Legislature(2017 - 2018)GRUENBERG 120
03/08/2018 10:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s):|| Fishermen's Fund Advisory and Appeals Council (ffaac)|| Commercial Fisheries Entry Commission (cfec) | |
| HB354 | |
| HB379 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 354 | TELECONFERENCED | |
| *+ | HB 379 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 354-DIVE FISHERY ASSESSMENTS
10:30:00 AM
CHAIR STUTES announced that the next order of business would be
HOUSE BILL NO. 354, "An Act relating to dive fishery management
assessment procedures."
10:30:42 AM
REPRESENTATIVE DAN ORTIZ, Alaska State Legislature, read from a
prepared sponsor statement, which read as follows [original
punctuation provided]:
This bill is necessary for the Southeast Alaska
Regional Dive Fisheries Association, the only dive
fishery association in the state regulated by AS
43.76.150-210, to amend the process undertaken to
modify the tax on the geoduck, sea cucumber and sea
urchin fisheries it represents. Each fishery can tax
itself at a different rate. At present, a majority of
permit holders are required to initiate the petition
to change an assessment tax and then vote on the
change. Many of the permits are nontransferable and
less than half of the CFEC permit holders in these
fisheries are actively participating in said
fisheries. Due to the low involvement of permit
holders, a majority participation of permit holders is
unrealistic. The proposed legislation allows for a
change in assessment tax to be initiated by a 3/4 vote
from the Board of Directors and the vote to accept the
change pass with a majority vote of permit holders
participating in the vote.
REPRESENTATIVE ORTIZ said the bill would allow the Southeast
Alaska Regional Dive Fisheries Association to take their votes
in a more workable manner. He asked his staff to elaborate on
the bill.
10:33:07 AM
LIZ HARPOLD, Staff, Representative Dan Ortiz, Alaska State
Legislature, stated the Southeast Alaska Regional Dive Fisheries
Association (SARDFA) was the only regional dive fishery
association affected by the bill. She said that SARDFA was a
private non-profit economic development organization established
in the late 1990s, representing the harvest divers, processors,
and communities of Southeast Alaska, south of Yakutat. There
were approximately 380 permit holders participating in the dive
fisheries, she said. The SARDFA organization oversees the
geoduck, sea cucumber and sea urchin fisheries and has a self-
assessed tax. She related that the association works with the
Alaska Department of Fish & Game (ADF&G) to develop its annual
operating plan, which determines how the dive assessment
collected by the Department of Revenue would be spent. An
assessment also goes to the ADF&G to manage the fishery, she
noted.
10:34:41 AM
MS. HARPOLD reviewed the voting process, such that the
assessment would be initiated by 25 percent of the permit
holders who voted in the previous election. This process worked
well in the 1990s, because the dive fisheries had switched to a
limited-entry fishery and most of the permit holders were
actively fishing. Since permit holders must actively be engaged
in the fishery to vote, many of the permit holders with non-
transferable permits cannot vote, since the individuals no
longer dive in the fisheries.
MS. HARPOLD said that the dive permit holders in Southeast
Alaska belong to SARDFA. The bill would change the initiation
process for the assessment tax by allowing the SARDFA Board of
Directors to initiate a change with 75 percent support of the
board. The assessment change would need a majority vote by
permit holders, as outlined in the bill. The election process
would not change, she said.
10:36:24 AM
CHAIR STUTES asked whether the vote is determined by 75 percent
of the received ballots.
MS. HARPOLD responded that at least 25 percent of the permit
holders who participated in the previous election must initiate
the change. It would require a majority vote of permit holders
to pass an assessment change. She explained the response rate
has declined since many diver permit holders no longer
participate in the fisheries, with less than half of the permit
holders sending in their ballots.
10:37:30 AM
REPRESENTATIVE ORTIZ added that in the 1990s there was a much
higher participation rate in voting on assessments. Currently,
the overall industry activity by permit holders has shown less
activity. As these permit holders cease fishing, they cannot
sell the permits, but choose not to participate in the vote.
Thus, it has been harder and harder to get to that level of
ratio of participation in an actual vote.
10:38:24 AM
REPRESENTATIVE NEUMAN asked whether there were any new
applications for permits and to describe the process to apply
for a new permit.
REPRESENTATIVE ORTIZ deferred to the Commercial Fisheries Entry
Commission (CFEC) to respond.
10:38:50 AM
VANCE "FATE" PUTMAN, Chairman; Commissioner designee, Commercial
Fisheries Entry Commission (CFEC), responded that this question
"gets to the heart" of the reason for so many legal cases
[pertaining to limited-entry fishing permits] in the Alaska
Supreme Court. He explained that when a fishery initially
becomes limited, that the CFEC issues permits to those fishermen
who participate in the fishery and have a history of
participation in the fishery. Applicants who are dependent upon
that fishery strictly for their economic survival are eligible
to obtain a transferable permit; however, applicants who have
other sources of income or do other work, are eligible for a
non-transferable permit.
10:39:50 AM
MR. PUTMAN acknowledged these limited-entry permits represent
very important decisions to the fishermen, their future, and
their families. Non-transferable permits are often challenged
in the court system. He offered his belief that in this
fishery, many dive fishermen who initially applied for a
limited-entry permit received a non-transferable permit because
they had other sources of income.
10:40:12 AM
REPRESENTATIVE NEUMAN said he was grappling over the reason for
the problem, which seemed to be a lack of new applicants. He
calculated that about 95 of 380, or 25 percent of permit holders
vote in an election. It takes about half to pass, or about 48
permit holders; however, not enough permit holders were voting
because they no longer participate in the dive fishery. He
asked again if that is the reason for the non-participation. In
response to Chair Stutes, he asked why new dive fishermen were
not applying for permits when participants aged out of the
fishery.
MR. PUTMAN agreed one of the issues with non-transferable
permits was that permit holders aged out, so over time the
number of permits diminish in a fishery. He explained that
getting new permit holders into the system was not possible
because only the permits that are transferable can be moved to
another fisherman.
10:41:39 AM
CHAIR STUTES related her understanding that once the non-
transferable permit was no longer being fished, "it's a goner"
and there was no way for a new entrant to apply.
MR. PUTMAN agreed.
10:42:02 AM
REPRESENTATIVE NEUMAN asked whether applicants could currently
apply for a transferable permit.
MR. PUTMAN answered that was correct.
10:42:10 AM
REPRESENTATIVE NEUMAN said that it seemed like the evolution
would be someone interested in the dive fishery would try to get
a temporary permit. He wondered if people were interested in
qualifying for temporary permits. He further asked how much
interest there was for the dive fisheries.
CHAIR STUTES responded that she believed that was the issue HB
354 was trying to address.
MR. PUTMAN agreed. He related his understanding, in speaking
with staff, was that the problem is that many permit holders who
were no longer participating in the fishery still maintained
their permits each year by paying the licensing fee each year,
but these permit holders may not participate in the vote. He
related his understanding that with a threshold of fifty percent
plus one to change the tax structure becomes a hurdle that
cannot be overcome without the changes in the bill.
10:43:19 AM
CHAIR STUTES opened public testimony on HB 354.
10:43:45 AM
PHIL DOHERTY, Executive Director, stated that SARDFA approached
Representative Ortiz to change an old statute with respect to
the assessment tax. The dive association was formed in 1997 to
provided management funds for the fishery because ADF&G did not
have adequate funds to research and manage the three species the
dive fisheries harvest, which were sea urchins, geoduck clams,
and sea cucumbers. The divers in Alaska recognized the value of
the resources, in part, based on fisheries in British Columbia,
Washington state, and California. These divers asked [former
Representative] Bill Williams to assist in forming SARDFA,
including establishing a mandatory assessment tax. The divers
could tax themselves at a one, three, five, or seven percent
assessment tax, he said. Currently the sea cucumber fishery,
which is the focus of this bill, has been taxing itself at five
percent. The geoduck fishery taxes itself at seven percent, and
the urchin fishery taxes itself at five percent of ex-vessel
value, meaning the fisherman comes to the dock and five percent
of the fish ticket would be removed immediately, he said. He
compared that collection process like one for state tax
collections. In addition, these fishermen also pay a three
percent state fisheries tax, he stated.
10:45:58 AM
MR. DOHERTY explained that the assessment funds goes into the
association's fund and SARDFA, in conjunction with the ADF&G
develops the annual operating plan. The ADF&G provides its
plans for assessment, management, and research needs to SARDFA,
which are discussed, if necessary, and the association provides
the department with the funds it needs to conduct the fisheries,
he said.
MR. DOHERTY further explained the hurdle has arisen due to the
number of non-transferable permits and even some of the
transferable permits. For example, the sea cucumber fishery has
156 transferable permits and 233 non-transferable permits
totaling 389 total permits. Two years ago, SARDFA had an
election to change the assessment tax in the sea cucumber
fishery from five percent to one percent but the association
could not obtain half of the 389 permit holders to vote. Even
though the active permit holders and association members wanted
to get it changed, it could not do so, he advised.
10:47:43 AM
MR. DOHERTY stated that the association requested HB 354, which
would change the voting process to allow a majority vote of the
ballots received to [count]. He characterized that as the
thrust of this bill and it does not affect any other fishery or
the state. The SARDFA has committed to pay ADF&G the funding it
needs to manage and research the fisheries. The association
also uses its assessment to fund paralytic shellfish poisoning
(PSP) and water quality testing via the Department of
Environmental Conservation (DEC). The permit holders understand
that ADF&G must provide research and management to maintain the
fisheries. He stated that the prices in the sea cucumber
fishery are up and the association does not have large overhead
costs for sea cucumbers. He briefly described some of the
programs. He indicated that lowering the tax from five percent
to one percent in the fishery, a diver would result in $1,200 to
$1,500 more for the ex-vessel value of the sea cucumbers
harvested. This bill would streamline the process. The
SARDFA's commitment to the state would always be there, he said.
10:50:15 AM
REPRESENTATIVE KREISS-TOMKINS thanked Mr. Doherty for his
testimony. He commented on the unique status the dive fisheries
have in Alaska. Referring to AS 16.42.40, Regional Dive
Development Associations lays out the organization, which is
what SARDFA would be, he said. He referred to page 3, lines 13-
14, of HB 354, which read," ... board members of the qualified
regional dive fishery development association ..." He said he
was curious whether multiple dive fishery associations could
form for the same dive fishery. He said he asked because
fishermen can debate among themselves and hypothetically a rival
association could arise and submit petitions to the commissioner
that could be different than what SARDFA might submit.
MR. DOHERTY responded that he had not previously considered
whether another dive association could compete on the same
fishery. He did not think it would be allowed to happen. The
only other dive fishery in Alaska could be for a small sea
cucumber fishery in Kodiak. He has spoken to the Kodiak
fishermen and they do not see the need for an association at
this point. In Southeast Alaska, he did not envision the
scenario happening.
10:53:02 AM
REPRESENTATIVE KREISS-TOMKINS agreed that there is no present
debate on this issue, but he wanted to know if technically or
legally that could happen in the future. He said that he did
not see any reason it could not happen after reviewing the
language in AS 16.42.40 since the three criteria in statute
would not be that difficult to meet. He wondered if anything
would prevent that from happening.
10:53:57 AM
CHAIR STUTES asked for further clarification as she was unsure
of the concern.
REPRESENTATIVE KREISS-TOMKINS asked whether there was anything
that prevents a group of dissatisfied fishermen from forming a
non-profit corporation and submitting a petition.
10:54:11 AM
CHAIR STUTES said she still was unsure why that would be a
problem.
REPRESENTATIVE KREISS-TOMKINS answered that one group might have
a different opinion on the preferred enhancement tax. Another
group could have a different opinion and that group could submit
a petition for a different tax amount. He expressed an interest
in learning more about the regional dive fisheries associations
and whether the statutes only allow one to exist.
10:54:44 AM
CHAIR STUTES said she was trying to apply it to this specific
bill.
REPRESENTATIVE KREISS-TOMKINS referred to page 3, lines 13-14 of
HB 354.
CHAIR STUTES acknowledged the cite but pointed out that the bill
does not identify a specific dive association such as SARDFA.
10:55:18 AM
REPRESENTATIVE KREISS-TOMKINS stated that his question related
to HB 354. He specifically asked what is "the" qualified
regional dive fisheries association as opposed to "a" qualified
regional dive fisheries association.
CHAIR STUTES offered that it might be more direct. She asked
whether the sponsor or CFEC could respond. She did not think
there was any issue.
MS. HARPOLD said she could not address the issue of if another
regional dive fishery could form but the rules would apply to
any regional dive fishery that formed. She related her
understanding that ADF&G would determine an assessment.
10:57:01 AM
MR. DOHERTY said he has not heard of anyone in Southeast Alaska
contemplating it. He explained that SARDFA's Board of Directors
has nine members who represent cities, municipalities, and areas
in Southeast Alaska, out-of-state divers, and a processor. He
characterized it as being representative plus the organization
has three committees for sea cucumbers, geoducks, and red sea
urchins. He said that about 20 divers participate in the sea
cucumber committee, which he believed was a robust committee
system. He related that the meetings are public meetings, and
discussions have been robust, but no one has ever mentioned
breaking away to form a second association.
10:58:44 AM
REPRESENTATIVE KREISS-TOMKINS said he hoped it was permissible
to ask questions to explore the overall structure. He was
interested whether anything could prevent a second association
from forming regardless of how highly unlikely it was that it
would happen. He related his understanding that it could
happen, that it was highly unlikely to happen, but he still
wanted to be certain he understood the statute.
10:59:32 AM
CHAIR STUTES asked whether an attorney from Legislative Legal
and Research Services was online.
REPRESENTATIVE KREISS-TOMKINS said he did not think this merited
further pursuit.
CHAIR STUTES wanted to be certain Representative Kreiss-Tomkins
was satisfied. She understood his intent.
REPRESENTATIVE KREISS-TOMKINS said, "It's a great bill." He
expressed an interest in the language choice between "a" or
"the" but noted in practical terms there probably was not much
difference.
11:00:16 AM
REPRESENTATIVE NEUMAN understood the concern expressed. He
highlighted his goal when reviewing any bill was to try to make
it better. He appreciated Mr. Doherty's testimony. He related
his understanding that the intent was to change the [assessment]
from five percent to one percent for sea cucumbers but not for
geoduck or sea urchins.
MR. DOHERTY answered that if HB 354 passed the SARDFA would vote
on the assessment for the sea cucumber fishery. He did not
anticipate the association would change the assessment tax on
the geoduck fishery. He explained that the geoduck fishery was
very expensive to manage. He related that due to some issues in
China, which is the destination market for geoducks, the
fisheries must also test for arsenic levels in geoducks. He
estimated that to pay for the program, including the PSP, water
quality testing, and arsenic level testing, that the divers pay
between $150,000 - $200,000 per year for the program in addition
to the $50,000 that the association pays to the ADF&G. He said
the geoduck fishery barely manages to exist. He estimated that
the sea cucumber fishermen have enough surplus funds that their
assessment tax could be reduced, between one to three percent;
probably to one percent.
11:02:34 AM
REPRESENTATIVE NEUMAN said that he was assuming that voting
lines do not cross between species, such that divers holding
permits for sea cucumbers do not vote for [tax assessments for
those holding permits geoducks or sea urchins]. He wondered if
part of the problem was due to reduced members or if permit
holders who were fishing for geoducks could vote for sea urchin
tax assessments.
MR. DOHERTY responded that if the association was considering a
change for the sea cucumber assessment tax, that only members
that could vote are the sea cucumber permit holders. He
reiterated that there were so many non-transferable permit
holders given out at the initial start of the sea cucumber
fishery, since it was the easiest fishery to obtain landings,
that it was difficult to get a majority vote. He recalled that
two years ago the association received 89 positive votes to
lower the tax. The remaining divers renewed their permits but
no longer dive in the fishery. He emphasized the intent is to
modernize [the statutes] to make it easier for the divers to
change their assessment. He pointed out that the dive fisheries
are very physically-demanding fisheries with the diver being the
permit holder. The permit holder must be the person doing the
diving, he said. As the divers get older, they tend to stop
diving but maintain their permits for a small fee.
11:05:00 AM
REPRESENTATIVE NEUMAN asked whether it was possible to make the
non-transferrable permits transferrable to get them back in the
market.
CHAIR STUTES suggested that would be a question for the CFEC.
11:05:24 AM
CHAIR STUTES, after first determining no one wished to testify,
closed public testimony on HB 354.
11:05:44 AM
REPRESENTATIVE KREISS-TOMKINS said it sounded like a great bill.
11:06:22 AM
SCOTT KELLEY, Director, Division of Commercial Fisheries, Alaska
Department of Fish & Game (ADF&G), introduced himself.
11:06:35 AM
REPRESENTATIVE NEUMAN stated that the fisheries are statutorily
required to cover any costs to administer their program. He
asked if the tax assessment was reduced from five percent to one
percent whether the funds would cover the program.
MR. KELLEY answered yes. He explained that the division works
closely with the SARDFA and the association and divers are aware
if the ADF&G does not have funds to assess to manage the
program, the divers cannot fish. He said the [association and
permit holders] are very motivated to ensure that the ADF&G
continues to receive its funding.
11:07:20 AM
CHAIR STUTES stated that the fiscal note for HB 354 was zero.
11:07:37 AM
REPRESENTATIVE TARR REPRESENTATIVE moved to report HB 354 out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, HB 354 was reported
from the House Special Committee on Fisheries.