Legislature(1995 - 1996)
03/01/1996 11:45 AM Senate RES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 191 MANAGEMENT OF STATE LAND AND RESOURCES
SENATOR LEMAN reconvened the Resources meeting at 2:55 p.m. at the
Kenai LIO and announced CSSSHB 191(FIN) to be up for consideration.
He said he intended to take testimony on sections 24, 25, and 26
which contain the changes proposed by the Department of Natural
Resources in the operation of the shore fisheries program. He had
met with the Department and expressed his concerns about what this
would do with the program that he believes is operating fairly
successfully and is paying for itself.
REPRESENTATIVE THERRIAULT, prime sponsor, commented that HB 191 is
a housekeeping measure that attempts to clarify certain Title 38
statutes governing DNR. It is intended to bring greater efficiency
to the management of State lands without sacrificing public
involvement in making the decisions.
This bill revises the remote cabin permit program to a program that
will allow for either the sale or lease of land for a remote cabin
sight. This permit program was never put into action because of
the associated administrative costs with a minimal return to the
State. This program is just one example of proposed changes
intended to give DNR the tools necessary to dispose of State land
more efficiently. The CS also includes a section clarifying that
the sale of State land does not obligate the State to provide
additional services. HB 191 changes the shore fisheries program to
allow a reasonable rate of return to the State for the use of State
lands for setnet sites.
He spoke with Senator Leman and Mr. Swanson, DNR, to understand
their concerns regarding the shore fisheries section of the bill .
It was not his intent to have a $300 shore fishery lease go up to
$5,000. He has talked with Senator Leman about the possibility of
tagging the lease to some reflection of the value of the property
as it reflects the value of the permit being used. He would be
willing to consider a percentage of the value that would be at a
less than one percent or perhaps they could consider the existing
$300 to be a floor and then have an upper limit of no more than
$1,000. The lease payment that would be generated based on the
percentage that would be set in statute would be somewhere between
that floor and ceiling, but nowhere close to the $5,000 people are
fearful of.
REPRESENTATIVE THERRIAULT said many sections of the bill are to
allow the public to utilize that State resource at a fair market
value.
He said he thought there was a way to address the concerns with the
homesteading provision and allow people to choose to continue their
homestead under the old statutes or the new statutes, but not allow
them to pick and choose between sections.
In the DNR budget review, the shore fisheries issue has come up and
in the current year funding for the program has been zeroed out.
If this legislation passed, it would be accompanied by a fiscal
note reflecting money put back into the budget for continuation of
the program.
Number 199
SENATOR LEMAN noted that Representative Alan Austerman was in
attendance at the Kodiak LIO.
BRENT JOHNSON said he does land surveying and has a small business
of drawing shore fishery lease diagrams for setnetters in Bristol
Bay, Kodiak, Prince William Sound, and other Cook Inlet locations.
He said this legislation would hurt his business because it deters
fishermen from applying for shore fishery leases.
MR. JOHNSON said his family holds five shore fishery leases. These
leases have accomplished a very good purpose in the setnet industry
by giving fishermen stability.
Section 24 says it would eliminate the unique leasing process for
setnet sites which need a unique leasing process. The "higher
value leases could be awarded at auction" language will be opposed
by all setnetters because they are opposed to any system that would
auction off sites where a person who has fished a sites for years
will be disenfranchised from it by being outbid.
Fishermen who lease sites often move rocks, stakes, and things away
from their nets. They also install permanent anchors and make
improvements that increase the value of their own sites. He
thought it might be a good idea to tie the value of the lease to
the permit renewal which fluctuates according to the value of the
industry and area.
Number 239
REPRESENTATIVE THERRIAULT pointed out that the value of the permit
would fluctuate with the market and it is an average around which
they are trying to structure. He thought the language could be
tightened up to ensure that an existing lease holder would be able
to continue without fear of having someone take a lease out from
under them. That is not his intention.
SENATOR LEMAN noted that language in the bill did provide for
maintaining that integrity throughout the term of the lease, but it
doesn't address the issue of lease renewal.
SENATOR LEMAN noted that Representative Ivan joined the Committee
at the Dillingham LIO.
RON SWANSON, DNR, said it has been in statute for many years that
if a person has a lease, they will be able to renew it without
competition. There is some confusion, though, because it refers to
section 38.05.102 which deals with long term leases. They have
always interpreted that statute to say we should treat the short
term set net leases the same as a long term lease when it comes up
for renewal.
MR. SWANSON agreed with Representative Therriault that the $5,000
reference is in no way intended to apply to the shore fishery
lease. The $5,000 limit and the 10-year limit is scattered
throughout Title 38. If the lease is for under 10 years, under
$5,000 they can negotiate the lease. Over that it has to go to
competitive auction. That is why the shore fishery leases were
established for under 10 years.
He said they are open to different ideas regarding the fees. Their
intent is to figure out a more equitable way to charge for the use
of State lands rather than to just cover administrative costs.
They also feel that they don't want to be "counting fish" and they
don't want to punish the person who fishes a site very hard
compared to a person who goes out for one or two openings.
Regarding the new applications for an area coming in, it doesn't
happen very often, where they must determine the most eligible
person for the site. A competitive bidding situation would be used
only in extreme cases.
Number 325
REPRESENTATIVE THERRIAULT assured people he would be willing to
structure the language so if there is a temporary lapse and if a
person has held the lease for a long time and wants to renew, there
is a finding that person is the most eligible and could reestablish
that lease.
MR. SWANSON reiterated that is their intent. SENATOR LEMAN noted
they may want to retain some of the old language in section 24.
MR. SWANSON added that they wanted to make it "may" instead of
"shall." If they are put in the situation where they cannot make
a determination, they are forcing them to go one way. They want an
option in the rare case that they can't figure it out.
BILL WARD, Ward Farms, said he thought the statute should retain
the "shall" status because the individuals need to have the
assurance that as land comes available and as they need the
opportunity to expand their base of operations they will be able to
do so. He added that SB 162 should "dove tail" with actions in
this bill.
LAUREN MOSS, Prince William Sound Setnetters Association, said they
feel the revisions to HB 191 are not necessarily needed. They feel
if the system works, why fix it. It's efficient and simple and she
didn't think it would reduce the cost. She didn't see how
auctioning off the high line set nets would really raise any money.
She reminded them that they are talking about a fishery, not real
estate.
MS. MOSS told Representative Therriault that it appears to them
that the budget line for the shore fishery is being held hostage to
these provisions and asked him if that was a misconception.
Number 409
REPRESENTATIVE THERRIAULT replied that the Governor zeroed out the
funding for the program and he is trying to make the budget numbers
work. Right now the expense of issuing the permits can be covered,
but now the statute doesn't allow the expense of adjudicating any
of the permits. He also said that many of the people who are
testifying today mistakenly believe that they are going to shift
everything over to an auction. That is not the intent at all. If
a person has a lease, they will be able to continue that lease for
as long as they want to. He didn't think there would be that much
change in the program. They are talking about a floor on the
amount they would pay for the lease and he is willing to consider
a ceiling so that the price will not go through the roof. The
auction will only come into effect when there is a dispute DNR
cannot make a determination of who is the most qualified applicant
for a lease.
SENATOR LEMAN commented that he and the legislature know that is
his intent, but the legislation as currently written does not say
that.
Number 426
DAVID SANDEN said his concern was with the 4,000 people who applied
for homesteads last year and of that number 53 received homesteads.
He wanted to know if they would be put under the old law or the new
law. He is also concerned with the effective date of the
legislation and how that would affect the staking period which is
normally from June 15, 1996 - August 14, 1996. He suggested that
there be something in the staking packet allowing them to choose
which law they want to go with.
SENATOR LEMAN replied that was the intention of the Department and
the bill's sponsor.
MR. SWANSON also replied that was absolutely their intent if this
legislation passes.
JOE CHUCKWUK said his concern was what affect the auction would
have on existing fishermen in the Bristol Bay area and elsewhere.
Historically there has been enough effort by foreign companies to
attempt to take over the fishery in Alaska. This makes fishermen
very suspicious when leases are auctioned off to the highest
bidder.
Number 489
KIM RICE, Egegik Setnetters Association, said they feel as other
people who testified that the system they have now works. He
thought it might change a lot of people's minds if the real intent
were put down, because everyone was reacting to the $5,000. He
said that right now the program is paying for itself and he would
be willing to pay for the added administrative costs to keep the
program as it is. However, people would drop their leases if they
cost too much more and then the system would fall apart. With the
system now, people respect each other.
MARV EBNET, President, Ugashik Setnet Association, said that people
are struggling with the costs they have now. Additional costs in
the setnet industry would cause people to drop their leases.
DEE PEARSON said she had setnetted on her site in Kodiak since 1947
with her family and she believed the bill was very unfair to
setnetters. She said they only use a rock to tie to and they don't
fish on State lands; they fish in deep water and are required to
tie to something above high water. That is the only time they use
the land. She feels they are already paying quite a bit and they
are being singled out as setnetters to pay more. If the State
needs money she thought they should do it on a more equitable
basis. She said the Kodiak Wildlife Refuge System makes their
situation a little different than others in the State. They have
fairly large investments in their shore facilities having been
there so long. They are all small businesses and employ a lot of
young people who are working their way through school.
She said that she pays her help well and felt that another expense
was more than she could stand. She was definitely against
auctioning off the sites. She didn't see any language that
addressed the sale of a site.
DON FOX, Kodiak resident, concurred with Ms. Pearson's statements.
He said a lot of their shore support facilities are on Wildlife
Refuges which they pay $250 per year for use of. The values of
their permits are approximately $120,000 and they use a rock about
10 ft. big. To charge a one percent fee of that would probably be
$1,200. He closed asking why fix something that's not broken.
Number 567
MR. SWANSON clarified that they don't deal with the sale of
permits. The person who has the lease deals with it and they honor
the lease.
PAT JONES, Cordova setnetter, said sections 24, 25, and 26 should
remain as they were. She said the program has been working and
giving fair value to the State and she didn't see any reason to
change it.
JOHN THOMAS said his family had a setnet in Prince William Sound
for a number of years and he felt the system was working quite
well.
KIMBERLY PETERSON opposed HB 191. She said she and her husband are
Kodiak setnetters from the Alatek Bay District where her husband
had been fishing since 1964. They bought their sites before
limited entry was established and they have been traditional sites
since the 1940's.
TAPE 96-23, SIDE B
Number 580
MS. PETERSON said they got shore fishery water leases to avoid the
political contentions in offshore fisheries with the advent of
limited entry. They paid for surveying and an attorney and applied
for shore leases. The fees for the leases at that time was $150;
now they are $300.
She agreed that they should pay for the services they are
receiving. A few years ago in Alatak there was a conflict and they
had to get their sites resurveyed and their point of attachment
monumented since they go under water. All of the fishermen
involved paid for everything, even for DNR to come down.
Now, she said, they are being told they want to charge more per
year for their leases and when they have to get them reissued the
fee could be based on the market value of the sites; and if they
don't pay they lose their sites to the highest bidder.
She also understood that the yearly lease payment would be based on
the market value of their permits and she asked why some fishermen
should pay more for the same service.
Number 556
TOM BURSCH, Homer resident, said he and his wife setnet in Bristol
Bay near Nugashik and their operation makes a substantial
contribution to the State's economy. He thought there was
confusion with the auction terminology and if they are talking
about a $1,000 ceiling on the leases, he didn't see where the
auction wording should even come in.
He said other methods needed to be looked into of resolving
conflicts over leases, like using a private arbitrator and having
the loser pay.
LAUREN CARLTON thanked the committee for the opportunity to speak
and said she represented herself and Eric Beeman who has setnetted
with his family for 30 years at Kalgin Island. She said they
understand the frustration in DNR with conflicts over sites. She
suggested beginning a mediated program because Mr. Beeman is in
that situation right now. She is really concerned with section 27,
the auction section. She said the three year permit process is very
important because they need to know in advance how much gear and
crew they will need. She thought the auction should be completely
removed.
MS. CARLTON said the way she hears it is that the biggest costs are
over arbitration in certain site conflicts.
WILL BISHOP, Homer resident, said most points have already been
made a couple of times, but he said the wording he sees is too
vague. The system works, so leave it alone. He pointed out that
site values change each year with fish prices, weather, and all
sorts of things.
Number 488
KIMBERLY PETERSON repeated her testimony as the transmission was
cut off the first time.
VIRGINIA ADAMS, Northwest Kodiak Setnetters, said they represent
about 80 permits. She pointed out that just having the tremendous
participation from setnet groups testifying indicates the
pervasiveness of interest on this issue and she hoped the consensus
would be noticed by the committee.
She said the shore fishery program was established to preserve the
fishing opportunities to those fishing traditional areas as well as
to add stability to the State setnet fishery. Awarding a shore
fishery lease to a high bidder in the case of a new or contested
lease would actually create instability within the setnet fishery
and may contribute to shore fishery disputes. They appreciate the
difficulty the Division of Lands has in resolving conflicting
claims and their desire for a solution in the form of a law. This
solution is ill conceived. Her group is working on an alternative
proposal or approach to this issue. She suggested they solicit the
opinions of the different setnet organizations around the state.
Number 420
HUGH MALONE, Kenai Peninsula Fishermen's Association, thanked them
for having a full hearing on this issue. This legislation would
bring uncertainty to the business investments connected with a
shore fisheries lease. If it is the intent that the present lease
holder should have priority, that should be specified in the
legislation.
The second point he wanted to make concerned the potential
increased cost to shore fisheries lease holders under this
proposal. He said there has been no clear reason given for the
potential increase in costs. If the program is about breaking even
now and if the director has the ability to set the administrative
costs of the program, collecting costs through this mechanism
beyond that seems inappropriate. The fisheries resource does
contribute now to the State's economy in a number of ways,
principally through the raw fish tax.
The industry is facing a fairly dramatic price drop in the value of
our salmon and even though it's not intended, this legislation
could put people out of business.
Number 391
NELLE MURRAY, Alatak Setnetters Association, said she was confused
about this legislation because it seems that the original reasoning
behind it is no longer valid. When this program was introduced the
shore fisheries lease program was running a deficit. Since that
time, the yearly lease payments have doubled and there's one less
person in the lease office. It seems as if there is widespread
concern about the conflicts that occurred in the lease program;
last year there were five (out of 1,344 leases). She felt this
legislation was a way to raise revenue for the general fund.
She looked up the statutes referenced in section 24 and 38.05.070
says negotiated leases are not eligible for a preference.
Historical use has been the backbone of the fishery long before the
shore fishery lease program was instituted. If past use is no
longer an important factor, the people who are going to be hardest
hit are those who have been in it the longest.
Another statute that bothers her is 38.05.102 that states when your
lease is up for renewal, the State can renew at its appraised
market value. This could vary widely from year to year.
The legislature should try to provide a stable environment for
independent fishermen. The focus should be on assisting businesses
to create a strong economic base.
This legislation will put older well established village people out
of the fishing business in favor of the younger more aggressive
fishermen. It will create new proposals before the Board of Fish
as people try to save their businesses.
Number 350
YAQUIATA YATSIK, Kodiak setnetter, opposed HB 191. It singles out
the setnetters to provide extra money to DNR. She asked why people
who have been in the setnetting business for hundreds of years be
required to possibly have to bid for their right to fish areas that
have been fished by their parents and grandparents.
A lot of sites are not listed as registered sites. HB 191 is a
monster that would require more money for DNR and the Division of
Wildlife Protection.
NORA SUTTON, Bristol Bay setnetter, agreed with everything everyone
has said. She said this legislation would cause disarray in every
part of the setnet industry. She has heard Mr. Swanson say it is
not their intent to do certain things, but everything is working
very well the way it is.
Number 325
AL BAUMAN, President, Quinhagak Setnetters Association, said this
program was originally established in 1963 when fishermen asked for
help. The shore fishery program was created bringing order,
procedure, and stability to a volatile business. He said they
presently have a means of settling conflicts amicably and cost
efficiently.
MR. BAUMAN said the shore fishery lease program is voluntary. The
bill, as written, has no method for appraising value. Tying a
lease fee to the limited entry permit would discourage people from
obtaining or maintaining leases. He would like to see any fees
this program generates to be dedicated back to it and not siphoned
off to some obscure program.
SENATOR LEMAN informed Mr. Bauman that these fees can't be
dedicated.
PAUL VICK said he setnets on the west side of Kodiak. He added to
the comments made today that this bill would create a new level of
conflict on both the beach and in the court room. He said he pays
fees in eight different places, to license his skiffs, a limited
entry permit fee, a shore lease fee, a fee for having his cabin on
a refuge, a business license, and he is taxed on the cabin and the
land that he doesn't even own; he pays a 3.67 percent tax on his
fish, plus the cannery charges another 3 percent. He said this is
a fishery and not a land use situation.
MR. VICK said he was appalled that this bill made it through the
House without the fishing community being made aware of it.
PETE MURRAY, setnetter from the south end of Kodiak, said that most
of what he wanted to say has already been said. He pointed out
that the value of permits doesn't always go up. If they were to go
down, DNR would be severely underfunded.
REPRESENTATIVE AUSTERMAN asked that the record be corrected to show
that contrary to what was testified to early in the hearing, the
Governor's proposed budget cut new revenues from shore leases at
$300,000. The budget has not been "zeroed out" for the shore fish
lease program.
KATHY DUGAN, DNR, said she wanted time to assimilate all the
comments.
REPRESENTATIVE THERRIAULT commented that many times intentions are
not clear in legislation and he would be willing to tighten the
language to make sure that what they are intending to do is very
clear. He thought most of the comments today were based on a
misunderstanding of why the $5,000 was included in the language and
whether all leases would go to a competitive bid process. He
wanted also to make sure that a person could sell their lease to
another person with their permit. He wanted this to apply only to
new areas or when a person lapses their lease.
Attaching the fee to the value of the permit is a way of tracking
the market fluctuations. If they establish a floor on the current
$300, many individuals would pay no increase for their yearly
lease. He would certainly be willing to talk about a ceiling for
additional insurance.
He said he would work with everyone to make sure as many concerns
as possible are extinguished. He gave examples of how fair market
value is used in business transactions and said he thought that was
a fair value to use.
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