Legislature(2017 - 2018)BUTROVICH 205
03/14/2018 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): Commercial Fisheries Entry Commission | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 14, 2018
3:30 p.m.
MEMBERS PRESENT
Senator John Coghill, Vice Chair
Senator Natasha von Imhof
Senator Kevin Meyer
Senator Bill Wielechowski
Senator Click Bishop
MEMBERS ABSENT
Senator Cathy Giessel, Chair
Senator Bert Stedman
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Commercial Fisheries Entry Commission (CFEC)
Vance Fate Putnam
Dale Kelley
- CONFIRMATIONS ADVANCED
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
VANCE FATE PUTNAM, Commissioner Designee
Commercial Fisheries Entry Commission (CFEC)
Anchorage, Alaska
POSITION STATEMENT: Testified as CFEC commissioner designee.
DALE KELLEY, Commissioner Designee
Commercial Fisheries Entry Commission (CFEC)
Juneau, Alaska
POSITION STATEMENT: Testified as CFEC commissioner designee.
ACTION NARRATIVE
3:30:03 PM
VICE CHAIR JOHN COGHILL called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Bishop, Von Imhof, Wielechowski, and Vice
Chair Coghill. Senator Meyer joined the committee one minute
later.
^Confirmation Hearing(s): Commercial Fisheries Entry Commission
CONFIRMATION HEARING(S):
Commercial Fisheries Entry Commission
3:30:51 PM
VICE CHAIR COGHILL announced the only order of business would be
the Commercial Fisheries Entry Commission (CFEC) confirmation
hearings. He said Alaska amended its Constitution in 1972 to
open the door to limited participation in its common fisheries
for the purposes of resource conservation and Alaska's economy.
Due to economic distress among fishermen and those dependent
upon them for a livelihood and to promote the efficient
development of aquaculture in Alaska, the Alaska Legislature
passed a Limited Entry Act to implement the tenets of the
Constitutional Amendment. It was managed by the Commercial
Fisheries Entry Commission to which the two appointees have been
asked to serve as commissioners.
VICE CHAIR COGHILL said this commission is a quasi-judicial
body, but being an attorney is not required. All its decisions
are appealable to the Superior Court. Current law assigns three
seats to the commission with a quorum consisting of two members.
Over the past three years, the Lawson Report and later the
report from the Division of Legislative Audit highlighted the
staffing and meeting practices for review.
Once the appointees are confirmed, they can only be removed for
cause and the commissioners meet regularly throughout the year.
Their compensation is equal to a range 27, the equivalent of
$100,000/year, as a base. The commission operations are derived
wholly from fees and taxes assessed through the Limited Entry
Program, which will be part of the discussion today.
VICE CHAIR COGHILL welcomed the two appointees and asked them to
relate their backgrounds and tell the committee why they want to
take this position.
3:33:38 PM
VANCE FATE PUTNAM, Commercial Fisheries Entry Commission (CFEC)
Commissioner Designee, introduced himself.
3:33:50 PM
DALE KELLEY, Commercial Fisheries Entry Commission (CFEC)
Commissioner Designee, Juneau, Alaska, introduced herself and
read a prepared statement. While she wasn't fortunate enough to
be born in Alaska, her soul was; she has been here more than
half her life. She grew up surfing, riding rodeo, and rock
climbing in California. Her academic training ranges from
fisheries science to aquaculture to pharmacy to paramedicine.
She worked as a pharmacy technician in three states and one of
her most unique responsibilities was preparing drug packs for
the space shuttle. She worked in surgery and on ambulances in
downtown Houston, which probably helped toughen her up for life
as a commercial fishing deckhand.
MS. KELLEY said she had lived in the Bush and been a fish
culturist in Prince William Sound and Southeast and had helped
rebuild steam turbines in Haines and Fairbanks. Whenever time
allows, she enjoys fishing on a troller out of Craig. She has no
financial interest in a fishing business and holds no permits.
For the past three decades she has been executive director of a
commercial fishing organization representing fishermen who fish
in state and federal waters for salmon, halibut, and other
species. As a result, she has acquired extensive knowledge about
fisheries and habitat conservation, resource management, and a
wide array of state, federal, and international regulatory
policies and laws. She supports all forms of fishing and have
worked on behalf of all fishermen for her entire career.
She served for 12 years as an Alaska commissioner on the Pacific
States Marine Fisheries Commission, a five-state organization
whose mission is conservation and sound utilization of West
Coast fisheries resources. She is a member of the Pacific Salmon
Commission, which implements the U.S. Canada Salmon Treaty, and
chairs the U.S. Advisors of the North Pacific Anadromous Fish
Commission, a five-country commission working to protect
anadromous fish stocks through research and enforcement of high
seas illegal fishing.
Over the years, she has helped start and manage a number of
blended state and national industry groups and coalitions
working on issues of mutual concern. She has been fortunate to
serve on various other industry boards and legislative,
gubernatorial, and congressional advisory panels. She is
familiar with the scope of work that CFEC does and throughout
her career she has both consulted and worked with the
commissioners and staff at CFEC.
MS. KELLEY said she believes it is important that the
commissioners have a solid understanding of the challenges
confronting the seafood industry in general and the harvesting
sector, in particular. She welcomes the new challenge and the
opportunities for learning that a CFEC appointment offers and
hopes that her knowledge and experience will be an asset to the
commission and the state's fishing communities. Together, she
and Mr. Putnam bring a complimentary set of skills to the table
and could be a good team for assessing the condition of CFEC as
a mature organization heading into the future and implementing
any needed change and charting a course for that future. They
agree on many of the new objectives and are working to develop a
plan to institute more following along the lines of the two
reports, the Lawson Report and the legislative audit.
3:37:57 PM
MR. PUTNAM said he is a designee for the CFEC and was appointed
December 1 to replace Ben Brown who resigned to take a different
job. He didn't realize that Chairman Twomley was going to
retire, too, after 37 years, but he is learning something every
day about this commission.
MR. PUTNAM started with his personal history saying he was born
in Fairbanks. His mother was a city planner and his dad was a
plumber/pipefitter. His mom went off every day with a briefcase
and his dad went off wearing a toolbelt. They moved to Anchorage
in 1965 after the earthquake. His mom worked for the Alaska
State Housing Authority (ASHA) reconditioning communities that
had been destroyed in the tsunami after the earthquake including
Valdez and Seward and then she became a city planner in
Anchorage and worked on bike trails and was known as the Bike
Trail Lady of Anchorage. He learned about eminent domain and
things like that when he was a little kid because his mom had to
go to court to "grab property" to make the contiguous bike
trails.
MR. PUTNAM said he was one of the first students to go to
Stellar High School in Anchorage and graduated from West High
School in 1976. After that, he attended Lynnfield College in
McMinnville, Oregon and ended up graduating from Western
Washington University. His first legislative job was 39 years
ago as an intern. He worked for Senator Pat Rodey, who was
Judiciary Chair. In that job he learned about "Christmas
treeing," when you find a title broad enough to put something in
including the student internship program, which they managed to
wedge in. That internship program is still in existence today.
He returned during law school and worked at the Natural
Resources Section of the Attorney General's Office in 1983. He
worked on natural resources like Dinkum Sands, navigable water
ways, Mental Health Trust lands, and salmon hatcheries; CFEC was
one of their topics of interest, also.
MR. PUTNAM said he served as a manager of a commission before,
on the Future of the Permanent Fund's Staff working for Red
Boucher who was chair of the State Affairs Committee then in
1989. He flew all over the state taking testimony about the
Permanent Fund with Hugh Malone, former commissioner of the
Permanent Fund and former legislator, Steve Frank out of
Fairbanks, and Mark Langland of Northrim Bank.
He was appointed to the Anchorage Municipal Planning and Zoning
Commission in 1993 by then Mayor Tom Fink and enjoyed his
service there (his mother's history in city planning prepared
him for that). After that, he worked as the legal
counsel/political director/lobbyist/assistant executive director
for a large public employee union for about 20 years. He retired
from that in 2015 and became a contract lobbyist for a couple of
years. He is no longer a lobbyist and has now changed directions
to serve on this commission that is a full-time job.
3:41:53 PM
MR. PUTNAM next related his fishing history and that he started
working with his dad as a longliner for halibut in the 70s and
80s and deck handed for halibut in the winter of 1984 out of
Homer. In 1979 he was a salmon hand troller. He was a cash buyer
for his brother's fish company back in 1981. From there he went
on to law school. After law school and since then, he and his
family have maintained a fish camp at the mouth of the Kasilof
River and for the last 20 years they fish from June 15-25. He
encouraged every Alaskan to do that as it is their opportunity
to catch 25 fish for their freezer.
He has never held a captain's license or a limited entry permit,
although he has been a deck hand. Stopping there, he asked for
questions.
VICE CHAIR COGHILL thanked him and said this is one resource
they want to do well at. He is surprised at the volume of permit
exchanges that happen every year. He asked what commission level
duties he has to do that staff can't do.
MR. PUTNAM said the essential function of the commissioners is
to act as an appellate court, like a divorce or bankruptcy
court, because the people who work for them adjudicate the
hearings and questions that licensing staff can't answer or deny
because of the strict interpretation of regulations, but those
regulations are variable depending on the conditions of the
fishermen and their circumstances. Fishermen are always allowed
the opportunity to appeal a decision to the judicial officers
who then make a recommendation to the commission. The commission
reviews the rulings and makes a final determination based on
regulations and the recommendations from the adjudication
section. From there, these cases can be appealed to the Superior
Court. Hundreds of cases have gone from this commission to the
Superior Court and 70 cases have gone to the State Supreme
Court. A huge body of law is associated with this area of the
fishing industry.
He thinks the reason limited entry was so controversial inthe
beginning was that the commission decided whether you got a
permanent transferable permit or a non-transferable permit,
because the transferable permit is worth a lot more money. Those
controversies have been worked through and about 13 cases are
still pending before the commission. Some of them have fact
patterns from 1975 that have not been resolved. He and Ms.
Kelley have the opportunity to go through those 13 cases over
the next years to see if they can be resolved. Their intent is
to work them through the system.
Since he has been there, 18 cases have been resolved, two of
which were remands from the Superior Court back to the CFEC.
Those two cases have been settled and their interim use permits
ended. He explained that an interim use permit allows a
fisherman to continue fishing while a case is being appealed.
Some interim use permits have been fished for years. They are
going to do their best to resolve these appeals so that the
optimum number of fishers in a fishing area can be resolved.
3:47:07 PM
MS. KELLEY said that Mr. Putnam gave him an extensive overview
of what commissioners do, and she heard his question to include
how they interact with staff. She is new, and she wanders around
trying to figure out what her job is. So, on a daily basis she
has been picking a number staff and finding out what they do and
learning it and finding out what they perceive her job to be.
She has received a variety of responses to that, but one is that
some questions about implementing regulations that need a
ruling. As Mr. Putnam has pointed out, the CFEC law is very
intricate and staff could unwittingly unravel it like a thread
in a sweater. So, oversight of regulation implementation is an
important part of what they do with staff.
3:49:38 PM
SENATOR VON IMHOF thanked them both for their introductions. She
sees three at-large positions on the commission and two are
filled. Considering the amount of work they have described, she
asked their thoughts on keeping that other seat vacant and if
they have anyone in mind for the position.
MR. PUTNAM said they decided to try running the commission with
just two commissioners rather than three, because they haven't
limited any fishery since 2004. Staff has been downsized so that
there is no longer an executive director, leaving the
commissioners to act as executive directors.
MS. KELLEY said her perspective is that there was wisdom in
setting up the Limited Entry Commission with three commissioners
just for the decision-making process. Three significant cases
are pending now, and it will be interesting to see how that
works over time. One advantage of having the three is just the
option for the commissioners not to gridlock on something that
protects the public and the state from having to go court, which
saves time and money. She considers having two commissioners a
"grand experiment" that is too early to tell how it will go.
VICE CHAIR COGHILL remarked that in 2015, staff issued 18,147
permits and 9,646 vessel licenses.
MS. KELLEY responded that they have a great licensing staff.
MR. PUTNAM added that there are open fisheries and limited
fisheries in Alaska. Their authority goes out to the 200-mile
limit for federal fisheries and three miles for the state.
Everyone in a limited fishery receives a permit from the
commission. Everyone in an unlimited fishery also receives a
permit to fish. Every fisherman who is in the 200 miles offshore
fishery is permitted. They also watch optimum numbers to
determine where there is stress on a fishery.
He said the Board of Fisheries cycles through different
fisheries, fin fish for example, about once every three years.
The commissioner of Alaska Department of Fish and Game (ADF&G)
can do an emergency closure on a fishery for stress issues - if
the biomass isn't there or if the research isn't there to
determine the presence of sustainable yields. The commission's
research section watches how those two things interface with
each other and tracks the decisions and may at some point
determine there is enough stress on an open fishery that it
needs to be closed. That will be the point at which the caseload
will go up and determinations will be made on who has a history
of and a dependency on a fishery. Those are the parameters for
deciding who gets a transferable permit or a non-transferable
permit. Those decisions are what become controversial and end up
in court.
3:53:57 PM
SENATOR BISHOP thanked them for their service and asked how the
appeal process works at the commissioner level.
MR. PUTNAM responded that trials are held by the adjudication
section. At one time, this section had seven attorneys and two
or three paralegals to do some background work. So, the
commission had 46 members. Now it is down to 13 employees. The
way it works is if a trial happens, the adjudication officers
take evidence, put people under subpoena, and get confidential
information, including tax returns and other information. They
make a recommendation to the commission; the final decision
rests with the commissioners who are trying to handle these
things on a consensus basis.
He said the House has a piece of legislation dealing with the
point of having just two commissioners; it allows in the absence
of one of those two commissioners, for the commission to still
function. Right now, there is a two-member quorum requirement
and if one commissioner isn't there, the commission doesn't
exist anymore.
They are trying to change that to a two-member commission
situation and if in the future, if a fishery has to be limited
they may come to the legislature and ask to hire an expert, like
Mr. Twomley, who knows the subject well. All decisions made by
the commissioners can be appealed to the Superior Court and then
to the Supreme Court.
SENATOR BISHOP observed that the two commissioners have to be
100 percent together and asked how that will work.
MR. PUTNAM replied that their intent is to agree all the time,
but if they don't agree, the ruling of the hearing officer in
the adjudication section becomes the ruling of the commission.
And that is what the fishermen would appeal to Superior Court.
3:56:38 PM
VICE CHAIR COGHILL said he is reluctant to agree with a two-
member commission. But he will watch closely how it plays out.
He noticed two things the commission had done: first, he didn't
know this was a significant part of the Fishermen's Fund. What
proportion is that?
MR. PUTNAM replied that the Fishermen's Fund was started pre-
statehood and was designed as a type of worker's compensation
for injured fishermen, because a lot of fishermen couldn't
afford insurance and got injured on the job. Ms. Kelley has the
exact figures as she has been involved with the CFEC for a long
time on the Governor's task force to restructure it, he said.
The Fishermen's Fund receives an average of $400,000 annually
that all comes from fishermen. A fishing captain's license is
needed at the beginning of the fishing season as well as a
vessel license. Those all come from CFEC, for which they charge
a small fee. At the end of a fishery, they charge four-tenths of
1 percent of whatever money one makes based on fish tickets,
which are confidential and held by CFEC for 45 years. That is
for an open fishery. For a closed fishery, it's four-tenths of 1
percent of the value of one's permits. Their economists watch
the values of permits that go up and down based on sale prices
and that is how the fees are based at the back end. Of this pot
of money, about $8 million, 40 percent by law, goes into the
Fishermen's Fund and about $5 million goes to the ADF&G, and
about $3.5 million is used by the commission to function.
3:59:47 PM
VICE CHAIR COGHILL said it is a pleasant surprise to see how
much money has been returned to ADF&G.
MS. KELLEY said she just got an update today. Since FY 2012,
about $23 million went to ADF&G; last year it was about $5.6
million. She has noticed over the years, sometimes to the
detriment of the commission, whenever times are tough, that the
ADF&G budget is restricted, but she stated that the department
needs enough money to be dynamic to be able to ebb and flow with
whatever work is in front of it.
4:01:10 PM
MR. PUTNAM highlighted the Carlson case for which the state paid
$37 million plus interest to out-of-state fishermen who sued the
state of Alaska because of the 3:1 margin that was being charged
to out-of-state permit holders versus in-state permit holders.
The Carlson case went to the Supreme Court that said the state
couldn't charge 3:1, but they could charge a little bit more.
So, every three years, they calculated the Carlson number, which
is over and above what in-state fishermen are charged for their
permits, and that money is used to support fisheries
enhancement. Because when there are no in-field biomass studies
on a fishery resource, the ADF&G commissioner will err on the
side of caution for sustainable yield and not open a fishery
because the science isn't there to back up the opening. So, they
need funds from both the CFEC collection and out-of-state
fishermen to pay for that science.
VICE CHAIR COGHILL asked if CFEC has a research arm within the
commission plus whatever they can help ADF&G or is it one and
the same.
MR. PUTNAM replied that ADF&G has field researchers. CFEC
doesn't go out in the field; it uses information it collects to
tell them what is going on in a fishery.
4:03:24 PM
MS. KELLEY added that one of their statutory charges is optimum
numbers. When limited entry first occurred, the number of
permits was maximized to make sure that folks who were truly
dependent weren't left out and the initial legislation wanted
that number reeled back in so that resources weren't harmed down
the road. Whether optimum numbers are needed on everything
remains to be seen, but if they are to start clicking through
the fisheries and doing optimum number studies, legislators
should be aware that research has only two people. One optimum
study that was done on a Bristol Bay fishery took three
researches four years and cost thousands and thousands of
dollars. So, if those studies are needed, enough of both money
and personnel resources will be needed to do the job properly.
VICE CHAIR COGHILL said something else he did not know was that
there are 68 unique fisheries.
MS. KELLEY said those are just the limited fisheries, not the
ones that may ultimately be limited.
MS. PUTNAM explained that when a fishery is an open fishery,
anyone can fish it from Alaska or out of state. Equal protection
applies to all Americans. So, anybody can be in any fishery they
want if it's open. When the commission decides a fishery needs
to be closed, they are trying to award permits to people who
have a history in that fishery. That may not be the optimum
number of permits; that study comes later. But everyone gets a
permit in that fishery, so they can continue to make a
livelihood in that fishery. As a fishery becomes more stressed
and there is less fish for the fishermen, the season has to be
closed more. It is a very difficult business and they have to
make enough money in order to stay out there. If there are too
many fishermen in the fishery, then all the fishermen suffer. An
optimum number study may bring the number of permits down that
allow for each fisherman to make a living, so they can stay out
there.
He explained that an optimum study would create a buyback
program. For the last one, Alaska got a $65 million loan from
the federal government that fishermen taxed themselves to pay
back and voluntarily decided to get out of the fishery and sell
their permit back to the CFEC. Then they just extinguished the
permits down to the optimum numbers.
SENATOR MEYER asked if most permit holders are Alaska residents.
What would be the ratio?
MR. PUTNAM replied the current ratio is about 77 percent
Alaskan. When you have transferable permits that are saleable on
the open market, there is no limitation on who that person can
sell it to. There is no way to stop that from happening. But at
the initial outset their goal was to design the permit system to
benefit the people who depend on the fishery the most and don't
have outside sources of income, like a teacher. People who live
in a small town in Alaska where fishing is the main source of
income are the people who get the valuable transferable permits.
The intent of the legislature at that time was that those
permits would be retained in the village, and about 50 percent
of permits are actually transferred without cost to other people
through gifting. About 50 percent are sold and often that is how
the out-migration can happen to Lower 48 people.
4:09:19 PM
SENATOR MEYER asked how much permits go for.
MR. PUTNAM replied that their economists calculate this
regularly, because their fees are based on the price of permits.
They know how much each permit is worth in each fishery; it's
all posted on their website. Just for an idea, a Bristol Bay
drift permit is worth about $220,000 and about 1,600 exist. A
set net permit on the east side of Cook Inlet, which is also in
a piece of legislation, is worth around $25,000.
MS. KELLEY added that there are so many permits in the state and
every month the permit value changes.
VICE CHAIR COGHILL asked Ms. Kelley if she is on the United
Fishermen of Alaska (UFA) board and asked if she has to let that
go.
MS. KELLEY replied that she was the longest-seated UFA board
member until March 1. She has told them she would only deal with
policies before the commission but has asked for an ethics
determination on whether she can stay on the North Pacific
Anadromous Fish Commission. It is light duty work and has a lot
of personal meaning to her. However, if they say it's a problem,
she will resign.
VICE CHAIR COGHILL said there is no doubt that she has had her
hand in many fisheries and Alaskan fisheries have unique
challenges but also a good reputation. He would like to keep
that going.
4:11:53 PM
MS. KELLEY said she also cares a lot about it and is proud of
Alaska's system.
VICE CHAIR COGHILL asked if their rulings set precedent or are
they for just one time, because they are so unique.
MR. PUTNAM replied that all 70 cases that have gone to the
Supreme Court and the hundreds that have gone to Superior Court
set precedent for the commission. The 13 cases still pending
before the commission - for 20, 30, and 40 years - are the most
difficult that if they don't get exactly right may bring the
whole system down, like a sweater coming apart by pulling a
thread.
The two remanded cases were appealed to Superior Court by a
fisherman who convinced the court that a mistake was made. Those
two got a second review by the CFEC and the same decisions were
sent back to the court where they were settled based on
negotiations.
The Attorney General's office is who their real lawyers are;
they know all the cases. You don't have to be an attorney to
serve on this commission, he said, although it helps, and before
he and Ms. Kelley make their decisions they want to know all the
cases, too.
He noted that the annual report will be very different than any
reports in the past. It's only 5 pages long and compared to up
to 70 pages in the past. The backside of the report will have
appendixes. He offered to come back and give them an overview of
that annual report in the future.
MR. PUTNAM said there are two things to think about; the
legislature gave them two mandates back in 1975 in enabling
statute. One of them is to regulate fisheries and to determine
how many permits are in a fishery, but also what the optimum
number is. The other is to make recommendations to the
legislature for future legislation to improve the regulation of
commercial fishing in Alaska. That is something they are
studying right now and will have some recommendations when they
finish their annual report.
VICE CHAIR COGHILL thanked him and said he would look forward to
the report. Finding no further questions and no one signed up
for public testimony, he stated that in accordance with AS
39.05.080, the Resources Committee reviewed the following and
recommends the appointments be forwarded to a joint session for
consideration: Dale Kelley and Vance Fate Putnam. This does not
reflect an intent by any of the members to vote for or against
the confirmation of the individuals during any further sessions.
4:17:59 PM
At ease
4:18:20 PM
VICE CHAIR COGHILL called the meeting back to order and
adjourned the Senate Resources Standing Committee meeting at
4:18 p.m.