion of those boats were absorbed by American
Seafoods which was moving forward. If the Stevens's legislation
passes in its present form, it is a measure of decapitalization and
will slow down the fishery. It will not deny opportunities for the
CDQ groups to prosper. Back in the early 80's when they were
proposing ways to get villagers from western Alaska into these
fisheries, nobody wanted to help them out. Once it was
orchestrated that they get this quota, everyone realized the value.
He didn't believe the value of their CDQ quotas would be impacted
by the passage of this bill.
If this bill passes, it will allow for a slower fishery, one which
allows for participants to spend more time watching out for bycatch
hot spots which would have significant benefits in its reduction.
He said these fisheries change over time and the only thing they
are really going to know is that they will be conducted by smaller
vessels, but it will be easier to stay within the parameters of
successful fishing and bycatch limitations. He thought many of the
effects were being overblown by many of the participants. Many of
the vessels that are there now are not legitimately there; they
snuck in through the back door and it isn't right.
Number 308
MR. JIM INGRAM, Bristol Bay commercial fisherman, opposed SJR 33.
Off shore processors provide his area with more salmon markets.
According to his son, the off shore schedule is good, the pay is
excellent, and the benefits are sufficient. He praised the off-
shore processors for their strict drug policy requirements. Many
young people refuse to work in at shore plants. He asked who would
be liable for the lives and safety of the crew on a boat under 165
feet with a load of polluck in a 100 knot wind. He asked if this
would end the competition of the bidding process for CDQ shares and
eliminate employment opportunities.
MR. AL BURCH, Kodiak vessel owner, said his two boats, 86 ft. and
96 ft., are engaged in the pollock fishery at this time. He
supported the remarks made by Mr. Benson, Mr. Plesha, and Mr.
Mitchell. He thought testimony was stretching the resolution out
of shape and it was very concise and focused on a particular
problem that needs to be solved.
MR. HAROLD JONES, a commercial fisherman for 51 years, said he has
a 96 ft. trawler and has seen a tremendous influx of factory
trawlers that cut their fisheries down from the original 10 months
out of a year down to 50 - 70 days. He heartily supported SJR 33.
MR. EUGENE ASICKSIK, President, Norton Sound Economic Development
Council (NSEDC), said they have purchased 50 percent of Glacier
Fish Co. which owns two mid-water factory trawlers. He expressed
concerns with this bill, although he supported the Magnuson-Stevens
Act. He said they are watching this bill and he is concerned with
what is happening to the fish.
MS. TAMMY POUND, Dutch Harbor resident, said she wasn't employed by
either sector or the pollock industry, but the livelihood of her
family is derived directly from an off shore fishing company. The
legislation will negatively impact her family with the loss of a
living wage job. She thought this would affect many families in
Dutch Harbor and the State. She thought the bottom line was which
companies will get the fish and the dollar.
MR. TINY SHASTEEN agreed with Senator Leman that the off-shore
fleet is not as bad as its made out to be and the on-shore fleet
isn't as good as it's made out to be. Many people own both on-
shore and off-shore processors, he pointed out. If this is a
conservation issue and they limit boats now, he asked who would
they limit in the future? If it's an Americanization issue, he
though we have healthy diversity with fish going to markets all
over the world and some good competition.
MR. KENNY WILSON said he was worried about the 165 ft. limit
because the larger vessels employ a lot of young people who live in
western Alaska. If they loose their jobs, it would put a lot of
hardship on their families. He said a larger ship was safer in 100
knot winds.
MR. OLIVER HOLM said he thought the factory trawlers affect the
health of the shore plants, which is what Alaska fishermen are
linked to and they need to be healthy in order for us to have good
markets. This reflagging loophole will let more boats in than
should have been allowed and the factory trawler fleet has been
overcapitalized to the detriment of the shore-side industry. There
is a long history of outside groups buying out small segments of
the Alaskan population to the detriment of the State and policies
as a whole. He strongly supported SJR 33.
MR. JEFF STEPHAN, United Fishermen's Marketing Association,
supported SJR 33 for all the reasons they have heard, generally,
with the idea that it was a loophole that was meant to be closed.
MR. CHRIS BERNS supported SJR 33, especially line 9. He said we
kicked the Canadians out of our fisheries and we can do it to the
Norweigans. He supported more local hire on the Slope.
MAYOR RON SELBY, Kodiak Borough, said that some of the testimony
has been overblown. It has no jobs impact, no CDQ impact, no on-
shore/off-shore impact. It's a matter of 5 - 10 vessels that
illegally entered the fishery in the first place and taking them
out of the fishery. With the American Reflagging Act they tried
real hard to keep the foreign vessels out. Without these boats,
the fishery will still be overcapitalized, but it is a place to
start. That's all this does. It doesn't change the off-shore
quota allocation. It's just that 50 boats will be catching the
fish now and not 60. He didn't see a lot of Alaskans losing their
jobs over this issue.
CHAIRMAN HALFORD thanked everyone for their testimony and adjourned
the meeting at 5:55 p.m.
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