HOUSE BILL NO. 341 "An Act relating to the dive fishery management assessment." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken explained that this bill would affect the Dive Fishery management assessment in that it would finalize a compromise between Alaska shellfish growers and commercial fishermen and would additionally address long-standing controversies regarding the State's management of geoduck clams and other shellfish stocks on aquatic farm sites. He noted that were the Finance committee substitute, Version 23-LS1280\I, adopted by the Committee, a title change would be required. In addition, he noted that a Department of Revenue zero fiscal note accompanies the bill. Co-Chair Green moved to adopt the Version "I" committee substitute as the working document. There being no objection, the Version "I" committee substitute was ADOPTED as the working document. TIM BARRY, Staff to Representative Bill Williams, the bill's sponsor, explained that this bill was introduced at the request of the Southeast Alaska Regional Dive Fisheries Association (SARDFA). He noted that the original bill incorporated "fairly mild changes" to existing statutes governing the manner in which SARDFA assesses its dive fishermen, Southeast Alaska communities, and dive fishery processor members. He explained that the Association, which is funded by either a one, three, five, or seven percent tax assessed on its members, works with the Department of Fish and Game and the Department of Environmental Conservation to manage and develop the dive fishery in Southeast Alaska. This bill, he recounted, would allow the Association's tax mechanism to be expanded to include two, four, or six percent assessments. Mr. Barry stated that the bill was recently amended to address an April 2004 State Supreme Court ruling that resulted in the Department of Fish and Game issuing cease-harvesting orders to several geoduck farmers. Consequently, he stated that the Association, shellfish farmers, the Department of Law, the Department of Fish and Game, the Governor's Office and others have reached an agreement on statutory language that would allow the shellfish farmers to continue to farm shellfish. He pointed out that this language is included in the Version "I" committee substitute before the Committee. He affirmed that this agreement, which has the support of the aforementioned entities, would institute a title change. Senator Dyson recalled that as this dive fishery industry was being developed, it asked the Legislature to adopt regulations, which would allow the industry to levy sufficient tax assessments through which to administer and supervise operations. He stated that he "was charmed" by the fact that the industry was willing to pay for this endeavor. In that vein, he asked whether this legislation would negatively affect "the bottom line for the State." Mr. Barry replied that this legislation would not affect the State "in any way." Continuing, he stated that enabling SARDFA to assess a two, four, or six-percent tax would allow the Association "to more effectively pay their own way." Senator Bunde stated that the bill has changed since he heard it in the Senate Labor & Commerce Committee. Continuing, he asked for further information regarding the standing stock language in the bill; specifically how designating aquatic farm sites in areas where no shellfish naturally exist would benefit the shellfish farming industry, as he contested that were the site suitable for the species, the shellfish would be naturally occurring there. He also asked for further information regarding the grandfathering in of current farms and the "common property" stock that existed on the site before the farm began. Mr. Barry voiced the understanding that the standing stock and shellfish farmer issue has been a topic of discussion in excess of five years. He stated that the agreement reflected in the Version "I" committee substitute "would define what significant and insignificant standing stock are." Furthermore, he stated that in those cases in which a farmer has a site designated as having an insignificant amount of standing stocks, the farmer could harvest the insignificant standing stock and sell it to a processor. He noted that the any proceeds generated by standing stock, beyond the insignificant stock, would be remitted to the State. JULIE DECKER, Executive Director, Southeast Alaska Dive Fishery Association, testified via teleconference from an offnet site and informed the Committee that geoducks are able to grow in areas where they are not currently present or do not naturally grow such as shallow inter-tidal areas. However, she noted that it is unknown as to whether they would grow as well in these areas as they would in a natural habitat area. Therefore, she attested that, to attract and encourage the growth of the "somewhat risky" shellfish farming industry, it would behoove the State to make available natural habitat sites, as they would provide natural feed and quicker growth. She stated that the primary on-going issue in this industry involves standing stock. She shared that the Alaska Court System has ruled that areas with insignificant geoduck clams should be available as aquatic farm sites, but that areas with significant amounts of standing stock should be regarded as common fishery sites. This issue, she disclosed has been heard by the Lower Court and appealed to both the Superior and Supreme Court. She stated that the Supreme Court has determined that State statutes do not currently allow the Department of Fish and Game to designate any amount of standing stock, significant or insignificant, to a farmer. This legislation, she contended, supports the Lower Court ruling that would change State Statute to allow farmers to harvest an area with insignificant amounts of wild stock. She stated that an agreement has been reached specifying that a harvest of 12,000 pounds or less would be regarded as insignificant wild stock. She noted that the net proceeds of a harvest exceeding that poundage would be remitted to the State. She reiterated that this issue has been addressed for a long time and that the ability of the various entities to reach this agreement was "quite an accomplishment." Senator Bunde stated that this legislation involves "some interesting common property issues." He asked whether Legislative Legal Services has developed a position regarding this common property stock issue. Co-Chair Wilken understood that a Constitutional concern has recently arisen regarding this legislation. Mr. Barry explained that George Utermohle, Legislative Counsel, Legislative Legal Services, has written a memorandum [copy on file], dated May 4, 2004 to Representative Williams, indicating that the agreement presented in this legislation would change State statutes. Furthermore, he stated that while the recent Supreme Court ruling specified that aquatic farmers should not continue to harvest common stock, the Court did not address any Constitutional issues. However, he allowed that Constitutional questions have arisen during the years of dispute involving this issue, and that the entities involved in the development of this agreement "are all aware" that there may be some unresolved Constitutional issues." Co-Chair Wilken asked that the memorandum be distributed to the Members for review. Mr. Barry concurred. Senator Olson asked whether there has been any opposition to the bill. Mr. Barry replied in the negative. Co-Chair Wilken stated that the bill would be HELD in Committee in order to further clarify, with Legislative Legal Services, the Constitutional issues being raised. AT EASE 9:37 AM / 9:38 AM