Legislature(2009 - 2010)BUTROVICH 205

03/29/2010 03:30 PM Senate RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 245 SALMON PRODUCT DEVELOP. TAX CREDIT TELECONFERENCED
Heard & Held
*+ SB 255 FISH PROCESSOR FEES, LICENSES, RECORDS TELECONFERENCED
Heard & Held
+ HB 162 SOUTHEAST STATE FOREST TELECONFERENCED
Heard & Held
= SB 143 RAILBELT ENERGY & TRANSMISSION CORP.
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
         SB 255-FISH PROCESSOR FEES, LICENSES, RECORDS                                                                      
                                                                                                                                
4:21:41 PM                                                                                                                    
CO-CHAIR   WIELECHOWSKI   announced  SB   255   to   be  up   for                                                               
consideration.                                                                                                                  
                                                                                                                                
4:22:29 PM                                                                                                                    
TIM  BENINTENDI,  staff to  Senator  Olson,  sponsor of  SB  255,                                                               
explained  that  a  program  is  already  in  place  whereby  the                                                               
National Marine  Fishery Service provides loans  to groups formed                                                               
for the purpose of reducing  fleet capacity by engaging in permit                                                               
buy-backs.  The  Southeast  Revitalization Association  (SRA)  is                                                               
engaged in such  an arrangement and operates  with a self-imposed                                                               
3 percent fee on fish sales from those remaining permit holders.                                                                
                                                                                                                                
He said this fee is the  basis for repaying federal loans and any                                                               
new  fish buyer  must agree  to collect  and remit  the fee  upon                                                               
entering the fishery. SB 255  authorizes the Alaska Department of                                                               
Fish  and   Game  (ADF&G)  and   the  Commercial   Fishery  Entry                                                               
Commission (CFEC) to  provide individual fish ticket  data to the                                                               
National  Marine   Fishery  Service  (NMFS)  that   will  support                                                               
monitoring the loan program by  allowing them to confirm that the                                                               
assessments are correct  and have been paid. SB  255 is supported                                                               
by the  CFEC, several  fisheries groups  and it  also has  a zero                                                               
fiscal note.                                                                                                                    
                                                                                                                                
SENATOR STEDMAN asked if anyone opposed the bill.                                                                               
                                                                                                                                
MR. BENINTENDI answered  that he hadn't heard  of any opposition.                                                               
The Pacific  Seafood Processors Association  (PSPA) had  an issue                                                               
once, but  an arrangement  has been  worked out  in terms  of the                                                               
draft letter of intent, which the sponsor supports.                                                                             
                                                                                                                                
4:24:14 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  noted the letter  of intent that  had just                                                               
come to them.                                                                                                                   
                                                                                                                                
MR. BENINTENDI explained  that there was a  difference of opinion                                                               
on a  peripheral issue,  and it  came through  by virtue  of this                                                               
bill into a discussion. The letter  of intent is a product of the                                                               
resolution.                                                                                                                     
                                                                                                                                
CO-CHAIR  WIELECHOWSKI said  it is  proposed by  the seiners  and                                                               
processors, but nothing had been formalized.                                                                                    
                                                                                                                                
SENATOR HUGGINS asked if the administration supports this bill.                                                                 
                                                                                                                                
MR. BENINTENDI answered yes.                                                                                                    
                                                                                                                                
4:25:52 PM                                                                                                                    
ROB  ZUANICH,   Manager,  Southeast   Revitalization  Association                                                               
(SRA), said he  represents the 180 Southeast  purse seine limited                                                               
entry  permit  holders  for  the   salmon  fishery.  He  provided                                                               
testimony   entitled   "The   Long   Road   to   Implementing   a                                                               
Consolidation  Program  for  the  Southeast  Purse  Seine  Salmon                                                               
Fishery." He  said the  genesis of  this concept  came up  in the                                                               
Salmon  Legislative  Task  Force  at the  same  time  the  salmon                                                               
production credit came up.                                                                                                      
                                                                                                                                
In  2002 the  legislature allowed  associations to  be formed  to                                                               
consolidate permits,  and in  2004 the SRA  was created  for that                                                               
purpose. In  2005, they  went to  Congress to  specifically amend                                                               
the Magnuson  Stevens Act to give  them access to a  federal loan                                                               
program  to finance  this consolidation  plan.  In 2006  Congress                                                               
appropriated  money   to  guarantee   the  loan;  in   2008  this                                                               
legislature appropriated $3 million in  grants to allow the first                                                               
phase of this program to go  forward. In 2009, they had this bill                                                               
that the NMFS  says is required before they can  finance the loan                                                               
before them.                                                                                                                    
                                                                                                                                
MR. ZUANICH  said the loan  program provides that  permit holders                                                               
can voluntarily decide to sell their  permit and submit a bid for                                                               
a dollar amount that  they wish to sell it for.  If they submit a                                                               
bid, they sign a contract  agreeing to relinquish their permit if                                                               
it is accepted. The bids will  be submitted to a certified public                                                               
accountant that  will rank them  and report the results.  The SRA                                                               
will then look  at those bids and if they  are satisfied, that is                                                               
the basis to go forward  with the consolidation plan. They submit                                                               
it to the  NMFS. The NMFS would then conduct  a referendum of the                                                               
permit holders to  see whether they are willing to  go along with                                                               
the  plan.  If   a  majority  approves  it,  the   plan  will  be                                                               
implemented. The  plan will also  require that only a  minimum of                                                               
260  permits will  remain in  the fishery  after this  program is                                                               
implemented.                                                                                                                    
                                                                                                                                
SENATOR  STEDMAN asked  of  the potential  permits  that will  be                                                               
retired how many are held by Alaskans.                                                                                          
                                                                                                                                
MR.  ZUANICH  answered that  a  majority  of  the permits  to  be                                                               
retired  will  be owned  by  non-residents.  In  phase 1  of  the                                                               
program 31 of  the 35 permits retired were  of non-residents. So,                                                               
they believe it will stabilize  and "Alaskan-ize" the purse seine                                                               
fishery.                                                                                                                        
                                                                                                                                
4:29:55 PM                                                                                                                    
SENATOR STEDMAN asked why 260  was the number of permits selected                                                               
as the number to remain.                                                                                                        
                                                                                                                                
MR.  ZUANICH replied,  "I guess  it was  your back  room brokered                                                               
agreement  between  the  Southeast Seiners  Association  and  the                                                               
affected seafood processors." Their  concern was that the program                                                               
could go too far and there  would be too few fishermen to harvest                                                               
the available salmon  to supply their plants. They  are trying to                                                               
show that past  large catches have been when 209  and 213 permits                                                               
were  fished; so  they are  satisfied that  the 260  threshold is                                                               
more than adequate.                                                                                                             
                                                                                                                                
SENATOR WAGONER  said the biologists  have the ability  to adjust                                                               
the catch with openings and number of days fished.                                                                              
                                                                                                                                
4:30:55 PM                                                                                                                    
BOB  THORSTENSON, Executive  Director,  Southeast Alaska  Seiners                                                               
Association (SASA), supported  SB 255. He said the  number of 260                                                               
permits was carefully chosen by his  members. It will be good for                                                               
long term stability  of the industry for both  investments in the                                                               
processing  sector and  the fishery.  It will  be good  for young                                                               
fishermen,  because it  allows more  permits  than are  currently                                                               
fished. Also buying  into the fishery now would  cost $500,000 to                                                               
$1 million  knowing that twice as  many boats won't be  coming up                                                               
in the future is reassuring for that kind of investment.                                                                        
                                                                                                                                
He said  they really appreciate  the support the  legislature has                                                               
given them.  This bill is  really a simple  accounting procedure,                                                               
but it  is a very  important nexus  to the federal  loan program.                                                               
This is  the first  state waters  fishery that  has been  able to                                                               
access  a federal  loan program.  His members  have polled  77-86                                                               
percent in favor of this program  over the last 20 years; and the                                                               
processing sector is either for it or neutral.                                                                                  
                                                                                                                                
SENATOR HUGGINS asked the geographical boundaries of the bill.                                                                  
                                                                                                                                
MR.  THORSTENSON replied  that the  bill applies  to any  limited                                                               
entry fishery  in Alaska. He is  attempting to apply it  to SO1A,                                                               
the Southeast Alaska Purse Seine.                                                                                               
                                                                                                                                
SENATOR HUGGINS asked  what the numbers of the  fisheries were in                                                               
the state a decade ago.                                                                                                         
                                                                                                                                
MR. THORSTENSON  replied that his constituents  fish in Southeast                                                               
Alaska and that is the reason  there is an emphasis on Southeast.                                                               
They are  the only ones  who have  used the 2002  legislation (HB
286) to organize and proceed  with the federally funded buy back.                                                               
About  22  percent  of  the permits  have  already  been  retired                                                               
through  grant money.  This  is the  final  closing document  for                                                               
paying the loan.                                                                                                                
                                                                                                                                
SENATOR  STEDMAN  wanted  the geographic  breakdown  of  the  212                                                               
permits that were fished in 2008  along with the 168 that weren't                                                               
fished.                                                                                                                         
                                                                                                                                
MR. THORSTENSON responded that he  could get that information for                                                               
them.                                                                                                                           
                                                                                                                                
4:36:38 PM                                                                                                                    
FRANK   HOHMAN,   Commissioner,    Commercial   Fisheries   Entry                                                               
Commission (CFEC), said their packets  had a one-page statistical                                                               
breakdown  of  the  fleets  for  the last  12  years.  It  had  a                                                               
breakdown of  resident and non-resident  figures. In 2008  of the                                                               
212 that  fished 113 were  resident and 90 were  non-resident. Of                                                               
the 168 that  did not fish, 55 percent were  non-residents and 44                                                               
percent  were  residents. Looking  back  over  the statistics,  a                                                               
majority of not fished permits have been owned by non-residents.                                                                
                                                                                                                                
CO-CHAIR WIELECHOWSKI asked if the administration supports this.                                                                
                                                                                                                                
MR. HOHMAN said  that every administration since  2002 has worked                                                               
to resolve this issue.                                                                                                          
                                                                                                                                
SENATOR HUGGINS asked what affect  reducing the number of permits                                                               
to 260 would have on the value of the permits.                                                                                  
                                                                                                                                
MR. HOHMAN replied that the tendency  would be for them to become                                                               
more valuable,  but the main  emphasis behind the program  was to                                                               
enhance economic return to the participants.                                                                                    
                                                                                                                                
4:43:18 PM                                                                                                                    
SENATOR STEDMAN said he had heard  that the state might help some                                                               
of  the smaller  villages in  buying entry  permits to  help them                                                               
regain the  fishing fleets that  they used  to have. He  asked if                                                               
the  state would  be  able  to issue  additional  permits in  the                                                               
future  or would  it have  to  buy some  of the  260 permits  and                                                               
spread those around.                                                                                                            
                                                                                                                                
MR.  HOHMAN  answered that  the  way  the  Limited Entry  Law  is                                                               
structured,  only  an  individual  could hold  an  entry  permit;                                                               
villages  can't.  But the  state  has  two  loan programs  -  the                                                               
Division   of  Investments   and  the   Commercial  Fishing   and                                                               
Agriculture Bank -  that have the ability to loan  for permits in                                                               
any field.  In this  program specifically,  the permits  would be                                                               
retired permanently.  The state couldn't reissue  them. The state                                                               
would  always  maintain  its   responsibility  for  managing  the                                                               
fishery and  if the  situation -  either through  conservation or                                                               
management or economics - changed  in the future, the state would                                                               
always  have  the ability  to  put  more  permits back  into  any                                                               
fishery, but  that would  be done  through a  complicated process                                                               
involving an optimum number study.                                                                                              
                                                                                                                                
4:46:24 PM                                                                                                                    
JOE PLESHA,  General Counsel, Trident Seafoods,  supported SB 255                                                               
with the understanding that the  SESA has agreed that 260 permits                                                               
will be  available at the  end of  this process. He  said Trident                                                               
has seafood  processing facilities  in Ketchikan,  Petersburg and                                                               
Wrangell; they  have spent  millions of dollars  in the  last few                                                               
years increasing  capacity as well  as value-added  product forms                                                               
that are produced from pink salmon.  As a result of those efforts                                                               
and efforts  and those of  other processors, the market  for pink                                                               
salmon is very healthy and permit  values are as high now as they                                                               
were in the mid-1990s.                                                                                                          
                                                                                                                                
He said Trident was concerned that  they didn't know the scope of                                                               
this  program  and  if  too  many permits  were  bought  back  it                                                               
wouldn't allow  for processors to achieve  their daily production                                                               
capacities through their  plants.  They believe  260 permits will                                                               
allow for them  to attain financial stability as well  as for the                                                               
Seiners Association.                                                                                                            
                                                                                                                                
4:47:47 PM                                                                                                                    
MARK PALMER, President, Ocean Beauty  Seafoods, supported SB 255.                                                               
He said  it is important  to consider investments that  have been                                                               
made in the production facilities  in the shore-based communities                                                               
they exist in. The number of  260 permits ensures their long term                                                               
viability as well as their ability  to grow and meet the needs of                                                               
the markets they are in today.                                                                                                  
                                                                                                                                
4:48:33 PM                                                                                                                    
CO-CHAIR  WIELECHOWSKI closed  public  testimony and  set SB  255                                                               
aside.                                                                                                                          

Document Name Date/Time Subjects
SB 245 - Bill Packet.pdf SRES 3/29/2010 3:30:00 PM
SB 245
SB 255 - Bill Packet.pdf SRES 3/29/2010 3:30:00 PM
SB 255
HB 162 - Bill Packet.pdf SRES 3/29/2010 3:30:00 PM
HB 162
GRETC - Joint Utility Task Force.pdf SRES 3/29/2010 3:30:00 PM