Legislature(2005 - 2006)CAPITOL 124
04/15/2005 08:30 AM House FISHERIES
| Audio | Topic |
|---|---|
| Start | |
| HB37 | |
| HB218 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| HB 218 | |||
| = | HB 37 | ||
HB 218-PRIVATE HATCHERY COST RECOVERY FISHERIES CO-CHAIR THOMAS announced that the next order of business would be HOUSE BILL NO. 218, "An Act relating to cost recovery fisheries for private nonprofit hatchery facilities." 8:50:16 AM REPRESENTATIVE ELKINS moved to adopt the committee substitute for HB 218, Version 24-LS0544/Y, Utermohle, 4/12/05. There being no objection, Version Y was before the committee. 8:51:19 AM IAN FISK, Staff to Representative Thomas, presented the committee substitute for HB 218 on behalf of Representative Thomas, sponsor. He pointed out that the findings were changed to read: The Alaska State Legislature finds that Alaska private nonprofit salmon hatcheries should maximize the harvests of returning hatchery-produced salmon by commercial salmon fishing permit holders. The legislature also finds that private nonprofit hatcheries should minimize, to the greatest extent feasible, the direct sale of salmon harvested in special harvest areas. MR. FISK explained that subsection (e) on page 3 has been reworded to model other fishing industry assessments such as the 3 percent salmon enhancement tax. This was because the attorney general's office advised that the original language, in which the revenue from the assessment would be held in trust, would not work; assessments are considered revenue to the state and therefore must be appropriated by the legislature. He commented that this will cause a delay in the distribution of the funds. 8:53:27 AM MR. FISK stated that lines 20 and 22 on page 2 and line 3 on page 3 had been changed such that the Alaska Department of Revenue would no longer be able to set the dates of distribution to the funds because the funds have to be appropriated by the legislature. Also, line 22 on page 3 was altered to make the violation of this bill a Class A fisheries misdemeanor rather than a Class A misdemeanor, and therefore the fine can be up to $15,000, and could require forfeiture of the vessel and the gear. Mr. Fisk emphasized that there are no changes to the bill's main language. 8:55:37 AM REPRESENTATIVE WILSON asked if the hatcheries will be likely to make any changes if the language in the bill is permissive. MR. FISK replied that it wouldn't be appropriate for the legislature to require these changes. He noted that the hatcheries each have different circumstances, including different debts and different types of fish, and therefore they shouldn't be forced into operating in the same way. He commented that it's hard to guess how many of the hatcheries will make these changes; it's up to each hatchery board to decide for itself. 8:57:52 AM REPRESENTATIVE WILSON asked if the hatcheries are in a position where they can handle the delay in funding. MR. FISK responded that this would depend on the finances of each individual hatchery. 8:58:33 AM CO-CHAIR THOMAS stated, "The fishermen started the hatcheries, the fish were for them to increase their profitability and produce more common property fish. Hopefully ... the board of directors have enough commercial fishermen on their board that they can utilize this [bill]. And I think it's a good tool...." 8:59:37 AM BRUCE WALLACE noted that he is on the Southern Southeast Regional Aquaculture Association (SSRAA) board, and said that at this time he doubted SSRAA would support this bill. However, he commented that as long as the bill is permissive, it is good to have it available as a tool. 9:01:06 AM PETER ESQUIRO, General Manager, Northern Southeast Regional Aquaculture (NSRAA), commented that he was glad the findings were changed in the CS for HB 218. He explained that financing a hatchery outside of the public sector is no small job; private operation of hatcheries is very rare. He noted that 20 years ago when private nonprofit hatcheries were authorized, cost recovery was identified by the legislature as the mechanism most likely to succeed in allowing for private payment of hatchery operating costs. He continued: For a number of years we have not been fully satisfied with the way cost recovery is going. Despite the fact that we have been, in this association, fairly successful in getting 70 plus percent of our returns every year to the common property fisheries. ... We've always felt that there's some room for improvement. And we continue to look for those areas where we can improve that program. But ... in all the looking that we've done in the past 15 years or so, we've not found a replacement for it that does not result in a net loss in value to the commercial fishery resource.... Contributions [to this cost recovery program] are very diverse. ... We have several sources of income; we have several species in several locations that feed into our total cost recovery program.... 9:05:29 AM MR. ESQUIRO expressed appreciation for the permissiveness of the bill. He also made some recommendations for other possible changes. He asked for clarification regarding the word "board" on page 2, line 10, as it isn't clear whether it is referring to the Board of Fisheries or the board of directors of the corporation. He commented that the words, "representatives of affected commercial fishermen" on page 3, lines 5-6, are redundant in that there are 15 commercial fisherman on the NSRAA board of directors, which is the hatchery permit holder. He recommended that the word "facility" on page 3, line 9 be changed to "corporation" because the corporation is the entity that has the fiduciary responsibilities to fulfill. MR. ESQUIRO, regarding subsection (e) on page 3, commented, "I know that's modeled after the language ... that authorizes the salmon enhancement tax, and I hope that we can continue to have the same kind of relationship that we've had with the legislature for the last ... twenty-some years with respect to appropriating the funds." He then turned to page 4, lines 1-4 regarding the exemption, he said: In some years, the salmon enhancement tax, the 3 percent tax that's generated from the fish caught at Hidden Falls hatchery can be one-quarter to one-third of our entire enhancement tax in a given year. So in the models that we've worked with to determine whether or not this is a good thing for fishermen ... we did not take exempting this from the 3 percent tax into consideration. So I hope that you would reconsider that exemption part there, because that is real income that we have coming in to us. MR. ESQUIRO stated that NSRAA is still opposed to HB 218. He said, "I don't think that this is really enforceable, and in the models that I've looked at, I don't know that this really produces the results desired by the commercial fishermen." 9:10:08 AM STEVE REIFENSTUHL, Operations Manager, Northern Southeast Regional Aquaculture Association (NSRAA), remarked that the findings in Version Y are much better that the original language. He said that he has done an economic analysis of what it would mean if this bill were implemented at Hidden Falls hatchery. The conclusion of this analysis, he said, is that there would be a net negative benefit to the fishermen with this tax imposed at the hatchery. He commented that only under one or two scenarios, with no administrative fees, no increase in enforcement monies, and with a price of about 27 cents, is there any benefit to common property fisheries; all other cases, there would be a negative benefit and the fishermen would actually have less money in their pockets at the end of the season than they did to begin with. MR. REIFENSTUHL noted that he sent the NSRAA letter of response to HB 218 to all the representatives. He said: Managing a fishery at one of the hatchery programs is a very difficult and complex job. And to do that we have to consider not only contribution to the common property fisheries but also our cost recovery program and, more particularly, our brood stock. And if this proposal were implemented at Hidden Falls, we would still potentially have to close down a midweek fishery because of brood stock concerns. MR. REIFENSTUHL explained that in many areas there are brood stock requirements of over 100,000 fish, which can be 5-10 percent of the return. He noted: It takes a great deal of effort to have that entire return represented in the timing; we can't just wait until the end of the return to take brood stock, because that would skew the timing on future returns. So we have to manage the fishery from the very beginning to the end to assure representation of that brood stock. 9:14:15 AM MR. REIFENSTUHL commented on the exemption listed on page 4 of the bill; he said that he didn't realize that the 3 percent tax wouldn't be applied to the fish harvested in any one of these special harvest areas. He stated that, for example, if they had to have a 30 percent tax on the Hidden Falls fishery, this bill would require that they change it to a 33 percent tax in order to generate the revenue required for operations. He said that the delay in revenue appropriations would be a major problem; most organizations don't have the funds, or what funds they do have are already allocated for certain purposes. 9:15:45 AM CO-CHAIR THOMAS asked Mr. Reifenstuhl what percentage of the contributions to the hatchery come from sport charter fleet. MR. REIFENSTUHL replied that the hatchery does not get anything on a regular basis from either the sport fish division [of ADF&G] or from sport fish charter operations. He said that they occasionally receive a small sum of money from the local charter boat organizations, but he noted that the program is worth hundreds of thousands of dollars to the sport fisheries. CO-CHAIR THOMAS remarked that it is a $20 million industry to the sport charter operators in Sitka. 9:17:52 AM MIKE WELLS, Sales Manager, Valdez Fisheries Development Association (VFDA), testified in opposition to Version Y of HB 218. He said that he has serious concerns about subsection (e) on page 3. He said: The suggestion that the assessed funds will go into the general fund and then the legislature may or may not appropriate these funds back to the hatchery operator is just not going to work in our opinion. There's just no guarantee that these funds would come back to the hatcheries after being subjected to the legislative process. Hatchery operators, including VFDA, simply can't wait to pay expenses pending these appropriations and we're not sure what, if any, loans ... or funding would be available in reserves to be able to carry us over. MR. WELLS pointed out that there is no fiscal note attached to the bill and no financial analysis has been completed on what the impact of HB 218 would have on the private hatcheries or on the Alaska Department of Revenue, which holds the notes on most of the hatcheries. 9:19:39 AM REPRESENTATIVE HARRIS stated that the language in subsection (e) on page 3 is "more boilerplate than anything else." He asked Co-Chair Thomas if he knew of any language in statute that is permissive in this way. He also asked if this bill would develop a situation where a hatchery would not know from year to year whether or not their cost recovery money would be returned to them. CO-CHAIR THOMAS replied that it is his understanding that the 3 percent salmon enhancement tax is handled in the same way. REPRESENTATIVE HARRIS asked if anyone from the Alaska Department of Revenue was available to take questions. MR. FISK answered that no one from that department could make it to the meeting. 9:21:42 AM STEVE DAUGHERTY, Assistant Attorney General, Alaska Department of Law (DOL), stated that he is very happy with the changes in the CS. He noted that DOL still has a very concerns with subsection (d) on page 3 and the broad discretion that it gives to the commissioner of the Alaska Department of Revenue to set an assessment anywhere between zero and 40 percent without definite guidelines and criteria for imposing a set level. He said that DOL does recognize that there are criteria there and that the bill may be defensible, however DOL does believe that it would be more defensible if more explicit criteria for establishment of the fee are set forth in the bill. He stated: We note that there are no other statutes that give such broad discretion to a department to set such a wide range of an assessment. Most of the other statutes that deal with this situation, such as the salmon enhancement tax, the dive fishery management assessment, and the seafood marketing assessment lay out specific options that the department can choose between, and in some cases have a vote of [an] association to determine which one is going to be imposed. We would be more comfortable with language like that, but we do realize that with the uncertainty and the variance between the different hatcheries, that such a scheme might not be feasible, because it might require 40 or more separate options. And we are continuing to work with the sponsor of the bill and we hope that we can develop some more definite criteria for the assessment in future versions of the bill. 9:24:20 AM BRUCE WHITE, Hatchery Program Coordinator, Division of Commercial Fisheries, Alaska Department of Fish & Game (ADF&G), stated that ADF&G has some concerns with the legislation. He said: The department ... does exercise authority over the private nonprofit hatcheries through their annual management plans. However the department has not been involved in the actual mechanics of the cost recovery operations of these hatcheries. And this legislation would have the department establish rules and conditions governing these common property cost recovery fisheries, and the department would prefer not to become involved as a referee on an issue that is basically between the fishermen and the hatchery operator. MR. WHITE continued: Second concern is this legislation has the [ADF&G] consulting with the Department of Revenue in establishing the rate of assessment to be levied on the fishermen. And we currently do not know what information or expertise the [ADF&G] is expected to provide or its role in this consultation. And again, historically the [ADF&G] has not had a role in setting hatchery cost recovery policies or amounts, and would prefer that it to continue to not have a roll in that process. MR. WHITE commented: The {ADF&G] is concerned that the early and late portions of the returns to the hatchery cost recovery when the volumes of fish are relatively low may not be adequately harvested, especially if other more attraction opportunities are available to the commercial fishermen. So the {ADF&G] would want to ensure that the hatchery had a backup harvester or harvesters to clean up any fish from the beginning or end of the run that may not be harvested in the common property fishery. MR. WHITE concluded: The {ADF&G] understands that this legislation has been generated because of some conflicts between the hatchery cost recovery operations and opportunities for common property fisheries on hatchery stocks. The {ADF&G] is willing to work on solutions to these problems when they are brought to our attention. And in closing, the {ADF&G] appreciates that this legislation is voluntary and the hatchery operator has the option to utilize common property fisheries for cost recovery. We're also supportive of the efforts to benefit ... commercial fishermen and hatchery operators, which we believe this bill attempts to do. 9:28:17 AM BOB THORSTENSON, President, United Fishermen of Alaska (UFA); Executive Director, Southeast Alaska Seiners Association, testified in support of HB 218. He said, "All we're asking for is the ability to discuss with the hatchery and the hatchery board a way to have a direct user fee so the people that actually catch the fish pay the fee." He continued: [Under this bill, Alaska Department of Fish & Game's] role will not change dramatically at all. The fish are going to be caught during the common property harvest, ... not in a special cost recovery fishery if this legislation were to be passed; [ADF&G] already manages that common property fishery. ... The cost recovery fishery is going to be taken into the common property fishery, so ... this is not going to be cost recovery anymore if a hatchery decides to go down this course because cost recovery will come out of the assessment in the fishery. MR. THORSTENSON remarked that ADF&G has a role in the 3 percent enhancement tax and he said, "We're not asking for a greater role than that. He continued, "The [ADF&G] has to make a guess or make an estimate of how many fish are coming back. The [ADF&G] doesn't have to levy taxes, come up with different revenue ideas; [ADF&G] is just going to do the normal, simple role of estimating how much fish are coming back." He opined that there will always be fishermen available to catch the fish, and [therefore there will be no need for backup harvesters]. 9:31:53 AM REPRESENTATIVE HARRIS commented that VFDA had expressed concern about how the hatchery can be sure that it will get funding to operate the hatchery. MR. THORSTENSON replied that most districts have some sort of overriding enhancement tax which then goes only to the main regional aquaculture associations; therefore some of the hatcheries do not collect an enhancement tax. For example, in Southeast Alaska the 3 percent enhancement tax is given only to NRSAA and SSRAA. He estimated that NRSAA collects an average of between $700,000 to $1.2 million [per year], while SSRAA collects about $350,000 to $800,000. REPRESENTATIVE HARRIS asked if that money automatically goes back to those hatcheries. MR. THORSTENSON answered that it is his understanding that it takes 9-12 months for the money to come back to the hatchery. He commented, "Some of the hatchery operators are looking at a potential problem with this funding because it will mirror that, the same kind of collection and it will be nine or twelve months later that the funds will come back." He opined that because of this delay, there might have to be a much higher assessment the first year so that the hatchery can be prepared for the delay. He pointed out that in cost recovery the hatchery would get paid within 30 days of selling the fish. 9:34:48 AM REPRESENTATIVE HARRIS asked Mr. Thorstenson if he understood the hatcheries' concerns about waiting for the legislature to appropriate funds every year. MR. THORSTENSON said that hatchery boards have to take it on faith that they will get the funds they need. 9:35:39 AM REPRESENTATIVE WILSON commented that she doesn't understand the process of allocating funds to the hatcheries. She asked if this was part of the budget deliberations, and if the funding has ever been adjusted by the legislature. MR. ESQUIRO explained that in the beginning all the regional aquacultures gave information to the legislature regarding what they would need to get their programs started; it was forward funded by appropriation by the legislature. From that point on, what the hatcheries get in any given year is based on the previous year's collection, and therefore there is no delay in receipt of funds. He said, "If we were to start this program just the same way that the 3 percent enhancement program was started way back when, ... there should be an appropriation equal to what the projected costs of operating would be for next year." He noted that in 27 years, all the money that was ever collected through the enhancement program was appropriated back to the hatcheries. 9:38:33 AM McKIE CAMPBELL, Commissioner, Alaska Department of Fish & Game (ADF&G), offered to answer questions and noted that other members of his staff were also available. REPRESENTATIVE HARRIS asked if the language in the bill is similar to language in other bills for funding hatcheries. COMMISSIONER CAMPBELL replied that he did not know the answer but would find out and get back to Representative Harris. 9:40:16 AM CO-CHAIR THOMAS, after ascertaining that no one else wished to testify, closed public testimony on HB 218. 9:40:25 AM CO-CHAIR THOMAS commented that the Alaska Department of Revenue told him that the legislature can choose to allocate some of the enhancement tax money to Douglas Island Pink and Chum, Inc. (DIPAC). REPRESENTATIVE WILSON asked why DIPAC doesn't usually get any of the enhancement tax money. CO-CHAIR THOMAS replied that this was because DIPAC is a private nonprofit hatchery and not a regional aquaculture. He explained that the regional aquacultures are owned by fishermen, while the others are not. 9:42:13 AM REPRESENTATIVE ELKINS moved to report the committee substitute for HB 218, Version 24-LS0544\Y, Utermohle, 4/12/05, out of committee with individual recommendations and the accompanying zero fiscal notes. REPRESENTATIVE HARRIS objected for discussion purposes. He commented that he will research the issues and deal with his concerns when the bill is heard by the House Resources Standing Committee. He then removed his objection. 9:43:11 AM There being no objection, CSHB 218(FSH) was reported from the House Special Committee on Fisheries.
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