Legislature(1997 - 1998)
03/18/1998 05:06 PM FSH
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 423 - ACCESS FISHERY TRUST/LIC. PERMIT SURCHARGE Number 0516 CHAIRMAN AUSTERMAN stated that the next order of business is HB 423, "An Act relating to the Alaska access fishery trust, purchase of commercial fisheries permits, vessels, gear, equipment, and leases by the Department of Fish and Game, sport fishing license surcharge, and the entry permit surcharge; and providing for an effective date." He called on Bruce Twomley. Number 0533 BRUCE TWOMLEY, Chairman/Commissioner, Commercial Fisheries Entry Commission (CFEC), Department of Fish and Game stated that he has talked to Representative Mulder, sponsor of HB 423, about the problems of the legislation and has recommended a work group to convene between sessions to work through some of the problems. He stated that Representative Mulder concurred with that recommendation and his recommendation would be that the work group preceded passage of the bill because there are enough problems that need to addressed. He stated that it would be important for all parties to know how the requirements for a buy-back program and how it will be implemented. He stated that it is also important to understand the Johns v. Commercial Fisheries Entry COmmission case as it affects the subject of buy-backs. The supreme court has basically said that a limited fishery can become too exclusive and if it does become too exclusive then the limited entry commission can put more permits back into the water. He stated that therefore, there are implications for whoever foots the bill for a buy-back program. He stated that the Johns case itself invalidates the language of Section 8, lines 26 and 27. He stated that he has already faced a lawsuit under the Johns ruling to eliminate the entire limited entry program for the Bristol Bay Drift Gilnet Fishery and it was only in the last 4 years. He stated that the supreme court has identified a tool to defend against the Johns claim and to support the buy-back program. It is the optimum number study, although it is not perfect and is time consuming and expensive. He stated that the result is a single number for all time in regards to the fishery. He stated that it is critical that the study is conducted as an independent and professional study. Number 1106 CHAIRMAN AUSTERMAN asked if he has ever done a study on the optimum number. MR. TWOMLEY replied that they have completed a study for the Southeast herring purse seine fishery, under a court order and public pressure to put more permits back into that fishery. The result was that the optimum number study defended the status quo. Number 1146 CHAIRMAN AUSTERMAN asked if they had ever done an optimum number study on salmon. Number 1147 MR. TWOMLEY replied that it would need to be done and the bill does call for it as it is the triggering mechanism that would have to go forward with the buy-back. The standard in the bill is that the buy-back would have to provide a direct and immediate benefit to sport fishermen. It is not known exactly what that would mean until the specifics are known. He stated that if that translated into reallocating the catch, it would be a factor that would have to be taken into account in a optimum number study. He stated that the most important aspect in doing the optimum number study is applying the statute as written which provides some standards but they are somewhat ambiguous and contradictory. An optimum number study is an exercise in statutory interpretation which means that a court could substitute its own judgement of what an optimum number ought to be. He stated that it would be helpful to have a decision from the court that the study was a sound methodology but that could take up to three years. Number 1328 MR. TWOMLEY stated that there are also some practical considerations. He referred to the 1995 setnet fishery which had 625 permits that recorded catch and 120 permits that did not record any catch and 63 permits that recorded .3 percent of the catch. 183 permits were not making demands on the resource at the cost of $24,800 a piece. The cost of retiring those permits would be more than $4.5 million. He stated that the 5 percent surcharge on the permits that the CFEC administers would only raise $200,000 a year. He stated that in order to evaluate the risks and the benefits a buy-back program it is necessary to look closely at it on a fishery by fishery basis. This bill does not provide the methodology about how to go forward. He encouraged that those considerations be discussed before proceeding. Number 1548 MR. TWOMLEY stated that he believed the bill is a good vehicle for discussing this and there are present inducements given the situation in the salmon fisheries. He stated that the CFEC would like to be involved in developing a working program. He stated that the gear groups that have looked closely at buy-backs in their fisheries have tended to turn away from sweeping buy-back programs and have looked toward incremental ways to reduce fishing efforts in the given fishery. He stated that the question has been raised for fishermen to get together privately, pool their funds to buy- out and retire permits. The CFEC has found a way for that to be done under existing law. He stated that the advantage is that a private buy-back program would be less visible to attract a John's type challenge. Number 1713 CHAIRMAN AUSTERMAN asked if the optimum number study would be needed with a private buy-back program. MR. TWOMLEY replied no, a private buy-back program could go forward if people chose to commit their money and assume that risk, it could happen right now. Number 1736 REPRESENTATIVE ELDON MULDER stated that Sections 7, 8, 9 deal with the areas of concern. He stated that he did not want them to be included in the bill because it clouds the issue. He stated that he agreed with Mr. Twomley, it is not possible to construct a buy- back program that passes all the tests. He stated that the only way to do so is to have the affected user groups come together to develop something that works for everybody. He stated that he would not mind having those sections deleted from the bill. As the optimum number study is extremely expensive and time consuming and will not be the best way to get where we want to go. He stated that if that requires a constitutional amendment then so be it. He stated that this bill is a way to get to the solutions. Number 2007 REPRESENTATIVE HODGINS asked if a group decides they want to retire their permits what will happen to those permits. Number 2014 MR. TWOMLEY replied that there, currently, is a yearly renewal fee and if a permit is not renewed for two years it is canceled. He stated that with a private buy-back program it would be possible for an individual holding a permit to contract anyone to not seek reinstatement. REPRESENTATIVE HODGINS asked if that permit could be reissued again even with an optimum study. Number 2126 MR. TWOMLEY replied no, because that is where the constitution intervenes, if there were to be an optimum number study that indicated more permits where required to make the fishery constitutional or if there was a court decision then more permits would have to be added back in. Number 2157 REPRESENTATIVE HODGINS stated that the fallacy is that there could be a way to get the permits reinstated. MR. TWOMLEY replied that is correct. Number 2231 CHAIRMAN AUSTERMAN asked if the constitution was changed to omit the optimum number, wouldn't that problem be eliminated. Number 2236 MR. TWOMLEY replied that there would be a lot to change and the reason the issue comes up is because there is a clause that authorizes limited entry but then there is a clause that states fisheries are open to everybody. He stated the only way to resolved that tension is to do an optimum number study. He stated that if a mechanism could be found under law other than an optimum number study, that would satisfy the court, that would be a way around it. Number 2405 REPRESENTATIVE HODGINS asked if it was true that on the setnet sites, buying a permit does not mean you are buying the site. MR. TWOMLEY stated that was his understanding. KEVIN DELANEY, Director, Division of Sport Fish, Department of Fish and Game, stated that one could envision a corporate effort with the Board of Fisheries, where time and area where changed in addition to permits being bought. Number 2544 REPRESENTATIVE HODGINS asked how the mechanism of setnet sites and permits interact, where if a permit was bought what would happen to the site. Number 2603 JERRY McCUNE, United Fishermen of Alaska, responded that setnet sites are different from area to area, some are leased federal sites and they are leased every year. He stated that in Cook Inlet some people own their sites and they would be looking to sell the sites with the permits. Number 2705 REPRESENTATIVE HODGINS asked if the Cook Inlet sites could be moved around. MR. McCUNE responded that was correct. Number 2830 BRENT JOHNSON, President, Kenai Peninsula Fishermen's Association, testified via teleconference from Kenai that he is opposed to HB 423. He stated that the bill states that it would buy-back boats and gear and asked what will the state do with them; if they don't burn them they will then be on the market at a decreased value and devalue the fishermen who choose not to sell. He asked the committee to keep in mind that the commercial fisheries are an important part of the economy. He asked that with the cut back in jobs related to Alaska's other natural resources jobs if it was wise to affect the commercial fishing industry. He stated that he would rather have two people making $30,000 in the setnet fishery than one person making 60,000. He stated that the salmon stocks are healthy and as last year "121 million salmon" were harvested across the state of Alaska, before 1983 that state had only exceeded this harvest one time. He stated that those kind of numbers do not support a buy-back. He stated that in the Pacific Northwest, Canada and Washington have had buy-backs generated because they did not have any fish. He stated that fishing season has always fluctuated and care needs to be taken when talking about buying something back that will permanently change the fishery when things may turn around. He stated that page 2, line 5, states "that would result in a direct and immediate benefit to sport fishermen." He asserted that the fisheries could be decreased without a handful of fish going to the sport fishermen. He stated that this is feeding the sport fishermen a line that they would benefit from a buy-back program. He stated that the technology is there for the existing fleet to continue to harvest the same number of fish. He stated that there are benefits to a slow fishery season in that young people are able to buy into the fisheries. Number 3544 DALE BONDURANT testified via teleconference from Kenai that he could not figure out how it would work and that a lot of problems would result. He questions how it would benefit the sport fish fleet. He stated that we do not owe the permit holders any money. He said "They did not pay anything for them so why does the public have to start paying them back." He stated that this is not the problem of the sport fishing industry. Number 3846 GRACE KENDALL, testified via teleconference from Kenai that HB 423 takes away from an already established commercial fishery and gives to a new commercial fishery called sport fish guiding. She stated that the reason for HB 423 is not to benefit the salmon runs or to enhance the habitat but to benefit the sport guides and enhance their pocket book at the expense of the commercial Cook Inlet fishery. She referred to page 2, line 5 of HB 423 and stated that the wording should be changed from a direct benefit to sport fishermen to sport guides because all the local sport fishermen have been shoved out of the way for the sake of the sport guides and their non-local paying customers. She asked if she understood it correctly that the local commercial drifters and set netters are supposed to help pay to put themselves out of business, so they can help the sport fishermen. She stated that the commercial fishermen were limited in 1974 for the sake of conservation of salmon runs and it has worked but it will not do anything if an unlimited amount of guides are allowed in the river drawing an exponential amount of tourists to damage and pollute the rivers. She pointed out the Cook Inlet commercial fishermen do not fish in the rivers, the drifters only take 8 percent of the silvers and the setnetters only catch 14 percent of the silvers, therefore, that only leaves the in-river fisheries to to account for the rest of the catch rate. It is time that the state starts recognizing the devastating effect they are having on the resources and stop blaming others. She stated that if the loss of fish in the rivers is due to the overuse and abuse by the in-river fisheries then it should be addressed at that level and not by destroying the local economy. Number 4142 DONNA SCHOWEILER, Commercial Fisherman, testified via teleconference from Anchorage against HB 423 because in 1974 the commercial fishermen agreed to the limited entry system under the assumption that it would be protecting their heritage and their families. She stated that in 1997 the amount of registered sport fishermen on the Kenai river was 472. These boats take on the average, two trips per day, six people each trip which equates to 54 fish per person. She said "Two trips a day with six people on board, the limit per person would be three, which equates 11,328 people per day and 33,984 fish a day. She asked that the committee think about this. Number 4349 MR. McCUNE stated that the United Fishermen of Alaska (UFA) opposes the bill as it is written, however, they do think it is an option to be looked at. It would have be crafted very carefully and be from area to area. He stated that it would have to be a voluntary buy-back program. UFA expressed that they would like have a voluntary buy-back program where each group would have to vote on it, they would assess themselves the 5 percent and pay for the permits in their areas. He stated that the way the bill is drafted, he would be paying for Bristol Bay permits whether he had a buy-back program or not. He suggested that the allocation issue be taken out all together as it causes problems. He asked why would he want to buy out his permit unless he received a gain. Number 4554 CHAIRMAN AUSTERMAN asked what allocation issue in the bill is he referring to. MR. McCUNE responded page 2, line 5 "would result in a direct and immediate benefit to sport fishermen." He stated that this would depend on the fishery and the area. He stated, for example, in the Copper River if 70 permits were bought out it would not make a difference as there are 70 permits that don't fish. TAPE 98-12, SIDE A Number 0001 MR. McCUNE suggested putting the buy-backs on a neutral ground. He stated that he had a concern on page 4, line 10. REPRESENTATIVE MULDER stated that the drafters put that in and it is not important to him. MR. McCUNE stated that it is a worthwhile discussion and some areas would like to look at it but UFA would like to get the program under the constraints that he mentioned. Number 0153 REPRESENTATIVE MULDER stated that page 2, line, 5 has a purpose in that federal requirements, in relation to sport fish licenses, prohibit the use of fish and game funds for those purposes that do not have a "direct and immediate benefit to sport fishermen." Without that language sport fishing licenses could not be used to help in the process. He stated that it is a way to ease tensions and benefit both user groups. He pointed out that in some locations this could not be done. He stated that there is a benefit to having a regional breakdown. Number 0316 MR. McCUNE stated that language on page 2, line 5 is what sets people off. He stated that one group or other should not be listed to gain from the buy-back because the gains are unknown. He stated the number of participants in some fisheries could be cut in half but the remaining boats could still catch that same amount of fish. Number 0505 REPRESENTATIVE MULDER stated that he could only reflect the area that he knew the best, which is Cook Inlet. He stated that his point is well made, a mechanism needs to be developed to evaluate which permits would give the greatest benefit to sport fishermen and then have those permits bought out by sport fishermen. Number 0545 MR. McCUNE stated that he understood the intent but thought that it would have to be voluntary by the permit holders and those benefits would be weighed after the fishery was consolidated instead of stating the direct benefit ahead of time. He suggested that allocation and this section be removed so the issue is how best could a buy-back program be implemented from area to area for those that desire to have one. Number 0636 REPRESENTATIVE MULDER stated that if that section 2 were eliminated from the bill he would not participate and the bill would not be in front of the committee. Number 0648 CHAIRMAN AUSTERMAN stated that he understood where he was coming from and it is a discussion that the committee will continue to have. He referred to the resolution by the Board of Fisheries and stated that because of Representative Mulder's interest in sport fish, he had incorporated further than what the Board of Fisheries has indicated. He stated that the committee will have to come back to that issue. He stated that the next issue is if sport fish is kept in the bill, the question is what is the Department of Interior's view on using sport fish dollars. He stated that a determination by the department should be gotten. Number 0811 MR. DELANEY stated that the way he envisioned the program to work is to have the fish and game fund purpose in statute. The state has to separately account for those things that are considered licenses to sport fishermen within the state fish and game account and those monies can only be spent on projects where a linkage can be demonstrated to a sport fish benefit. He stated that all other monies deposited in the fund can be used for any fish and wild life purposes. He stated that the way it would need to work is a separate ledger would need to be kept from the other monies. Number 1036 CHAIRMAN AUSTERMAN asked if the bill had been presented to the Department of the Interior. MR. DELANEY responded that he had asked the department if federal aid monies or license fees had been used to finance buy-back programs. He stated that the answer is that it is not an appropriate use of federal aid funds but sport fish license fees had been used in some East Coast states to facilitate a buy-back program. A direct linkage to the sport fish benefit would need to be proven. He stated that the way he reads the bill, is that if nothing was ever implemented in the 10 year time-frame then all of those monies would be available to be appropriated to fish and wildlife uses. Number 1201 CHAIRMAN AUSTERMAN referred to a February 8, 1996 letter by George Utermohle that raised the question about the Department of the Interior. He asked if there should be further written determination. Number 1243 REPRESENTATIVE MULDER stated that it would be worth pursuing and he felt confident in what Mr. Delaney has stated. There needs to be a carefully constructed plan. He stated that for example, a permit that had a high intercept king salmon rate with the owner willing to sell it, could then be purchased from the access trust fund. Number 1337 CHAIRMAN AUSTERMAN stated that there was reference in the Board of Fisheries resolution to the Magnuson-Stevens funding of buy-back programs on the East Coast and Washington state. He asked if that had been considered. Number 1347 REPRESENTATIVE MULDER stated that he has contacted Senator Stevens office and it is available. He stated that it is a low interest loan program meant to be utilized for buy-back type programs. It could be capitalized very quickly. He stated that in the end, there would be an assessment of the affected user groups to implement a buy-back program and capitalized 100 percent by the fund from D.C. and paid back as a loan through the different assessments to the affected groups. Number 1449 REPRESENTATIVE HODGINS asked if he envisioned an incentive for various group to buy-back permits within the group. He asked if he was considering letting reduced fleets being able to fish longer. REPRESENTATIVE MULDER stated that he would expect the commercial fisheries to come to the table and develop a program that made sense for them. He stated that he would feel comfortable with that. He stated that in many of the regions there are multiple fishermen making close to nothing so with a reduced fleet is would be better to have one person making something. Number 1636 CHAIRMAN AUSTERMAN stated that the HB 423 would be held over.