Legislature(2021 - 2022)SENATE FINANCE 532

04/12/2022 01:00 PM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 98 ADULT FOSTER CARE FOR DISABLED TELECONFERENCED
Moved CSSB 98(FIN) Out of Committee
+ SB 29 COOK INLET: NEW ADMIN AREA;PERMIT BUYBACK TELECONFERENCED
Heard & Held
Invited Testimony Only
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 45 AGE FOR NICOTINE/E-CIG; TAX E-CIG. TELECONFERENCED
Moved CSSB 45(FIN) Out of Committee
**Streamed live on AKL.tv**
SENATE BILL NO. 29                                                                                                            
                                                                                                                                
     "An  Act   relating  to  the   powers  of   the  Alaska                                                                    
     Commercial  Fisheries  Entry  Commission;  relating  to                                                                    
     administrative   areas   for  regulation   of   certain                                                                    
     commercial set  net entry permits; establishing  a buy-                                                                    
     back  program  for  certain   set  net  entry  permits;                                                                    
     providing for  the termination of  state set  net tract                                                                    
     leases  under  the  buy-back program;  closing  certain                                                                    
     water  to  commercial  fishing; and  providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
2:02:42 PM                                                                                                                    
                                                                                                                                
Co-Chair Bishop  relayed that it  was the first  hearing for                                                                    
SB 29.  The intention of  the committee  was to hear  a bill                                                                    
introduction   and   Sectional    Analysis,   take   invited                                                                    
testimony, and set the bill aside.                                                                                              
                                                                                                                                
2:03:12 PM                                                                                                                    
                                                                                                                                
SENATOR  PETER MICCICHE,  SPONSOR, relayed  that he  did not                                                                    
like the fact  that a bill such  as SB 29 had  to be brought                                                                    
forth.  He recounted  that his  community  had struggled  in                                                                    
previous years  and currently  community members  were lucky                                                                    
if  they  had  a  few  days  of the  year  to  fish  due  to                                                                    
regulations and  other occurrences. He asserted  that twelve                                                                    
generations  of Alaskans  had fished  in the  area, and  the                                                                    
value of  the peoples  investment  was gone. The  bill would                                                                    
remove about half of the  set netters in the Eastside setnet                                                                    
fishery, which  was the fishery of  contention. He recounted                                                                    
that there  was a  reduction in the  amount of  King salmon,                                                                    
which were linked to what  individuals were allowed to catch                                                                    
in  Sockeye  salmon.  He  discussed  investment  in  fishing                                                                    
preparation.                                                                                                                    
                                                                                                                                
Senator  Micciche  asserted that  the  bill  was unique.  He                                                                    
relayed  that  the  sport,   commercial,  and  personal  use                                                                    
fisheries groups  had come together  in agreement on  a bill                                                                    
that would reduce the amount of  gear used on the East side,                                                                    
bring  more  King salmon  to  the  river, and  provide  some                                                                    
compensation  for  fishers  to  retire or  go  on  to  other                                                                    
activities.                                                                                                                     
                                                                                                                                
Senator Micciche  reiterated that he  wished he were  not in                                                                    
the position to sponsor the  bill, since all of the families                                                                    
involved wanted  to continue fishing.  He hoped that  if the                                                                    
bill were to pass, some families could continue to fish.                                                                        
                                                                                                                                
2:07:28 PM                                                                                                                    
                                                                                                                                
KONRAD JACKSON, STAFF TO SENATOR  MICCICHE, addressed a Bill                                                                    
Summary document (copy on file):                                                                                                
                                                                                                                                
     Section 1:  Amends the uncodified  law of the  State of                                                                    
     Alaska by  adding a new section  which establishes that                                                                    
     this legislation may be known  as the East side of Cook                                                                    
     Inlet Set Net Fleet Reduction Act.                                                                                         
                                                                                                                                
     Section 2:  Amends the uncodified  law of the  State of                                                                    
     Alaska by  adding new  Legislative findings  and intent                                                                    
     relating to the bill.                                                                                                      
                                                                                                                                
     Section  3:  Amends  AS  16.43.200(b),  clarifying  the                                                                    
     Alaska   Commercial    Fisheries   Entry   Commission's                                                                    
     (commission) specific  authority to divide  an existing                                                                    
     commercial  fishing  administrative  area into  two  or                                                                    
     more separate areas.                                                                                                       
                                                                                                                                
     Section  4:  Amends  AS  16.43.200   by  adding  2  new                                                                    
     subsections:                                                                                                               
     (c)  Establishes an  area of  the Upper  Subdistrict of                                                                    
     the  Cook   Inlet  Central   District  as   a  distinct                                                                    
     administrative  area  separate   from  the  Cook  Inlet                                                                    
     Central District on December 31, 2019.                                                                                     
                                                                                                                                
     This  area   is  made  up  of   the  statistical  areas                                                                    
     identified on  January 1, 2019 as  244-21, 244-22, 244-                                                                    
     31, 244-32, 244-41 and 244-42.                                                                                             
          (d) Provides that an individual  who has a set net                                                                    
          permit  for the  Cook  Inlet  Central District  on                                                                    
          December 31,  2019 is not  entitled to set  net in                                                                    
          the   administrative  area   created  under   this                                                                    
          section as  of January  1, 2020 unless  the permit                                                                    
          has  been reassigned  to  that new  administrative                                                                    
          area.                                                                                                                 
                                                                                                                                
     Section 5:  Amends the uncodified  law of the  State of                                                                    
     Alaska by adding  a new section which  provides how the                                                                    
     commission  will determine  whether  an individual  who                                                                    
     holds a set net entry  permit in the Cook Inlet Central                                                                    
     District  on January  1, 2022  is  reassigned an  entry                                                                    
     permit  for the  administrative area  established under                                                                    
     AS 16.43.200(c)  (added by sec.  4 of the bill)  or the                                                                    
     portion  of the  Cook Inlet  Central District  that was                                                                    
     not assigned  into the administrative  area established                                                                    
     under AS 16.43.200(c).                                                                                                     
                                                                                                                                
     Section 6:  Amends the uncodified  law of the  State of                                                                    
     Alaska  by  adding  a new  section  which  defines  the                                                                    
     appeals process  in the  new administrative  area. This                                                                    
     section  provides that  a provisional  license will  be                                                                    
     issued  pending   resolution  of  an  appeal   and  the                                                                    
     provisional  permit  holder   may  cast  a  provisional                                                                    
    ballot in the election established under section 7.                                                                         
                                                                                                                                
     Section 7:  Amends the uncodified  law of the  State of                                                                    
     Alaska by adding a new  section which requires on April                                                                    
     1,  2022 an  election  be conducted  by the  commission                                                                    
     among    persons   holding    permits   in    the   new                                                                    
     administrative  area, to  affirm support  or opposition                                                                    
     to a buy-back program.                                                                                                     
                                                                                                                                
     Requires the  commission provide  public notice  of the                                                                    
     election,   hold   public   meetings   concerning   the                                                                    
     election,  and  clarify  the details  of  the  buy-back                                                                    
     program to those participating in the election.                                                                            
                                                                                                                                
2:11:46 PM                                                                                                                    
                                                                                                                                
Mr. Jackson continued to address the Bill Summary:                                                                              
                                                                                                                                
     Section 8:  Amends the uncodified  law of the  State of                                                                    
     Alaska by  adding a new  section which  establishes the                                                                    
     set  net  entry  permit buy-back  program  for  certain                                                                    
     permits fished  in the administrative  area established                                                                    
     under AS  16.43.200(c) (added by  sec. 4 of  the bill).                                                                    
     This section  will only take  effect if approved  in an                                                                    
     election by  the set  net entry  permit holders  in the                                                                    
     administrative area established  under AS 16.43.200(c).                                                                    
     If  it is  approved, the  buy-back program  will become                                                                    
     law 30 days following  notification of the Lt. Governor                                                                    
     (see  secs.   10  and  12).  Sets   qualifications  for                                                                    
     participation  in the  program,  provides the  buy-back                                                                    
     price for permits, requires  that the purchased permits                                                                    
     be cancelled  and not re-issued, provides  that certain                                                                    
     waters that  were fished  with permits  purchased under                                                                    
     the program will be closed  to future commercial salmon                                                                    
     fishing, and  specifies other  details of  the buy-back                                                                    
     program.                                                                                                                   
                                                                                                                                
     Section 9:  Amends the uncodified  law of the  State of                                                                    
     Alaska  by  adding a  new  section  which requires  the                                                                    
     commission  to   provide  a   written  report   to  the                                                                    
     Legislature  on the  status of  the  program not  later                                                                    
     than January 15, 2028.                                                                                                     
                                                                                                                                
     Section 10: Amends  the uncodified law of  the State of                                                                    
     Alaska  by  adding a  new  section  which requires  the                                                                    
     chair  of  the  commission  to  notify  the  Lieutenant                                                                    
     Governor and the Revisor of  Statutes of the outcome of                                                                    
     the election held under section 7.                                                                                         
                                                                                                                                
     Section 11: Repeals sections 1, 2,  8 and 9 on June 30,                                                                    
     2028.                                                                                                                      
                                                                                                                                
     Section 12: Amends  the uncodified law of  the State of                                                                    
     Alaska  by adding  a new  section  which provides  that                                                                    
     secs. 1,  2, 8,  and 9  take effect  only if  notice is                                                                    
     provided  under section  10 that  the buy-back  program                                                                    
     established under section 8 was approved.                                                                                  
                                                                                                                                
     Section  13: Effective  Date Clause.  Section 4  of the                                                                    
     bill takes effect January 1, 2022.                                                                                         
                                                                                                                                
     Section   14:  Effective   Date  Clause.   Provides  if                                                                    
     sections 1, 2, 8 and,  9, take effect under section 12,                                                                    
     they  take effect  30 days  following the  date of  the                                                                    
     notice provided in section 10  that the buyback program                                                                    
     was approved.                                                                                                              
                                                                                                                                
     Section 15:  Effective Date Clause. Except  as provided                                                                    
     in sections 13 and 14, the bill takes effect                                                                               
     July 1, 2021.                                                                                                              
                                                                                                                                
2:14:52 PM                                                                                                                    
                                                                                                                                
Senator Hoffman expressed that the  problem with the lack of                                                                    
Chinook salmon  was statewide and  thought that  the problem                                                                    
needed to  be addressed. He  had met several times  with the                                                                    
Department of Fish and Game  commissioner and had emphasized                                                                    
following the  constitution in managing resources  under the                                                                    
sustainability clause.  He thought the matter  was not being                                                                    
addressed by the  department nor by the  Board of Fisheries.                                                                    
He   understood   that   problems  existed   in   commercial                                                                    
fisheries,  and referenced  numerous conversations  with the                                                                    
Co-Chair  Bishop regarding  the subsistence  lifestyle being                                                                    
wiped  out  on  the  Kuskokwim River  and  Yukon  River.  He                                                                    
pointed   out  that   salmon  fishing   was  a   predominant                                                                    
livelihood for  those that lived  along the river.  He cited                                                                    
that  the situation  had gotten  so bad  on the  Yukon River                                                                    
that  the  Bristol Bay  Native  Corporation  had to  provide                                                                    
assistance to  communities. He stressed  that people  in the                                                                    
area had reliance on salmon to live.                                                                                            
                                                                                                                                
Senator Hoffman asserted  that any efforts should  be how to                                                                    
reverse the current situation  for Chinook salmon throughout                                                                    
the state. He thought trying  to come up with monetary fixes                                                                    
for  the issue  was  ignoring the  problem.  He thought  the                                                                    
state  needed to  redirect itself  to  be in  a position  of                                                                    
having the  most prized salmon  in the world.  He questioned                                                                    
what kind  of precedent the  bill would set.  He represented                                                                    
the Bristol  Bay area, which constituted  the largest salmon                                                                    
harvest in the  world. He pondered that  law already existed                                                                    
for  a buy-back  program,  and  that to  change  the law  as                                                                    
proposed would  set a bad  precedent and was not  a solution                                                                    
to the real problem.                                                                                                            
                                                                                                                                
2:19:24 PM                                                                                                                    
                                                                                                                                
Senator  Micciche  strongly   agreed  with  Senator  Hoffman                                                                    
regarding  the  big picture  issue.  He  suggested that  the                                                                    
problem  in the  case of  the East  side setnet  fishery was                                                                    
that there  was a flood  of Sockeye salmon  that individuals                                                                    
were unable  to participate  in catching. He  contended that                                                                    
the  problem had  been  present  in the  Kenai  area for  35                                                                    
years.  He  thought  each  case   needed  to  be  considered                                                                    
individually. He agreed that bycatch  and other matters that                                                                    
affected fisheries  needed to be  understood and  funded. He                                                                    
explained that there  were no state dollars  proposed in the                                                                    
bill. He  mentioned there were private  companies interested                                                                    
and he knew there were programs that could participate.                                                                         
                                                                                                                                
Senator Micciche  continued his remarks. He  emphasized that                                                                    
people had  invested in an  opportunity that had  gone away.                                                                    
He  referenced  the  fishery  being  adjacent  to  an  urban                                                                    
environment.  The  bill proposed  to  save  in part  of  the                                                                    
fishery, allow some  people to find funding  for a different                                                                    
enterprise, and  to find  balance. He  mentioned individuals                                                                    
that  were present  for invited  testimony,  who he  thought                                                                    
might  be able  to answer  some questions.  The stakeholders                                                                    
had  worked together  on  a  solution, and  he  did not  see                                                                    
another way to address the problem.                                                                                             
                                                                                                                                
Senator  Wielechowski  was  willing to  support  efforts  to                                                                    
increase  King salmon  coming  back  to the  Yukon-Kuskokwim                                                                    
Delta and across  the state. He noted  that his constituents                                                                    
relied  on  fish, albeit  not  on  a subsistence  level.  He                                                                    
mentioned Cook Inlet  and the Kenai River,  and closures due                                                                    
to  a  reduction in  King  salmon.  He  asked if  there  was                                                                    
invited testimony  that might  be able to  speak to  how the                                                                    
bill might  impact the  number of  King salmon  returning to                                                                    
Kenai, Kasilof, or the Matanuska-Susitna Valley.                                                                                
                                                                                                                                
Senator  Micciche  thought   the  testifiers  had  anecdotal                                                                    
information  about  the  catch  over time.  He  thought  the                                                                    
valley might  be affected  somewhat. He  knew that  all five                                                                    
species  of salmon  that  came to  Cook  Inlet took  erratic                                                                    
routes of travel  to get to home rivers. He  thought if half                                                                    
of the  fishing gear  was removed from  the pathway  of King                                                                    
salmon getting to  the Kasilof River and  Kenai River, there                                                                    
would be additional returns.                                                                                                    
                                                                                                                                
2:24:47 PM                                                                                                                    
                                                                                                                                
Senator  Micciche recounted  that he  had looked  into other                                                                    
buyback programs that had been  done in the state and around                                                                    
the country.  He conveyed  that the  bill proposed  that the                                                                    
East  side set  netters would  have to  vote to  approve the                                                                    
program. He  discussed the mechanics  of a  successful vote,                                                                    
and up  to 200 permits could  be sold with a  random drawing                                                                    
amidst applicants  for sale. He  discussed a  tax protection                                                                    
provision. He  commented on  the depressed  price of  a Cook                                                                    
Inlet  setnet permit.  He mentioned  that some  families had                                                                    
spent up  to $1 million  in expenses for the  fishery. There                                                                    
were  large  private  sector companies  interested  and  two                                                                    
federal programs that participated in buybacks.                                                                                 
                                                                                                                                
Senator  Micciche discussed  alternate  ways that  buy-backs                                                                    
had taken  place and  mentioned the  fear of  corruption. He                                                                    
described the bill proposal as  a Commercial Fisheries Entry                                                                    
Commission (CFEC) supervised and  managed program, which did                                                                    
not  allow  people  to  speculate.   He  asserted  that  the                                                                    
individuals actively fishing were eligible.                                                                                     
                                                                                                                                
Co-Chair  Stedman referenced  Senator Micciche's  mention of                                                                    
$1 million  in costs  for fishing  operations. He  hoped the                                                                    
presentation would  address the historical value  of permits                                                                    
and expenses, as  well as why the current  structure was not                                                                    
sufficient  to allow  reduction in  permits. He  asked about                                                                    
recent studies.                                                                                                                 
                                                                                                                                
2:29:41 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:30:08 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Bishop thanked the sponsor and his staff.                                                                              
                                                                                                                                
2:30:34 PM                                                                                                                    
                                                                                                                                
KEN COLEMAN, PRESIDENT,  EASTSIDE CONSOLIDATION ASSOCIATION,                                                                    
KENAI, explained  that he was  a 52-year fisher  from Kenai.                                                                    
He  explained that  the  Eastside Consolidation  Association                                                                    
was  a  qualified salmon  association  formed  for the  sole                                                                    
purpose of  exploring permit reduction  on the East  side of                                                                    
Cook Inlet.  He explained that  the goal of  the association                                                                    
was to seek to reduce  or change a fishery through reduction                                                                    
of permits  from 440 to  240 that fished exclusively  on the                                                                    
East  side  of  Cook  Inlet.  He mentioned  the  goal  of  a                                                                    
sustainable escapement  goal for  all salmon species  in all                                                                    
rivers  and a  reasonable harvest  opportunity for  all user                                                                    
groups.  He  emphasized  that  the  association  had  worked                                                                    
collaboratively with  different user groups  including sport                                                                    
fishing.                                                                                                                        
                                                                                                                                
Mr.  Coleman  discussed  a presentation  entitled  "EASTSIDE                                                                    
CONSOLIDATION ASSOCIATION - Senate  Bill 29: Cook Inlet: New                                                                    
Admin Area: Permit Buyback" (copy on file).                                                                                     
                                                                                                                                
Mr. Coleman turned to slide 2, Goals:                                                                                           
                                                                                                                                
      Reduce the number of setnet permits and nets on the                                                                    
        Eastside of Cook Inlet                                                                                                  
      An economically viable and sustainable setnet                                                                          
        fishery                                                                                                                 
      Sustainable escapements into our rivers                                                                                
      Reasonable harvest opportunity for ALL user groups                                                                     
      Work Collaboratively in Upper  Cook  Inlet for  the                                                                    
        FISH                                                                                                                    
      Passage of SB 29: Cook Inlet: New Admin Area: Permit                                                                   
        Buyback and Gear Reduction Act                                                                                          
                                                                                                                                
Mr. Coleman discussed slide 3, "Eastside Consolidation                                                                          
Association":                                                                                                                   
                                                                                                                                
    The Eastside Consolidation Association. Who are we?                                                                         
                                                                                                                                
     The  Eastside  Consolidation  Association  (ECA)  is  a                                                                    
     Qualified Salmon  Fishery Association as  identified in                                                                    
     AS 16.40.250.                                                                                                              
                                                                                                                                
     The ECA was  formed as a non-profit and  is licensed by                                                                    
     the  State  of  Alaska  as required  by  AS  10.20,  in                                                                    
     addition  is  registered  with   the  federal  and  the                                                                    
     Internal  Revenue  Code  as a  Section  501(c)(5)  non-                                                                    
     profit.                                                                                                                    
                                                                                                                                
     ECA  was formed  to  promote the  consolidation of  the                                                                    
     Cook   Inlet  setnet   fishery,   primarily  by   fleet                                                                    
     reduction  through buyback  of  permits and  locations.                                                                    
     Further, our position is that  such reduction occurs in                                                                    
     the   Upper  Subdistrict   of  the   Central  District,                                                                    
     commonly known  as the  "Eastside Setnet  Fishery". Our                                                                    
     Board  of  Directors  is  comprised  of  limited  entry                                                                    
     permit holders as required                                                                                                 
                                                                                                                                
Mr. Coleman referenced Co-Chair Stedman's question about                                                                        
the method proposed in the bill instead of addressing the                                                                       
matter in a traditional approach.                                                                                               
                                                                                                                                
Mr. Coleman referenced slide 4, "WE ARE EASTSIDE                                                                                
SETNETTERS":                                                                                                                    
                                                                                                                                
     We  are fathers  and mothers,  we are  grandparents, we                                                                    
     are children,  sons and daughters, we  are families. We                                                                    
     are a  community filled with generations  of setnetting                                                                    
     families.  We  are  an  important  part  of  our  local                                                                    
     history.  Setnetting   is  not   just  a  job   to  us.                                                                    
     Setnetting defines us, it is who we are.                                                                                   
                                                                                                                                
Mr. Coleman spoke to slide 5, "EASTSIDE SETNET HISTORY":                                                                        
                                                                                                                                
     For  over  150 years  these  salmon  have been  feeding                                                                    
     people both locally and all  over the world. This rich,                                                                    
     renewable  resource was  first exported  in the  1840's                                                                    
     when  ships  from  America   and  other  nations  began                                                                    
     fishing in Alaskan waters  and delivering salted salmon                                                                    
     to ports  around the world.  The first cannery  in Cook                                                                    
     Inlet was  built at the  mouth of the Kasilof  River in                                                                    
     1882.  Six years  later the  first  salmon cannery  was                                                                    
     constructed  on  Kenai  River.  By  1892,  thirty-seven                                                                    
     canneries had  been built in Alaska.  Gillnets had been                                                                    
     used to some  degree in the silty waters  of Cook Inlet                                                                    
     from  the beginning.  After fish  traps were  outlawed,                                                                    
     independent fishermen  caught the salmon  with gillnets                                                                    
     to be sold at the canneries.                                                                                               
                                                                                                                                
2:34:59 PM                                                                                                                    
                                                                                                                                
Mr.  Coleman displayed  slide 6,  "UPPER  COOK INLET  SETNET                                                                    
AREA":                                                                                                                          
                                                                                                                                
      732 set net permits                                                                                                    
      5 districts:                                                                                                           
          o Northern District                                                                                                   
          o Kalgin Island District                                                                                              
          o Western District                                                                                                    
          o Southern District                                                                                                   
          o Central District Upper (Eastside)                                                                                   
      The Eastside spans approximately  80  miles and  is                                                                    
        home to the two most popular rivers in the State of                                                                     
        Alaska: The Kenai and Kasilof Rivers.                                                                                   
      The Cook Inlet fleet reduction opportunity will only                                                                   
        be available to the Eastside                                                                                            
                                                                                                                                
Mr.  Coleman addressed  the map  on slide  6. He  noted that                                                                    
there were  five different districts,  but permits  were all                                                                    
common  setnet  permits.  He   explained  the  necessity  of                                                                    
segregating the  East side permits,  which was  not possible                                                                    
by traditional  means. He  discussed the  longstanding issue                                                                    
faced by user groups.                                                                                                           
                                                                                                                                
Mr.  Coleman   noted  that  there  was   a  smaller  fishing                                                                    
footprint  in the  1970s, after  which fishing  had expanded                                                                    
because  of   enhancement  and  improved   enhancement  that                                                                    
brought many more Sockeye into the area.                                                                                        
                                                                                                                                
2:38:27 PM                                                                                                                    
                                                                                                                                
Co-Chair Bishop asked  about the migration from  the West to                                                                    
the East of Cook Inlet in the 1980s.                                                                                            
                                                                                                                                
Mr. Coleman indicated that the  migration came from all four                                                                    
other areas in the Cook Inlet.                                                                                                  
                                                                                                                                
Co-Chair Bishop asked how many  permit holders there were in                                                                    
Cook Inlet in 1980.                                                                                                             
                                                                                                                                
Mr. Coleman  cited that there were  approximately 742 permit                                                                    
holders in Cook Inlet in 1980.                                                                                                  
                                                                                                                                
Co-Chair  Bishop  presumed  that   the  maximum  salmon  run                                                                    
strength was on the East side.                                                                                                  
                                                                                                                                
Mr.  Coleman stated  that the  predominant streams  were the                                                                    
Kasilof River and the Kenai River.                                                                                              
                                                                                                                                
Mr. Coleman showed slide 9,  "MECHANISM FOR REDUCING PERMITS                                                                    
& CLOSING WATERS":                                                                                                              
                                                                                                                                
     SB 29 Cook Inlet: New Admin Area: Permit Buyback and                                                                       
     Gear Reduction Act                                                                                                         
                                                                                                                                
     "An  Act   relating  to  the   powers  of   the  Alaska                                                                    
     Commercial  Fisheries  Entry  Commission;  relating  to                                                                    
     administrative   areas   for  regulation   of   certain                                                                    
     commercial set  net entry permits; establishing  a buy-                                                                    
     back  program  for  certain   set  net  entry  permits;                                                                    
     providing for  the termination of  state set  net tract                                                                    
     leases  under  the  buy-back program;  closing  certain                                                                    
     water  to  commercial  fishing; and  providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
Mr. Coleman commented that the bill  may or may not be a way                                                                    
to effect change  in other areas. He thought  the same issue                                                                    
would occur  other places, in  that affecting change  in one                                                                    
focused area was not possible  in area-wide permit zones. He                                                                    
referenced a  commercial fisheries entry bill  in the 1970s,                                                                    
which  he  thought  had  not  had  enough  focus  on  setnet                                                                    
fisheries. He referenced a buyout in Icy Bay.                                                                                   
                                                                                                                                
2:41:23 PM                                                                                                                    
                                                                                                                                
Mr. Coleman spoke to slide 10, "REDUCING PERMITS":                                                                              
                                                                                                                                
         732 Cook Inlet Permits                                                                                              
         440 permits registered to the Eastside (2018                                                                        
          Season)                                                                                                               
         Senate Bill 29 proposes to remove 200 Eastside                                                                      
          permits (45%)                                                                                                         
         440 permits = 1,320 nets on the Eastside today                                                                      
         200 permits = 600 nets on the Eastside removed                                                                      
         After fleet reduction: 240 permits = 720 Eastside                                                                   
          nets may remain                                                                                                       
                                                                                                                                
Mr.  Coleman clarified  that the  selling  of permits  would                                                                    
mean  closed waters  around the  fishing site,  estimated to                                                                    
equate  to about  400 acres  of permanently  closed area  to                                                                    
commercial  fishing. He  suggested that  without segregating                                                                    
the East side, there could be an influx of other permits.                                                                       
                                                                                                                                
Co-Chair Stedman  looked at  slide 10 and  asked if  all 732                                                                    
permits were fished every year.                                                                                                 
                                                                                                                                
Mr. Coleman noted  there were 440 permits on  the East side,                                                                    
and the  other 292 permits were  in the other four  areas of                                                                    
Cook Inlet.  Within the 440  permits on the East  side, each                                                                    
fisher had to  purchase a limited entry  permit and purchase                                                                    
buoy stickers to  prove the location being  fished. He cited                                                                    
that  the number  of permits  fished  on the  East side  had                                                                    
remained consistent for the previous  20 years. He mentioned                                                                    
regulations  and biomass  issues,  and thought  it was  very                                                                    
difficult to estimate permit latency.                                                                                           
                                                                                                                                
2:45:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman asked if there  were any optimum studies on                                                                    
how many permits should be in Cook Inlet.                                                                                       
                                                                                                                                
Mr.  Coleman  cited   that  there  was  an   attempt  at  an                                                                    
optimization program in  2020 for Cook Inlet.  He was unsure                                                                    
of the  status of the program,  and he did not  think it was                                                                    
complete.  He opined  that  it would  be  very difficult  to                                                                    
overlay  an  optimization  program that  included  the  East                                                                    
side, and then segregate the  information for the East side.                                                                    
He emphasized that the fishery was very complex.                                                                                
                                                                                                                                
Co-Chair  Stedman thought  he could  obtain the  information                                                                    
from the  Commercial Fisheries  Entry Commission  (CFEC). He                                                                    
asked about the value of the  permits and the amount of time                                                                    
the permits had been flat.                                                                                                      
                                                                                                                                
Mr.  Coleman stated  that  valuation had  been  up and  down                                                                    
since the inception  of limited entry. In  the mid-1970s the                                                                    
permit was  $15,000 and  got to  a high  of $115,000  in the                                                                    
mid-1980s.  Due to  biomass issues  and regulation  changes,                                                                    
the  permit  value  was  back  down  to  about  $15,000.  He                                                                    
discussed the gear reduction, sale  of a boat, and the value                                                                    
up upland areas from the  fishing site. He stressed that the                                                                    
fishery buyback  allowed for  the fish to  get to  the river                                                                    
for  other  user  groups.  He  addressed  Senator  Hoffman's                                                                    
comments   about   encouraging   Chinook   populations   and                                                                    
discussed voluntary mitigation efforts by fishermen.                                                                            
                                                                                                                                
2:50:34 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman   had  noticed  in  Southeast   that  when                                                                    
fisheries were  reduced for a  season or more,  some permits                                                                    
were not  fished. He  thought there  was more  activity when                                                                    
returns were  strong. He referenced a  buyback in Southeast,                                                                    
and a  significant number of  permits bought back  that were                                                                    
never fished. He mentioned the  Department of Laws  interest                                                                    
in the  buyback. He referenced Senator  Hoffman's point that                                                                    
care was warranted when changing  statutes, since the change                                                                    
would be setting a precedent for other fisheries.                                                                               
                                                                                                                                
Mr.  Coleman  understood  Co-Chair  Stedman's  comments.  He                                                                    
referenced  bill provisions  that  would  make the  proposed                                                                    
buy-back  different  such as  the  CFEC  being custodial  of                                                                    
funds  and not  being a  jury. He  shared that  stakeholders                                                                    
were in agreement  that all sites would be  treated the same                                                                    
and the  proposed process would be  democratic. He mentioned                                                                    
working with  former Senator Cathy  Giessel to  ensure there                                                                    
were protections in place.                                                                                                      
                                                                                                                                
2:54:08 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman asked about slide 12.                                                                                          
                                                                                                                                
Mr.  Coleman   displayed  slide  12,   "VOLUNTARY  REDUCTION                                                                    
APPROVED BY FLEET":                                                                                                             
                                                                                                                                
     A survey was conducted by Senator Micciche to all                                                                          
     Registered permit holders in the Eastside Setnet fleet                                                                     
     asking the following question:                                                                                             
     1.  Do  you  support  the concept  of  voluntary  fleet                                                                    
     reduction program  for the Cook  Inlet set  net fishery                                                                    
     that   would  cost   nothing  to   those  who   do  not                                                                    
     participate and remain fishing?                                                                                            
     92.4 % YES                                                                                                                 
     7.6 % NO                                                                                                                   
     229 permit holders responded to the survey                                                                                 
                                                                                                                                
Co-Chair Stedman asked to go to slide 13.                                                                                       
                                                                                                                                
Mr. Coleman showed slide 13, "ESTIMATED VALUE":                                                                                 
                                                                                                                                
     When  a setnet  permit  and the  accompanying nets  are                                                                    
     retired, the  result is a  small business that  will be                                                                    
     retired forever.                                                                                                           
                                                                                                                                
     The  estimated  value  of $260,000  was  determined  by                                                                    
     taking  the average  earnings of  a setnet  permit each                                                                    
     year over the  prior ten years, an average  of a little                                                                    
     above $20,000 per year per  permit. Adding a number for                                                                    
     tax  implications, so  that if  volunteer participating                                                                    
     fishermen are  included in a  program, they  would exit                                                                    
     with a $200,000 sale for  small a business that in many                                                                    
     cases have been around for generations.                                                                                    
                                                                                                                                
     The remaining permits  will gain value and  will have a                                                                    
     higher price point in their gross earnings per year.                                                                       
                                                                                                                                
Mr.  Coleman discussed  the process  of coming  up with  the                                                                    
numbers on slide 13 using information from ADFG.                                                                                
                                                                                                                                
Co-Chair  Stedman  agreed  that  the permits  could  not  be                                                                    
valued   accurately   when   including   data   years   with                                                                    
unreasonably low  returns such  as 2018.  He thought  it was                                                                    
necessary to  use data from  reasonable fishing  seasons. He                                                                    
cited that the  2019 gross average was  $21,500. The average                                                                    
cost  was   almost  $6,000,  which   provide  a   profit  of                                                                    
approximately  $15,000.  He asked  how  it  was possible  to                                                                    
implement expensive  capital equipment to harvest  a fishery                                                                    
that netted $15,000.                                                                                                            
                                                                                                                                
Mr.  Coleman  stated  that   many  operations  had  multiple                                                                    
permits in order  to make the numbers work. He  was not sure                                                                    
what  document  Co-Chair  Stedman referenced.  He  had  used                                                                    
numbers from  ADFG to calculate  the average  fishing income                                                                    
per year. He discussed real values versus quartile values.                                                                      
                                                                                                                                
2:59:22 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  referenced  a document  with  an  optimum                                                                    
number study update  (copy on file), which  was in progress.                                                                    
He  had looked  at  the net  income versus  the  value of  a                                                                    
permit.  He  wanted  further   explanation  to  rectify  the                                                                    
numbers. He  considered data from  the CFEC and  thought the                                                                    
value  of permits  had  been  flat going  back  to 2000.  He                                                                    
thought the  permits had gone  up after the late  1980s, and                                                                    
then had dropped down and stayed  at the same level. He also                                                                    
wanted information  from CFEC  regarding the  workability of                                                                    
the buyback system  as compared to what was  proposed in the                                                                    
bill.                                                                                                                           
                                                                                                                                
Co-Chair Bishop  wanted to understand  the upland  areas and                                                                    
business on the shoreside.                                                                                                      
                                                                                                                                
Mr. Coleman showed slide 14, "REDUCTION IN SETNET PERMITS:                                                                      
                                                                                                                                
     For 45 years Upper Cook  Inlet Setnet permits have seen                                                                    
     a decrease from 746 to  732 permits today. 84% of those                                                                    
     permits are owned by Alaska residents.                                                                                     
                                                                                                                                
     As  a set  net permit  is retired,  three nets  will be                                                                    
     permanently removed from the  waters on the Eastside of                                                                    
     Cook Inlet. As a result,  a percentage of the available                                                                    
     fish on  a certain day,  may be harvested by  the sites                                                                    
     around them  and a higher  percentage will move  to the                                                                    
     rivers.  Reducing the  nets  by 600  will  result in  a                                                                    
     Chinook and Sockeye harvest savings.                                                                                       
                                                                                                                                
     An  ADF&G biologist  indicated that  with approximately                                                                    
     45% of  the commercial setnets removed,  there would be                                                                    
     an  appreciable harvest  reduction  of Chinook  Salmon.                                                                    
     The Eastside set net fleet  believes that we will still                                                                    
     have  the  opportunity  and  capability  of  harvesting                                                                    
     sockeye while reducing the harvest of Chinook salmon.                                                                      
                                                                                                                                
3:02:41 PM                                                                                                                    
                                                                                                                                
AMBER EVERY, SET NET PERMIT  HOLDER, KENAI, spoke in support                                                                    
of  the bill.  She thanked  the sponsor.  She discussed  the                                                                    
difficulty  in obtaining  consensus on  the subject  of Cook                                                                    
Inlet fisheries, and  she thought that the  bill had support                                                                    
from almost every  user group. She shared  that her children                                                                    
were  fourth generation  Cook Inlet  fishermen, and  she and                                                                    
her husband  owned one  of the  larger setnet  operations on                                                                    
the East side  with over $1.2 million  invested. She relayed                                                                    
that  she  would  remain  in the  fishery  if  the  proposed                                                                    
buyback  was enacted.  She discussed  declining Kenai  River                                                                    
King  salmon in  the  previous ten  years,  and the  reduced                                                                    
opportunity due to changes in management plans.                                                                                 
                                                                                                                                
She  asserted that  the  bill would  provide  the East  side                                                                    
setnet fishery a  chance to reduce its  footprint. She hoped                                                                    
there would be  future changes to the  Cook Inlet management                                                                    
plan to  allow remaining  fishers the  ability to  operate a                                                                    
viable business,  while giving something to  those that were                                                                    
exiting the fishery.                                                                                                            
                                                                                                                                
Co-Chair  Bishop   for  more   background  on   Ms.  Everys                                                                     
shoreside operation.                                                                                                            
                                                                                                                                
Ms. Every detailed  that her husband had been  a drifter his                                                                    
whole  life, and  she  became  a part  of  the fishery  upon                                                                    
marriage 20  years previously. The family  had purchased the                                                                    
first commercial  setnet site south  of the Kenai  River and                                                                    
had  made a  large  investment in  the  fishery. The  family                                                                    
owned six permits which allowed for fishing 18 nets.                                                                            
                                                                                                                                
Co-Chair  Bishop  asked  if  Ms.   Every  had  a  shore-side                                                                    
processing set-up.                                                                                                              
                                                                                                                                
Ms. Every  noted that  the family  had a  fish buyer  in the                                                                    
near vicinity of the fishing site.                                                                                              
                                                                                                                                
Co-Chair Bishop asked what kind  of assets the family had on                                                                    
the shore.                                                                                                                      
                                                                                                                                
Ms. Every explained that the  location was the unique factor                                                                    
in  setnetting. She  asserted  that the  site  south of  the                                                                    
river was more lucrative. The  family had five boats and ran                                                                    
three tractors, and all the  gear and expenses were the same                                                                    
regardless of the length of the fishery each year.                                                                              
                                                                                                                                
Co-Chair  Bishop asked  if  Ms. Every  had  an annual  beach                                                                    
lease from the Department of Natural Resources.                                                                                 
                                                                                                                                
Ms. Every  confirmed that  she was the  holder of  an annual                                                                    
lease.                                                                                                                          
                                                                                                                                
Co-Chair Bishop asked if the  lease would revert back to DNR                                                                    
if the bill were to pass.                                                                                                       
                                                                                                                                
Ms. Every answered affirmatively.                                                                                               
                                                                                                                                
3:07:29 PM                                                                                                                    
                                                                                                                                
SARAH   FROSTAD-HUDKINS,   SET   NET   PERMIT   HOLDER   AND                                                                    
FISHERWOMAN, spoke in support of  the bill. She relayed that                                                                    
her family  had been fishing  just north of the  Kenai River                                                                    
since the early 1900s. Her  grandfather had settled in Kenai                                                                    
in 1924  and fished on one  of the original fish  traps were                                                                    
she  still fished  today.  She shared  that  she planned  to                                                                    
remain in the fishery.                                                                                                          
                                                                                                                                
Co-Chair Bishop asked if Ms.  Frostad-Hudkins would keep her                                                                    
permit.                                                                                                                         
                                                                                                                                
Ms.  Frostad-Hudkins stated  that she  intended to  keep her                                                                    
permit. She mentioned a decline  in fishing opportunity over                                                                    
the previous  ten years due  to low numbers of  King salmon.                                                                    
She  referenced  a  YouTube  documentary  called  "The  Last                                                                    
Harvest" which discussed the fishery.  She detailed that she                                                                    
had  seen only  three to  five  fishing days  per season  in                                                                    
recent  years.  She mentioned  the  investment  of time  and                                                                    
funds in a fishery that was not sustainable.                                                                                    
                                                                                                                                
Co-Chair Bishop referenced  Senator Hoffman's comments about                                                                    
the Yukon  River and Kuskokwim  River and recounted  that he                                                                    
grew up fishing  on the Yukon River. His  family had started                                                                    
a fish  processing plant and  had not fished since  2000 due                                                                    
to lack of fish.                                                                                                                
                                                                                                                                
3:10:57 PM                                                                                                                    
                                                                                                                                
Senator Hoffman  assumed both previous testifiers  would not                                                                    
be giving  up fishing permits.  He asked how  the supporters                                                                    
of  the bill  would get  200 individuals  to participate  in                                                                    
proposed permit buyback.                                                                                                        
                                                                                                                                
Ms.  Every emphasized  that  the East  side  fishery was  no                                                                    
longer viable.                                                                                                                  
                                                                                                                                
Ms.  Frostad-Hudkins  commented  that   there  was  a  large                                                                    
surplus  of  Sockeye salmon  in  Cook  Inlet that  fed  many                                                                    
people.  She  relayed  that  she  had  a  processor  on  her                                                                    
property that  was run by  another company. She  thought the                                                                    
Sockeye should be able to  be harvested by various groups to                                                                    
feed people.                                                                                                                    
                                                                                                                                
Senator Hoffman  recognized that the bill  proposed a system                                                                    
in which  permit holders  would see the  benefit of  even 50                                                                    
parties electing  to give up  permits, and that it  would be                                                                    
challenging  to  find   additional  buyback  volunteers.  He                                                                    
thought there would be  decreasing interest in participation                                                                    
in  the  buyback  as  the  number  approached  200  and  the                                                                    
positive monetary  effects were discernable. He  asked if it                                                                    
would be  fair to say  that if  the program did  not achieve                                                                    
the buyback of 100 to 200 permits, the program was null.                                                                        
                                                                                                                                
Ms.  Every  believed  that  that   there  were  more  people                                                                    
interested than  not interested, and thought  there would be                                                                    
more than  200 people in  the fishery to participate  in the                                                                    
proposed buyback.                                                                                                               
                                                                                                                                
Co-Chair   Bishop   understood   the  perspective   of   the                                                                    
testifiers. He  mentioned teaching  his grandsons  about the                                                                    
fish wheel.                                                                                                                     
                                                                                                                                
3:15:31 PM                                                                                                                    
                                                                                                                                
SHANNON    MARTIN,   EXECUTIVE    DIRECTOR,   KENAI    RIVER                                                                    
SPORTFISHING ASSOCIATION, spoke in  support of the bill. She                                                                    
explained  that  the  Kenai River  Sportfishing  Association                                                                    
(KRSA) was  a nonprofit  organization dedicated  to ensuring                                                                    
the sustainability  of the Kenai River,  which she described                                                                    
as the greatest  sportfishing river in the  world. She noted                                                                    
that  the associations   area of  responsibility encompassed                                                                    
the  Kenai River  watershed, the  greater Cook  Inlet Basin,                                                                    
and Alaska.  She shared  the same  concerns as  the previous                                                                    
testifiers  regarding  the health  of  the  fisheries and  a                                                                    
desire to  reduce tension between user  groups. She asserted                                                                    
that  SB  29  would  reduce  pressure  on  King  salmon  and                                                                    
possibly  allowing for  sustainable commercial  fishing. She                                                                    
clarified that the  bill effort came from  her colleagues in                                                                    
the commercial sector as a way to solve problems.                                                                               
                                                                                                                                
Ms.  Martin   shared  that  some  association   members  had                                                                    
expressed   concern  regarding   the  potential   price  tag                                                                    
associated with the  retiring of sites, and  where the funds                                                                    
would  come  from. She  understood  that  there was  federal                                                                    
support for the effort. She  relayed that KRSAs  concern was                                                                    
related  to conservation  of  fisheries  resources, and  the                                                                    
appropriateness of  the funding  was up to  the participants                                                                    
and overseeing  bodies. She  continued that  KRSA considered                                                                    
that  fisheries  in Cook  Inlet  were  overcapitalized as  a                                                                    
result  of  management  loopholes exploited  in  the  1980s,                                                                    
drawing numerous permit  holders from the West  side over to                                                                    
the peninsula.  She asserted that  the bill was  designed so                                                                    
that  no one  could game  the system.  She highlighted  that                                                                    
participation   was   voluntary   and  the   retirement   of                                                                    
qualifying sites  was randomized and made  the program fair.                                                                    
She  thought the  bill would  set  up a  more efficient  and                                                                    
conservative  fishery.   She  asserted   that  KRSA   was  a                                                                    
conservation-minded organization and  believed that the bill                                                                    
supported conservation efforts.                                                                                                 
                                                                                                                                
3:18:21 PM                                                                                                                    
                                                                                                                                
Co-Chair Bishop mentioned   fish politics,  and acknowledged                                                                    
that he  was not as  familiar with  the Cook Inlet  area. He                                                                    
thought it  seemed as  though there was  not a  fish problem                                                                    
for Sockeye  salmon in Cook  Inlet, but rather  a regulation                                                                    
problem.                                                                                                                        
                                                                                                                                
Mr.  Coleman  thought  Co-Chair   Bishop  had  made  a  fair                                                                    
assessment.                                                                                                                     
                                                                                                                                
Co-Chair  Stedman  commented   that  historically  when  the                                                                    
committee  considered similar  issues,  it  had studies  and                                                                    
data presented  by CFEC.  He thought there  would be  a CFEC                                                                    
study that  would be  completed at the  end of  the calendar                                                                    
year. He recommended  that the committee wait  on any action                                                                    
until  the  study  was  ready to  be  considered,  and  then                                                                    
consider a  solution. He urged caution  because the proposed                                                                    
bill  would  set statewide  precedence.  He  thought it  was                                                                    
clear that the bill had gained the attention of CFEC.                                                                           
                                                                                                                                
Senator   Hoffman  referenced   his   initial  remarks   and                                                                    
emphasized  that  it was  essential  to  refocus efforts  on                                                                    
Chinook salmon. He relayed that he  had been a member of the                                                                    
Senate Finance Committee and the  ADFG subcommittee for over                                                                    
30  years  in  the  Senate  and  the  House.  He  referenced                                                                    
declines in Chinook  throughout the state, and  a decline in                                                                    
Chum salmon the previous year.  He emphasized that the state                                                                    
needed to determine a course  other than accepting continued                                                                    
declines. He thought  it was not an option to  do nothing as                                                                    
a state. He emphasized that  the state needed to address all                                                                    
areas  of the  state,  particularly with  regard to  Chinook                                                                    
salmon.                                                                                                                         
                                                                                                                                
SB  29  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Bishop discussed the agenda for the following day.                                                                     
                                                                                                                                

Document Name Date/Time Subjects
SB 98 Amendment #1 Wielechowski.pdf SFIN 4/12/2022 1:00:00 PM
SB 98
SB 29 ECA Presentation to SFIN 4.12.22.pdf SFIN 4/12/2022 1:00:00 PM
SB 29