Legislature(2005 - 2006)HOUSE FINANCE 519

04/10/2006 09:00 AM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 93 DENTISTS AND DENTAL HYGIENISTS TELECONFERENCED
Heard & Held
+ HB 360 REGULATION OF PUBLIC DRINKING WATER TELECONFERENCED
Heard & Held
+ HB 390 PROPERTY ASSESSMENT APPEAL FEE TELECONFERENCED
Scheduled But Not Heard
+ HB 484 FISHERY ASSOCIATION REIMBURSEMENT TELECONFERENCED
Moved CSHB 484(FSH) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 484                                                                                                            
                                                                                                                                
     "An Act allowing for revenue received from issuance of                                                                     
     additional entry permits to be appropriated for                                                                            
     reimbursement to salmon fishery associations."                                                                             
                                                                                                                                
REPRESENTATIVE PEGGY WILSON, sponsor, introduced her staff.                                                                     
                                                                                                                                
LINDA  MILLER, STAFF,  REPRESENTATIVE  PEGGY WILSON,  related                                                                   
the  history of  HB 484.   In  2002,  the Alaska  Legislature                                                                   
created  salmon fishery  associations under  AS 16.40.250  to                                                                   
encourage  fleet reduction  in the  Alaska salmon  fisheries.                                                                   
Salmon  fishery   associations  may   be  formed   in  salmon                                                                   
fisheries  throughout the  state to facilitate  a permit  buy                                                                   
back program.  This means that  a group of fishermen may form                                                                   
an association and vote to assess  themselves for purposes of                                                                   
Buying Back Salmon Permits in their fishery.                                                                                    
                                                                                                                                
Ms. Miller explained  that the Southeast Seiners  have formed                                                                   
an association  to develop a  buy back program  for Southeast                                                                   
seine permits.  One of the questions  raised by fishermen was                                                                   
"What would happen  if we assess ourselves to  buy back these                                                                   
permits  then at  some  point in  the  future the  Commercial                                                                   
Fisheries  Entry  Commission  sells  permits  back  into  the                                                                   
fishery?"   Their dilemma  was that  they wanted a  guarantee                                                                   
that  they  would  get  their money  back  if  that  actually                                                                   
happened.  HB 484 answers that question.                                                                                        
                                                                                                                                
Ms. Miller  reported that  the CS for  HB 484 that  is before                                                                   
the committee is  a housekeeping measure to  clarify what may                                                                   
happen  to the  revenue  if  the Commercial  Fisheries  Entry                                                                   
Commission  should  find it  necessary  to sell  or  re-issue                                                                   
permits  that  have  been relinquished  under  the  buy  back                                                                   
program authorized  under AS 16.40.250.   This bill  makes it                                                                   
clear  that in  the unlikely  event CFEC  sells more  permits                                                                   
than  were  previously  purchased   by  an  association,  the                                                                   
legislature may appropriate money back to that association.                                                                     
                                                                                                                                
The change from the original version  to the current CS is to                                                                   
make it clear that the fishery  association that actually did                                                                   
the buy back is the fishery association  that may receive the                                                                   
payback.   Under this  bill the  legislature may  appropriate                                                                   
revenue from  the permit  sale to  the association  that paid                                                                   
money or incurred  debt to remove the permit  from the market                                                                   
in  the   first  place.     The   state  or   CFEC  has   the                                                                   
responsibility  to monitor  each limited  entry fishery.   In                                                                   
the event that  CFEC determines more permits are  needed in a                                                                   
salmon  fishery through  an optimum  number determination  or                                                                   
court action, the provisions of HB 484 would apply.                                                                             
                                                                                                                                
Ms.  Miller  stated  that  the   Commercial  Fisheries  Entry                                                                   
Commission,  who   worked  with  the  Southeast   Seiners  in                                                                   
developing  their  association,  supports  this  bill.  Peter                                                                   
Froehlich, Commissioner  of CFEC,  and Jerry McCune  from the                                                                   
United  Fishermen  of Alaska  were  available  to answer  any                                                                   
questions.   Ms. Miller requested  support for the CS  for HB
484 - Fishery Association Reimbursement.                                                                                        
                                                                                                                                
9:17:07 AM                                                                                                                    
                                                                                                                                
Representative Stoltz asked about  self-funded buy backs.  He                                                                   
saw no clear separation for that.                                                                                               
                                                                                                                                
PETER  FROEHLICH,  COMMERCIAL   FISHERIES  ENTRY  COMMISSION,                                                                   
related that there  is no limit in the bill as  to the source                                                                   
of the funds.  Association funds  used for the buy back could                                                                   
be reimbursed under this bill.                                                                                                  
                                                                                                                                
Representative  Stoltze noted that  most buy back  mechanisms                                                                   
use federal funds.  He said it  appears that there is nothing                                                                   
that would limit those federal  funds from being paid back to                                                                   
individual  fishers.     Mr.   Froehlich  replied   that  the                                                                   
association  could use federal  funding, or  self-assessment,                                                                   
or a  combination of  the two.   The legislature  could later                                                                   
reimburse the association, not the individual fishers.                                                                          
                                                                                                                                
Representative Wilson  added that in this instance,  they are                                                                   
assessing themselves  and borrowing the money to  do it.  She                                                                   
stated no problem  with clarifying the idea.   Representative                                                                   
Stoltze  reported on  a  likely mechanism  for  funding.   He                                                                   
wanted to ensure that it is the  intent of the bill to refund                                                                   
the amount that the association has assessed.                                                                                   
                                                                                                                                
Mr. Froehlich  said that is the  intent of the bill.   It was                                                                   
crafted with UFA  and the Southeast Seiners,  who are working                                                                   
with Congress  and Senator Stevens' office.    Representative                                                                   
Wilson  added that when  the association  borrows money  they                                                                   
want to be sure they are reimbursed.   Representative Stoltze                                                                   
summarized   that   there   are   two  parts   in   need   of                                                                   
reimbursement, self-assessment and federal funds.                                                                               
                                                                                                                                
9:24:18 AM                                                                                                                    
                                                                                                                                
Representative  Kerttula suggested  that the  money could  be                                                                   
used for other  things to enhance the fishery if  it is going                                                                   
into the  buy back.   She did not  see a concern  because the                                                                   
bill solves  the problem and the  money would go back  to the                                                                   
fishery.  Representative Wilson agreed.                                                                                         
                                                                                                                                
Mr.  Froehlich added  that  the version  of  the language  in                                                                   
Congress  considers  it a  federal  loan where  financing  is                                                                   
required.  Representative Kerttula  said that is even more of                                                                   
a reason for the bill.                                                                                                          
                                                                                                                                
9:26:40 AM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault asked  what gives  the impression  that if                                                                   
the association goes through a  buy back provision, the state                                                                   
would go  back in  and resell  more permits.   Representative                                                                   
Wilson  responded  that  has   never  been  the  case.    The                                                                   
association is nervous about taking  this big step because of                                                                   
the large  amount of  money.   It is  a "what if"  statement.                                                                   
Co-Chair Chenault  voiced concern about it being  a long time                                                                   
into the  future before  any state  department would  want to                                                                   
increase permits.                                                                                                               
                                                                                                                                
9:28:47 AM                                                                                                                    
                                                                                                                                
Representative Weyhrauch  asked what percent of  the funds go                                                                   
to permits.                                                                                                                     
                                                                                                                                
JERRY MCCUNE,  UNITED FISHERMAN'S  ASSOCIATION, related  that                                                                   
the bill allows the association  to create a committee, voted                                                                   
on  by  the  permit  holders,   to  accept  money  or  assess                                                                   
themselves.  He explained that  if there was a buy back, they                                                                   
could set a price for the permit.   The only reason that they                                                                   
would have  to put permits  back, would  be like the  case in                                                                   
Sitka where  they went to court  and asked for  more permits.                                                                   
The judge ruled  that a fishery could be made  too exclusive.                                                                   
If the association  used their own money they  would have the                                                                   
opportunity to  ask the legislature  at a later date  if they                                                                   
could get any money back.                                                                                                       
                                                                                                                                
Mr. Froehlich  related two possibilities for  having to issue                                                                   
more permits:  setting an optimum  number that is higher than                                                                   
the number  of permits reduced by  the buy back, and  a court                                                                   
order.   He  addressed  Representative  Weyhrauch's  concern.                                                                   
All of the funding would go to permitees in the buy back.                                                                       
                                                                                                                                
9:32:18 AM                                                                                                                    
                                                                                                                                
Representative Weyhrauch said  it seems like it is a risk for                                                                   
the state.  If  there is a challenge, then  the fishers might                                                                   
be in  a position of having  sold their permits  and obtained                                                                   
money.  If permits have to be  put back, there may be a legal                                                                   
risk to  the state.   Mr. McCune thought  a lawsuit  would be                                                                   
unlikely  because the  state can  defend  an optimum  number.                                                                   
There is  also a provision  to own two  permits.  He  said he                                                                   
could   not   guarantee   there    would   be   no   lawsuit.                                                                   
Representative  Weyhrauch  summarized  it  would have  to  be                                                                   
equal  to, or greater  than, the  optimum number  set by  the                                                                   
commission.  Mr. McCune agreed.                                                                                                 
                                                                                                                                
9:34:32 AM                                                                                                                    
                                                                                                                                
Representative   Stoltze  asked   if  the  salmon   fisheries                                                                   
association  is made  up  of those  that  have limited  entry                                                                   
permits.  Mr.  Froehlich replied yes, commercial  harvesters.                                                                   
Representative  Stoltze  asked   about  concerns  related  to                                                                   
conservation  and sport fishing.   Mr.  Froehlich said  he is                                                                   
not  aware  of  any mechanism  that  would  allow  others  to                                                                   
participate in  a buy back.   Representative Stoltze  thought                                                                   
there might  be others interested  in participating in  a buy                                                                   
back.  He  wondered if that would  be a policy concern.   Mr.                                                                   
Froehlich said  it is a policy  question beyond the  scope of                                                                   
the bill.                                                                                                                       
                                                                                                                                
Mr.  McCune   responded  that   only  permit  holders   could                                                                   
participate  in   the  buy  back.    Representative   Stoltze                                                                   
commented that the  association does not want  anyone else to                                                                   
participate.   Mr. McCune responded  that the  permit holders                                                                   
are the ones  that are going to be assessed.   Representative                                                                   
Stoltze noted a reluctance to  provide a mechanism.  He asked                                                                   
about buy backs and conservation.                                                                                               
                                                                                                                                
Representative  Kerttula  noted that  there  needs  to be  an                                                                   
optimum number  of permits.  She  said a theoretical  risk is                                                                   
always  there.  She  noted that  sport fishing  does not  fit                                                                   
into the commercial fisheries  entry.  Representative Stoltze                                                                   
maintained that it is hard to separate them.                                                                                    
                                                                                                                                
9:40:11 AM                                                                                                                    
                                                                                                                                
Representative Weyhrauch  suggested a three-part  process for                                                                   
sport fishers  to participate.   Mr.  Froehlich said  that is                                                                   
accurate  since the  bill  refers to  associations  qualified                                                                   
under AS 216.42.50.                                                                                                             
                                                                                                                                
Representative Stoltze shared  some discomfort but said it is                                                                   
not his intent to bog down the bill.                                                                                            
                                                                                                                                
Representative Weyhrauch  spoke about conflicts  between user                                                                   
groups with a  limited resource.  He suggested  involving all                                                                   
regions by having a broad policy such as this one.                                                                              
                                                                                                                                
9:43:20 AM                                                                                                                    
                                                                                                                                
Representative  Kelly voiced  a concern  about a person  with                                                                   
the intent to shut  down the fisheries in order  to limit the                                                                   
market.   Mr. McClune reported  that only permit  holders can                                                                   
form an association, so that is  not a danger.  No one has to                                                                   
sell a permit.   The association is trying  to reduce permits                                                                   
for those who want to get out of the fishery.                                                                                   
                                                                                                                                
9:45:32 AM                                                                                                                    
                                                                                                                                
Representative Kelly asked if  there is a danger of a cartel.                                                                   
Mr.  McCune  explained market  limitations.    Representative                                                                   
Weyhrauch  noted  that  last year  the  commercial  fisheries                                                                   
entry commission tried to amend  provisions of those statutes                                                                   
that dealt  with a moratorium.   This  bill is a  vehicle for                                                                   
fixing an unworkable statute.                                                                                                   
                                                                                                                                
Co-Chair  Chenault stated  that it  is a  voluntary buy  back                                                                   
program.                                                                                                                        
                                                                                                                                
9:48:51 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  noted  a  new  zero  fiscal  note  from  the                                                                   
Department of Fish and Game.                                                                                                    
                                                                                                                                
SUZANNE  CUNNINGHAM, STAFF,  REPRESENTATIVE MEYER,  explained                                                                   
that the House Special Committee  on Fisheries drafted fiscal                                                                   
note #1.  She has requested a  new zero note by Department of                                                                   
Fish and Game.                                                                                                                  
                                                                                                                                
9:50:49 AM                                                                                                                    
                                                                                                                                
Representative Foster  MOVED to report CSHB 484  (FSH) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSHB  484 (FSH)  was REPORTED  out  of Committee  with a  "no                                                                   
recommendation"  and  with a  new  zero  fiscal note  by  the                                                                   
Department of Fish and Game.                                                                                                    
                                                                                                                                
9:51:29 AM                                                                                                                    
                                                                                                                                

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