Legislature(2017 - 2018)GRUENBERG 120
01/30/2018 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB188 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 188 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 188-COMM. FISH. ENTRY PERMITS; LOANS; TRUSTS
10:07:40 AM
CHAIR STUTES announced that the only order of business would be
HOUSE BILL NO. 188, "An Act relating to commercial fishing entry
permits; establishing regional fisheries trusts and fisheries
trust regions; relating to commercial fishing entry permits held
and leased by a regional fisheries trust; relating to the duties
of the Alaska Commercial Fisheries Entry Commission and the
Department of Commerce, Community, and Economic Development; and
providing for an effective date."
10:08:19 AM
REID MAGDANZ, Staff, Representative Jonathan Kreiss-Tomkins,
Alaska State Legislature, on behalf of Representative Kreiss-
Tomkins, prime sponsor of HB 188, stated that he would be
presenting an analysis of the changes incorporated into the
proposed committee substitute (CS) for HB 188, Version M
[labeled 30-LS0389\M, Bullard, 1/22/18]. He advised the
committee that his presentation would follow the document titled
"Summary of Changes, ver U ver M | HB 188 Regional Fisheries
Trust," which should be in members' packets. As previously
discussed at the committee meeting on January 25, 2018, one of
the major changes in Version M was to replace the term "lease"
with "temporary transfer" and replace the term "lessee" with
"temporary transferee." These changes reflect the different
structure of the proposed fisheries trust permit system, which
uses temporary transfers of permits as opposed to permit leases.
He said that these changes have been made throughout Version M
of HB 188. He pointed out that the Summary of Changes document
does not identify instances where these specific changes have no
substantive effect on policy and that he would not cover those
instances; however, he emphasized that he would review
substantive policy changes that have been made. He also pointed
out that this section-by-section analysis reflects the changes
incorporated into Version M, as shown in the Summary of Changes
document, reflecting changes made to the bill as it was
originally introduced to the work draft currently before the
committee.
10:11:54 AM
MR. MAGDANZ referred to page 2, line 25, which adds Section 2,
[Version M] [Alaska Statutes (AS) 06.26.040(b)], to allow a
regional fisheries trust to be called a "regional fisheries
trust" since state law restricts what can be referred to as a
trust. This section ensures that the regional fishery trusts do
not violate that other state law. He turned to page 3, [lines
29-31 and page 4, lines 1- 9], to Section 6, AS 16.04.480(h),
[Version M]. He said this language was added because under the
new draft nonresidents would be allowed to access permits from a
fisheries trust. He then referred to Sections 12 and 14 of
Version M, [on page 5, lines 27-31, page 6, lines 19-31, and
page 7, lines 1-27], and said these sections were added to make
conforming changes to existing law that Legislative Legal and
Research Services attorneys said are necessary to ensure that a
temporary transferee would be treated the same as any other
permit holder.
10:13:03 AM
MR. MAGDANZ directed attention to Section 16, [page 7, line 28-
31 and page 8, lines 1-3, AS 16.10.540(a), Version M], which has
been amended. He said this section relates to groups of
fishermen coming together to levy fees that cover hatchery debt.
He stated that the new version clarifies that a temporary
transferee's temporary status with a fishery would prohibit them
from participating in voting on whether to incur long-term debt
on behalf of other fishermen in the fishery. He directed
attention to Section 17 [Version, M, on page 8, lines 4-31, page
9 lines 1-31, and page 10, lines 1-3]. He said Section 17 adds
two new paragraphs, (22) and (25), which are found on page 9,
[lines 23 and 31, respectively]. He said these paragraphs would
add duties to the Commercial Fisheries Entry Commission (CFEC)
to reflect the different responsibility it has for the temporary
transfer of a permit as opposed to permits that are leased. He
stated that the first duty, under paragraph (22), would be to
approve temporary transfers proposed by a fisheries trust.
Paragraph (25) specifies how the CFEC would handle permits that
revert to it if a fisheries trust dissolves because of financial
insolvency, he said. Mr. Magdanz directed the committee to the
second page of the Summary of Changes document, where it states
that the conforming amendments in AS 16.43.140(c) of Version U
were removed as they were deemed unnecessary by the Legislative
Legal and Research Services attorney. Thus, Version M does not
include any amendments to AS 16.43.140(c).
10:15:18 AM
MR. MAGDANZ turned to Section 22, on page 10, [lines 24-31 and
page 11, line 1, AS 16.43.150(g), Version M]. He said this
section has been amended to reflect the fact that leasing of
permits would still be prohibited under Version M. In addition,
Section 22 adds new language making it explicit that temporary
transfers are allowed. He said that under current law, the
allowance for temporary transfers or emergency transfers is
implicit. He stated that the Legislative Legal and Research
Services attorneys added the language on page 10, lines 29-30,
to make it clearer that temporary transfers are not transfers
with a retained right of repossession, which is otherwise
prohibited. Referring to Section 28, on page 12, [lines 22-31,
Version M], he said this change pertains to the existing
temporary transfers authorized by the Limited Entry Act (LEA).
He explained that these are commonly known as emergency
transfers or emergency medical transfers. The changes to
Section 28 [AS 16.43.180(a)] would allow an individual fishing a
permit acquired from a regional fisheries trust to emergency
transfer the permit to another person for reasons specified in
law if the individual is unable to participate in the fishery.
For example, if someone has a temporary transfer permit acquired
from a fisheries trust for a period of three years and broke
his/her leg after fishing the permit for one year, then he/she
would be able to emergency transfer the permit to another
individual subject to approval and regulations under CFEC.
10:17:17 AM
CHAIR STUTES asked whether the person with the temporary
transfer would be able to choose who receives his/her permit
through an emergency transfer.
MR. MAGDANZ answered that language in Version M would allow the
injured person to choose who would receive the permit under an
emergency transfer, subject to approval and regulations under
the CFEC. In response to a further question by Chair Stutes, he
replied that the original permit holder in this case would be
the fisheries trust.
CHAIR STUTES asked for confirmation that the fisheries trust
would have input on the selection of the transferee.
MR. MAGDANZ responded that Chair Stutes was correct.
10:18:39 AM
MR. MAGDANZ directed attention to Section 29, on page 13, [lines
1-31], Version M, stating this new section describes the
procedures a regional fisheries trust must follow to temporarily
transfer a permit. He emphasized that Section 29 is new law and
one of the more substantive sections of the bill, that most of
the previous sections of the proposed committee substitute for
HB 188 are largely conforming changes. The first thing Section
29 [proposed AS 16.43.190(a), page 13, lines 3-7], provides is
that an entry permit held by a fisheries trust can only be
fished by a temporary transferee [qualified under proposed AS
16.44.080 and approved by the commission under (c) of this
section]. This basically says the fisheries trust must follow
this defined procedure for this permit to be legally fished, he
said.
MR. MAGDANZ, referring to [Section 29, AS 16.43.190(b), on page
13, lines 8-17, Version M], said that this subsection outlines
the procedure a fisheries trust must follow when issuing a
temporary transfer permit. First, they would have to provide
the CFEC with information identifying the permit to be
transferred as well as identifying the person who will receive
the permit. Additionally, the CFEC would have to be notified of
the terms of the temporary transfer, including the length of the
transfer period and compensation received by the trust.
Finally, the CFEC is also empowered to require the fisheries
trust to provide any other information the CFEC might require,
he said. Referring to [Section 29, AS 16.43.190(c), on page 13,
lines 18-23, Version M], he stated that once the fisheries trust
has provided the CFEC with that information, the commission
reviews the temporary transfer to ensure that the proposed
temporary transferee is eligible. The CFEC could deny the
transfer if the transferee is not eligible under the law.
MR. MAGDANZ said that Section 29, [AS 16.43.190(d), on page 13,
lines 24-31, [Version M] pertains to reasons the CFEC could
revoke a temporary transfer of an entry permit. He provided two
examples where the terms of a temporary transfer might not be
met. First, under paragraph (1), if the transferee has violated
fishing laws, such as fishing the permit beyond its set period.
Second, the CFEC could revoke a temporary transfer if the
transferee has failed to compensate the fisheries trust with the
required fees or the transferee has tried to fish the permit for
a period longer than allowable under the permit. He said that
the permit would be revoked if new information demonstrating
that the transferee is not eligible to receive the permit
becomes available.
10:22:05 AM
CHAIR STUTES asked whether an individual transferring his/her
permit because of an injury would lose all financial attachment
to the permit.
MR. MAGDANZ asked for clarification that Chair Stutes was
referring to a situation where an individual who received a
permit from a fisheries trust becomes injured and subsequently
transfers the permit to another individual.
CHAIR STUTES answered yes.
MR. MAGDANZ responded that the bill does not specify how the
financial obligations would transfer in the type of situation
Chair Stutes just described. He offered his belief that the
CFEC would have some authority to address those types of
circumstances in regulation. He said the likely outcome would
be that the original transferee would remain financially
responsible to the fisheries trust. The emergency transferee
would then pay the temporary transferee, who would pay the
fisheries trust, just as it is currently done
CHAIR STUTES asked for confirmation that the bill does not
include provisions for this scenario.
MR. MAGDANZ answered that it is not specifically defined in the
bill; therefore, it is possible that the financial obligations
would pass on to the emergency transferee. As the bill is
currently written, such regulatory authority would fall under
the jurisdiction of the CFEC, he stated.
CHAIR STUTES asked whether there are limits on the number of
emergency transfers that can occur for a given permit. She
provided an example where an individual who receives a permit
through an emergency transfer is unable to participate in the
fishery because the temporary transferee falls off the boat and
dies. She asked whether the permit could be transferred again.
MR. MAGDANZ responded that he was unsure if it is currently
possible for a permit to be transferred multiple times as an
emergency transfer. He would defer that question to the CFEC
commissioners. Referring to the language in Section 28 of
Version M, he read, "The commission shall adopt regulations
providing for the temporary emergency transfer of entry permits,
including temporary emergency transfer of temporarily
transferred permits under AS 16.43.190". He said he would
interpret this to be at the discretion of the CFEC.
10:24:48 AM
REPRESENTATIVE EASTMAN asked at what point an emergency transfer
period would end. He provided an example of recovering from a
broken leg and asked if the permit would then come back to the
previously injured individual.
MR. MAGDANZ answered that he could only speak to his
understanding of emergency transfers under current law. His
understanding is that regulations adopted by the CFEC provide
that emergency transfers are valid for one year. He suggested
that the permit holder may be able to make an emergency transfer
for two years in a row if the disabling condition continues to
exist. He said CFEC regulations also provide for an injured
individual to revoke an emergency transfer at any time, which
would return the permit to them for their own use.
10:26:11 AM
MR. MAGDANZ turned to Section 37, on page 18 [lines 1-21,
Version M] noting that Sections 30-36 are the same as those in
Version U except for replacing the term "lease" with "temporary
transfer." He directed attention to page 18, [lines 7-12, to AS
16.43.960(k)], which contains the next substantive change to
existing law. This subsection provides that if a fisheries
trust is dissolved due to financial insolvency, permits held by
the trust would revert to and be reissued by the CFEC. He
directed members to briefly revert to Section 17, [Version M],
which provides further direction for the CFEC, specifically,
that the CFEC shall reissue the permits to ensure the state
receives fair market value for them. He pointed out that this
is language borrowed from existing statute.
10:27:13 AM
REPRESENTATIVE EASTMAN asked whether an insolvent fisheries
trust would receive fair market value for the permits it
relinquishes to the CFEC.
MR. MAGDANZ answered that the proceeds for the permits would go
to the CFEC; however, the funds received would be state monies
subject to legislative appropriation.
MR. MAGDANZ then directed attention to Section 37, [AS
16.43.960(k)(2) Version M, on page 18, lines 10-12, Version M],
and explained that paragraph (2) states that the CFEC cannot
revoke a permit from the fisheries trust solely due to the
actions of a temporary transferee. In practice, this means if
the fisheries trust temporarily transferred a permit and a
temporary transferee violates fishing laws, the CFEC can revoke
the temporary transfer; however, it cannot also revoke the
permit from the fisheries trust itself.
10:28:22 AM
REPRESENTATIVE EASTMAN said he understood the reason for that
provision. He then asked about a situation where a temporary
transferee is habitually violating fishing laws possibly with
the knowledge of a fisheries trust. He asked what might be done
under those circumstances, given the fact that the proposed
legislation would not allow CFEC to revoke the permit from the
fisheries trust.
MR. MAGDANZ answered that Version M of HB 188 would give the
CFEC the authority to continue to revoke a permit from anyone
violating fishing laws. He directed attention to Section 36 of
Version M, in existing law, which is why he had not mentioned
it. He read, in part, paraphrasing, that the CFEC has the
authority to revoke, suspend, or transfer all entry permits held
by a fisheries trust if the trust knowingly provides or assists
in providing false information to the CFEC to obtain a benefit.
He said this is the case in which a fisheries trust could have
its permit unilaterally revoked. He was not sure if the bill
speaks specifically to the situation posed by Representative
Eastman, where a fisheries trust might somehow be colluding with
a temporary transferee to routinely violate fishing laws;
however, that scenario would be unlikely. He added that there
may be additional provisions of law that might apply. He
offered to look further into that possibility.
10:30:15 AM
MR. MAGDANZ turned to Section 37, [AS 16.43.960(l), [Version M],
on page 18, [lines 13-21]. He explained that this paragraph
relates to cases in which a temporary transferee's fishing
privileges are suspended due to fishing law violations and to a
regional fisheries trust's right to revoke a permit. The
current bill, under [AS 16.43.960(l)(1)] provides that if
fishing privileges are suspended for a period longer than the
period of the temporary transfer permit, the fisheries trust can
unilaterally request the CFEC to revoke the temporary transfer,
return the permit to the fisheries trust, and the CFEC can make
the permit available to someone else. Paragraph (2), [AS
16.43.960(l)(2)] applies to instances in which fishing
privileges are suspended for a period shorter than the temporary
transfer period. He related a scenario in which a temporary
transfer is for a three-year period, but the temporary
transferee is suspended from fishing for one year due to fishing
violations; a fisheries trust cannot unilaterally revoke the
temporary permit transfer. He explained that the regional
fisheries trust can only revoke the temporary transfer of the
permit if the temporary transferee requests it. To illustrate
this provision, he related a scenario wherein a temporary
transferee might acknowledge that due to fishing violations, the
permit to fish could not be used. The transferee, upon further
realizing that would preclude him/her from earning money to pay
for next year's permit, could request the CFEC take back the
permit and give it to someone else to use. The fisheries trust
could do that.
10:31:51 AM
MR. MAGDANZ turned to Section 39, [AS 16.44.010] on page 18, 6s
27-31, page 19, lines 1-31, and page 20, lines 1-3, Version M],
which adds Chapter 44 [Regional Fisheries Trusts] to the Title
[16] statutes. He said Chapter 44 pertains to the operations
and structure of fisheries trusts. He offered that the next two
pages of the Summary of Changes document describe various
aspects of changes to Section 39.
MR. MAGDANZ directed attention to Section 39, [AS 16.44.010(a),
on page 18, lines 28-31, Version M] noting that the first change
was also present in the work draft the committee reviewed last
spring. He said that changes in this subsection would provide
[the Department of Commerce, Community & Economic Development
(DCCED)] limited authorization to establish fisheries trusts in
no more than three regions in Alaska, unless others are approved
through further legislative action, he said. In addition,
subsection (a) would require municipalities applying to the
DCCED for a trust to not only provide evidence demonstrating
that two-thirds of the municipalities in their region are in
support of establishing a trust, but also provide draft bylaws
and business plans for the trust prior to DCCED's review.
10:33:24 AM
MR. MAGDANZ turned to Section 39, to proposed AS 16.44.010(d),
on page 19, [lines 19-29], Version M. He explained that this
subsection pertains to events following the dissolution of a
fisheries trust. Permits held by the trusts would revert to the
CFEC for reissue and all other rights and properties of the
trusts would pass to the state.
MR. MAGDANZ referred to proposed AS 16.44.020(c) and AS
16.44.020(d), on page 20, [lines 14-30, Version M]. He
explained these subsections have been rewritten, that the
substantive change makes it clear that an unincorporated
community can be seated on a fisheries trust board from the
inception of the fisheries trust if the fisheries trust
application to the DCCED requests that the community be
included. He remarked that the prior version of the bill
required that the initial board could be seated only with
representatives from municipalities and that board could then
choose to include unincorporated communities.
10:35:07 AM
REPRESENTATIVE EASTMAN asked, regardless of whether they are
unincorporated communities or municipalities, if the bill has a
mechanism for longtime participants in a trust, who are perhaps
on a border or boundary between two different trusts, to leave
one regional fisheries trust and join another one.
MR. MAGDANZ answered that Version M does not consider this
option. He said that the intent is when fisheries trust regions
are drawn they are essentially set; however, he drew attention
to one provision. He referred to page 19, lines 17-18,
[proposed AS 16.44.010(c) Version M], which allows the DCCED to
modify or change the boundaries of regions for "good reason."
He acknowledged that some people have suggested this language
needs further clarification, which might be appropriate given
Representative Eastman's question. He highlighted the sponsor's
intent in instances where the CFEC might make changes to its
administrative area boundaries, which are found in regulation,
not statute, that the department would be able to adjust or
modify the boundaries. He clarified that in drafting this
language, the sponsor did not anticipate that communities might
want to "jump" from one fisheries trust region to another.
10:37:07 AM
MR. MAGDANZ referred to [Section 39], to proposed AS 16.44.020
(d) on page 20, lines 25-30, [Version M]. This language is new
language based on feedback primarily from fishermen and
commercial fishing groups, he stated. Subsection (d)] requires
that the governor appoint fisheries trust board members "who
have a diversity of experience relevant to the operations of a
fisheries trust." This provision also would require that "for
each board, at least two individuals have experience in the
commercial fishing industry." These requirements were added
because the previous version would have allowed anyone to sit on
the board. This language will give the governor more direction
in how to fill the fisheries trusts board seats.
10:38:12 AM
MR. MAGDANZ referred to [Section 39], AS 16.44.040(a), on page
22, [lines 15-31, Version M]). He explained that this makes a
minor change on line 15. The Legislative Legal and Research
Services attorney added the term "permit-related" in front of
the words "fees levied," which is not a substantive change to
the legislation.
MR. MAGDANZ turned to Section 39, AS 16.44.050(a)(3), on page
23, lines 15-16, Version M]. This language, "subject to AS
16.44.060(d), borrow funds," makes it explicit that while a
fisheries trust may borrow funds, it may not in any way use its
permits as securities for those loans. For example, a fisheries
trust could seek to obtain a loan from a bank to acquire a
permit, but it cannot use its permits as collateral, which
applies to everyone. Although this prohibition was in previous
drafts, it is now clearer in [Version M].
MR. MAGDANZ turned to [Section 39], to proposed AS
16.44.050(a)(6), [on page 23, lines 15-16, Version M]. He
explained that this requires a fisheries trust to temporarily
transfers permit according to the process he described in
Section 29. He said it also removes the "lease to own"
provisions present in the previous version of the bill because
the new mechanism of temporary transfer makes them unnecessary.
The Legislative Legal and Research Services attorney advised
that, under the bill, the lease to own provisions were no longer
necessary since a fisheries trust has the power to permanently
transfer a permit out of the fisheries trust to a former
temporary transferee. He said he would explain more about this
later. The question of "termination or revocation of a
temporary transfer" is now covered in Section 29, [Version M],
as previously discussed.
10:40:39 AM
MR. MAGDANZ referred to [Section 39] proposed AS
16.44.050(a)(7), on page 23, lines 17-18, which has been added
in [Version M], provides language that is consistent with the
temporary transfer procedure.
MR. MAGDANZ referred to [Section 39] proposed AS 16.44.050(b)(1)
on page 23, lines 24-26, [Version M], which specifies that a
temporary transfer, unlike a lease, would be subject to the CFEC
review and approval, he said. He explained that this somewhat
addresses Representative Eastman's question in a previous
committee meeting about the difference between a "lease" and a
"temporary transfer."
MR. MAGDANZ turned to [Section 39] proposed AS 16.44.050(b), on
page 24, lines 1-5, [Version M]. He said that the language of
paragraphs (4) and (5) has been rewritten to account for the new
temporary transfer mechanism. He added that the substance of
paragraph (5) is the same; however, the substance of paragraph
(4) is slightly different to account for new procedures for
revoking temporary transfers relative to the procedures that
existed in prior versions for terminating leases.
MR. MAGDANZ referred to [Section 39] to proposed AS
16.44.050(c), on page 24, lines 6-15, [Version M] and said this
subsection describes the preference criteria mentioned in a
prior committee meeting's presentation. It states that a
fisheries trust can weight competitive bids it receives, based
on one or more of four criteria. He referred to the four
criteria found in subsection (c), which read as follows:
(1) history of participation in the fishery for which
the temporarily transferred entry permit would apply;
(2) access to economic opportunities other than
commercial fishing;
(3) record of participation in commercial fishing
organizations and fisheries management; or
(4) expected economic contribution to the fisheries
trust region if the bidder is awarded a temporarily
transferred entry permit under this chapter.
MR. MAGDANZ said a fisheries trust does not have to weight bids
according to these criteria; however, it could ask applicants
questions based on the four criteria he just mentioned and
assign points based on the answers received. He characterized
this process as being like the process which the CFEC uses when
allocating permits in a fishery that becomes limited.
10:43:41 AM
REPRESENTATIVE EASTMAN asked whether a fisheries trust could
apply additional or different criteria than these [under AS
16.44.050(c)(1)-(4)].
MR. MAGDANZ answered no.
MR. MAGDANZ turned the page on the Summary of Changes to
[Section 39], to proposed AS 16.44.050(d) and (e) [on page 24,
lines 16-18], noting that this new language would explicitly
prohibits a fisheries trust from holding an CFEC interim-use
permit, noting these permits are non-transferable permits,
generally issued in non-limited fisheries. In addition, a
"fisheries trust" cannot hold a vessel permit or "quota share"
from a federally managed fishery. These restrictions were
implied in previous versions of HB 188, but the sponsor wanted
to make it explicit and clear that a fisheries trust is only
allowed to hold transferable, State of Alaska limited entry
permits, he said.
MR. MAGDANZ, referring to [Section 39] to AS 16.44.060, [on page
24, lines 27-31, and page 25, lines 1-16, Version M], stated
that this language covers rules governing what and how many
permits a fisheries trust may hold. He explained that concern
arose regarding the potential for fisheries trusts to interfere
with markets for permits in very small fisheries. He said 13
limited fisheries in Southeast Alaska alone have fewer than 40
permits. The concern is that a fisheries trust acquiring those
permits could impact an individual's ability to acquire a
permit, he said. This language limits fisheries trusts to
acquiring permits only in fisheries with 40 or more transferable
limited entry permits.
10:46:03 AM
REPRESENTATIVE TARR asked for confirmation that the last version
of the bill [Version U] set a 2.5 percent cap on the number of
permits in a fisheries trust] as one way of constraining it [the
number of permits]. She indicated that the language Mr. Magdanz
just now described is a second layer that would only apply to
fisheries of a certain size.
MR. MAGDANZ answered that Representative Tarr was correct in her
interpretation, that the 2.5 percent cap is still present in
Version M; although, it was changed slightly. The previous
version of the bill [Version U] set a 2.5 percent cap "rounded
up to the nearest whole number," but Version M now states 2.5
percent "rounded to the nearest whole number." He clarified
that rounding to the nearest whole number makes for a slightly
more conservative cap.
10:46:43 AM
REPRESENTATIVE KREISS-TOMKINS, prime sponsor of HB 188, further
commented that the goal of this is to provide a stepping stone
for entry into the major "meat and potato" fisheries, such as
those for sockeye or Coho salmon fisheries. He said that for
the fisheries that have less than 40 transferable limited entry
permits, some permits exist only on paper, perhaps because these
fisheries have not been prosecuted in some time. Also, some are
very small, niche fisheries, which if included in a fisheries
trust, might add complexity and unintended consequences.
10:47:26 AM
CHAIR STUTES asked whether permits held by a fisheries trust
that liquidates would go back to the CFEC and become available
or if the fisheries trusts could sell those permits.
MR. MAGDANZ responded that Version M would allow a fisheries
trust to permanently transfer permits out of the trust, which is
considered the same as selling them. He said, if a trust is
dissolved, the permits would revert to the CFEC where they would
be reissued back into the open market.
MR. MAGDANZ referred [Section 39], to proposed AS 16.44.060(e),
on page 25, lines 15-16, [Version M] stating this subsection was
also new language that would require a fisheries trust to
receive fair market value when it transfers a permit out of the
trust. It is intended to prevent the trusts from speculating in
the permit markets for the sole purpose of making money. For
example, this language would ensure that a fisheries trust that
may have received a permit at sub-market cost cannot sell it
into the market to increase its cash flow since that is not the
purpose of fisheries trusts. Instead, their purpose is to
provide those permits to people who want to become fishermen.
10:49:17 AM
MR. MAGDANZ directed attention to [Section 39] proposed AS
16.44.070(c) on page 25, lines 25-27, [Version M], which allows
for a temporary transfer permit to be emergency transferred,
which was previously covered.
MR. MAGDANZ directed attention to [Section 39], AS 16.44.070(e),
on page 25, [lines 30-31 and page 24 lines 1-5, Version M], and
said this subsection makes it clear that a fisheries trust, not
a temporary transferee, is responsible for paying the CFEC
renewal fees on a permit.
MR. MAGDANZ turned to [Section 39], AS 16.44.070(f), on page 26,
lines 3-5, [Version M], which is a new subsection that makes it
clear a temporary transfer can only be revoked in situations
specified by law. He noted that is the difference with lease
arrangement, with perhaps a wider range of reasons for a permit
being revoked. The new language [Version M] makes clear that a
temporary transfer be revoked only due to the allowable reasons
set in statute.
MR. MAGDANZ turned to [Section 39] to AS 16.44.080, on page 26,
lines 6-23, [Version M]. He characterized these as substantial
changes, primarily due to the removal of the nonresident
prohibition. In the previous version of the bill [Version U],
the proposed AS 16.44.080 would have restricted fisheries trusts
to only providing permits to Alaska residents, as previously
discussed. He explained that this restriction was removed for
constitutional reasons.
MR. MAGDANZ turned to [Section 39] AS 16.44.080(a)(3), on page
26, lines 12-13, [Version M], stating this paragraph requires
that a temporary transferee be able to actively participate in
the fishery for which a temporary transfer permit applies. This
language is modeled after a standard the CFEC uses to determine
if an individual is eligible for a permanent transfer of a
permit, he said. He directed attention to the last changed to
Section 39, is to AS 16.44.080(d), [on page 26, lines 21-23,
Version M], which states that a fisheries trust does not have to
accept bids from an individual who has had a temporary transfer
permit revoked. He explained that without this language, a
fisheries trust would technically have to consider that
individual's application.
10:51:49 AM
MR. MAGDANZ offered to review the remaining changes incorporated
into Version M in batches. He referred to Sections 41-50, on
page 27, [lines 20-31, page 28 lines 1-31, page 29 lines 1-31,
and page 30, lines 1-8, Version M]. These provisions pertain to
specific taxes and assessments that fisheries groups can self-
impose for specific purposes. He noted that the previous
version of the bill [Version U] would have inadvertently
exempted temporary transferees from paying any taxes or fees,
which was never the sponsor's intention. Sections 41-50 make
clear that temporary transferees are subject to taxes and fees,
if they exist. In addition, these sections also include
language that would prohibit temporary transferees from voting
on whether to impose taxes and fees since these individuals are
temporarily in the fisheries. Decisions on taxes and fees
should be made by those who have a long-term tie to the fishery.
He detailed the taxes and assessments, stating that Sections 41-
43 pertain to salmon enhancement taxes; Sections 44 and 45 apply
to dive fishery management assessments; Sections 46 and 47 apply
to salmon fishery assessments; Section 48 applies to permit
buyback assessments; and Sections 49 and 50 apply to seafood
development taxes.
CHAIR STUTES asked if these would cover the voluntary Alaska
Seafood Marketing Institute (ASMI) tax.
MR. MAGDANZ answered yes and explained it was intended that
temporary transferees should not have an economic advantage over
someone who holds a permanent permit. He further explained the
rationale, such that if an individual permit holder is paying
the ASMI tax, the temporary permit holder should also pay it
since temporary transferees benefit from the marketing that ASMI
provides.
MR. MAGDANZ, turning to Section 54 [on page 30, lines 23-31, and
page 31, lines 1-12, Version M] said this section makes a minor
change. It states that the DCCED shall consult with the Alaska
Department of Fish & Game (ADFG) to consider salmon
administrative area boundaries when dividing the state into
distinct fisheries trust regions.
MR. MAGDANZ, turning to Section 55, [on page 31, lines 13-31,
Version M], said this section pertains to limited authorization
and how the DCCED would choose the three initial fisheries trust
regions when more than three applications are submitted. In
short, if the proposed bill were to pass and more than three
regions apply to create a fisheries trust, how the department
choose which ones to authorize. This language was in a prior
work draft, and the only change in [Version M] is to reflect the
dates since the legislature is now in its second session.
MR. MAGDANZ turned to Section 56, on page 32, [lines 1-2,
Version M], and said that adds Sections 52, 54, and 55 would
take effect immediately. In addition, Section 57 [on page 32,
line 3, Version M] changes the effective date to account for the
fact that the legislature is now in its second session.
10:56:09 AM
REPRESENTATIVE EASTMAN asked what would happen if a fisheries
trust is unable to find individuals to receive temporary
transfer permits.
MR. MAGDANZ answered that a fisheries trust has options. First
would be to continue to advertise another bid period and
advertise more widely. Second, a trust could decide to not
issue the permit to anyone, which would not be ideal as there
would be no earnings on the permit. Third, a fisheries trust
could transfer the permit away from the fisheries trust. He
related a scenario in which a fisheries trust might say that it
acquired a permit for a period, but it is clear there is not any
more demand; the fisheries trust could then transfer it out and
acquire a different type of fishery permit, he said.
10:57:57 AM
REPRESENTATIVE TARR pointed out that there are two letters of
support for [HB 188] - one from the Bristol Bay region and one
from Sitka. She asked if these were the two leading areas where
this program might be implemented.
10:58:40 AM
REPRESENTATIVE KREISS-TOMKINS, prime sponsor of HB 188,
responded that there has been a good deal of interest from the
Bristol Bay region, as indicated by the letter Representative
Tarr referenced. He offered his belief this interest is in part
due to a trend of permits out-migrating from that area. He said
he would not make the same statement about the Southeast Alaska
region because it is more heterogenous, in terms of all the
different fisheries and communities. He reiterated that Bristol
Bay has shown quite a bit of interest, as have as a few other
regions of Alaska. He said that while he would not include
Southeast Alaska in that category, there is localized interest
in the Southeast region.
10:59:58 AM
CHAIR STUTES, directed to the CFEC, asked whether there is a
limit on the number of times one license can have an emergency
transfer.
11:00:14 AM
BRUCE TWOMLEY, Commissioner; Chair, Commercial Fisheries Entry
Commission, answered no. He explained that each recipient of an
emergency transfer is the holder of the permit for that time.
Each permit holder can, if they are injured or qualify in some
other way, apply for an emergency transfer.
11:00:53 AM
CHAIR STUTES announced that HB 188 was held over.
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