Legislature(2003 - 2004)
03/09/2004 09:03 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 315
"An Act relating to the administration of commercial fishing
entry permit buy-back programs."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this legislation "relates to the
limited entry fishing permit buy-back program" in that it would
allow the commercial Fisheries Entry Commission "to front fund a
buy-back program if the money is available."
Senator B. Stevens, the bill's sponsor, reported that this bill "is
the product of the Joint Legislative Salmon Industry Task Force."
He noted that the bill would alter statutes to allow the Commercial
Fisheries Entry Commission to implement "a loaded buy-back permit"
program were money available. He shared that current statutes allow
for a fishery levy to be assessed, and, upon completion of an
optimum number study for the permits in that fishery, a permit buy-
back could occur. Continuing, he explained that this legislation
would provide money to accelerate the buy-back process. The funds
provided by this legislation, he noted, could be paid back via
multiple options including an assessment of the remaining permit
holders. He stressed that while this legislation would maintain the
requirement that an optimum number study be conducted, it would
provide a funding mechanism to quicker implement a buy-back if one
were to occur. He pointed out that the legislation has no fiscal
impact as it is "just a management tool" to allow a quicker
process.
Senator Hoffman asked the status of the optimum number of fisheries
permit studies.
FRANK HOMAN, Commissioner, Commercial Fisheries Entry Commission,
Department of Fish and Game, responded that two or three optimum
number studies have been completed and one is currently being
conducted in the Bristol Bay region fishery. He declared that these
studies are very extensive, involve a lot of manpower, and
therefore require a long time to conduct. He stated that due to the
difficulty in managing these studies, one study is conducted at a
time. He assured that a study would be required were a buy-back in
a fishery desired.
Co-Chair Wilken asked whether the funds involved in this
legislation would be general funds or federal funds.
Senator B. Stevens responded that numerous funding options could be
available, including federal funding. He noted that while it is not
the issue with this legislation, other federally funded buy-backs
that have occurred in the State primarily involved fisheries in
which there were depleted stock assessments. Other funding options,
he continued, could be in the form of a federal loan or grant;
however, he opined that a federal loan would be the more likely
because this legislation would address "an economically distressed
region rather than a biologically distressed region." He stated
that no funding source has been identified at this time as this
legislation is just an option that the task force desired to have
in place where a buy-back situation to occur.
Co-Chair Wilken asked for verification that this legislation is the
result of Salmon Task Force efforts.
Senator B. Stevens confirmed. He stated that the Commercial
Fisheries Entry Commission brought the concept to the Salmon Task
Force which then brought the idea forward.
Co-Chair Green asked for further information regarding the current
buy-back program as she noted that the bill analysis indicates that
the current buy-back program structure would be maintained.
Senator B. Stevens explained that the current program requires an
optimum number study to be conducted before a buy-back program is
implemented. In addition, he noted that the Limited Fisheries Entry
Commission has the authority to assess a seven percent "up-front"
assessment on "the permit holder based on their value." He stated
that the assessment is coordinated with the permit holders annual
permit re-application. Continuing, he shared that the assumption is
that the assessed funds would accumulate and allow for permits to
be purchased in order to reduce the number of permits in the
fishery. However, he stated, the issue is that to collect the
amount of funds required would take a long time. Therefore, he
stated that the purpose of this legislation is to provide upfront
funds, make the assessments, and reimburse the fund later.
Mr. Homan concurred.
Senator B. Stevens stated that currently the program must be
sufficiently funded, through the assessment process, before the
buy-back program could occur.
Co-Chair Green understood therefore that in a situation in which
there is the desire to buy-back permits in a fishery, the process
would be required to wait until sufficient funds accumulate to
support it.
Senator B. Stevens concurred.
Co-Chair Green concluded therefore, that the program is currently a
fishery self-assessment program with the Commercial Fisheries Entry
Commission managing the funds that are assessed and collected.
Senator B. Stevens replied that the funds could result from a self-
assessment, a grant, or a loan for instance from the National
Marine Fisheries fishing vessel obligation guarantee.
Co-Chair Green asked for confirmation that these options are
currently available.
Senator B. Stevens confirmed that they are.
Senator Olson asked how the optimum numbers study "relates" to
studies conducted by the Board of Fish for the State's fishing
regions; specifically Area M.
Senator B. Stevens responded that he is unsure of how the optimum
number study would relate to a situation wherein there is an
allocation conflict between various regions. He stated that the
optimum number study is unique to a fishery and is a gauge for
determining the economic output, the number of participants, and
the number of sustainable participants in the future.
Mr. Homan stated that while he is unsure how the optimum numbers
study would relate to regions such as Area M, the Bristol Bay
optimum study survey, for instance, would review historical catch
records on the resources, as well as the economic value of the
fisheries and the number of vessels required to catch that resource
overtime. Then, he continued, the information would be used to
project into the future to estimate the resource and economic
return to the fisherman in that district. He stated that a
complicated series of questions are used to calculate such things
as the minimal number of vessels that would be required to catch
the resource over the next twenty years once the number of the
resource is determined, as well as how many permits would be
required to provide an economic return to the fishermen in that
district. He commented that the historical record of the area would
be affected by factors such as whether an area, like Area M might
be open or closed to fishing.
Senator Olson noted that decisions regarding areas such as Area M
are affected by Administrative and Board of Fisheries changes.
Mr. Homan assured that the optimum numbers survey is a long-range
study that could encompass twenty or more years. He voiced
uncertainty as to how a single event, like that occurring in Area
M, would impact the study overtime.
Senator B. Stevens stressed that an optimum number study, which is
the process that determines the economic capacity of a fishery in a
region, must be conducted before a buy-back program could be
implemented. He clarified that a buy-back program would not apply
to the entire industry of a region, but would be limited to a
certain percentage of that fishery's participants in order to
reduce the number to economically sustain and stabilize its
participants. He clarified that the purpose of the buy-back is not
to eliminate the fishery within the region, but is rather to ensure
that the participants desiring to remain in that fishery could be
more economically sustained and "the capacity able to endure the
swings in the market volatility into the future." He reiterated
that the self-assessment program is simply a measure to allow those
who wish to remain in the industry more stability in the future.
Senator Hoffman, noting the "reasonable costs to be offset by the
Department" language located in Section 1, page one, lines 13 and
14 that pertains to the expenses of managing the program, asked
whether a definition or percentage estimation is provided to
clarify what the costs of managing the program might be.
Mr. Homan responded that the costs have not been established at
this time, as he stated, these expenses would be addressed during
the planning of the buy-back program. Continuing, he noted that
this planning and the level of the assessment must adhere to State
regulations.
Senator Dyson stated, for the record, that he has divested himself
of his investments in this area, and therefore, he has no conflict
of interest regarding this legislation. Continuing, he
characterized government efforts to manage the economic component
of fisheries as "well-intended and wide of the mark and quite
ineffective." He speculated that, in the long run, a review of
fishery resource management practices would "indicate that the
limited entry program was a bad idea," and that the industry and
its participants have been "masked from the price signals" that
should have been an indicator of the economics of the fisheries. He
stated that this legislation would "help extricate fishermen from
bad or sub-optimal government interference." He stated that he
would support this legislation, and that he "personally" feels that
government "does very badly in its efforts to manage virtually
every enterprise." He voiced the hope that government would learn
from this experience and refrain from getting involved in the
future.
Co-Chair Wilken inquired regarding the authority through which the
Commission would be authorized "to incur debt" for the program as
specified in Section 1, page two, line one.
Mr. Homan clarified that the Commission could not incur a debt and
that any appropriation to the Limited Fisheries Entry Commission
must be advanced by the Legislature.
Co-Chair Green understood therefore that even were this legislation
adopted, the Legislature would be involved in the process.
Mr. Homan affirmed.
Senator B. Stevens moved to report the bill from Committee with
individual recommendations and accompanying fiscal note.
There being no objection, SB 315 was REPORTED from Committee with
zero fiscal note #1 from the Department of Fish and Game.
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