Legislature(2005 - 2006)BUTROVICH 205

04/05/2006 03:30 PM Senate RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Failed To Move Out Of Committee
Heard & Held
Moved SCS CSHB 380(RES) Out of Committee
     CSHB(FIN) 218-PRIVATE HATCHERY COST RECOVERY FISHERIES                                                                 
CHAIR WAGONER announced HB 218 to be up for consideration.                                                                      
IAN  FISK, staff  to Representative  Bill  Thomas, presented  the                                                               
bill on  behalf of the  sponsor and clarified that  the committee                                                               
was working  from Version R  that passed the House.  He explained                                                               
that HB  218 addresses  the way  hatcheries recover  costs. Under                                                               
the  current system  a hatchery  takes bids  from processors  for                                                               
recovery  of  the  anticipated return  and  allocates  a  certain                                                               
percentage  of  the  harvest as  cost  recovery.  The  percentage                                                               
varies from hatchery to hatchery.                                                                                               
The intent  of the bill  is to maximize  the benefit to  the user                                                               
groups  and so  HB  218  creates a  system  whereby the  hatchery                                                               
operator has the  option of collecting the  cost recovery through                                                               
a  fishery that  is open  to all  fishermen who  hold permits  to                                                               
harvest fish in the hatchery area.                                                                                              
MR. FISK explained that for a  hatchery to be able to recover its                                                               
costs through  a common property  fishery there would have  to be                                                               
an assessment on the fish  that are harvested specifically in the                                                               
cost  recovery  area. That  terminal  harvest  area is  typically                                                               
located directly in  front of a hatchery or  remote release site.                                                               
The Board of  Fisheries or the commissioner  of Alaska Department                                                               
of Fish and Game (ADF&G) sets the boundaries.                                                                                   
The language in the bill  establishes an assessment between 1 and                                                               
40  percent of  the  value of  the fish.  The  proceeds would  be                                                               
recovered in a manner similar  to the salmon enhancement tax. The                                                               
hatcheries would not collect the tax.                                                                                           
MR. FISK emphasized  that this is optional and  the sponsor would                                                               
not  support making  it mandatory.  He has  worked with  hatchery                                                               
operators  to reach  a comfort  zone and  is willing  to continue                                                               
doing so.                                                                                                                       
4:11:39 PM                                                                                                                    
CHAIR WAGONER stated he intended to hold the bill until Friday.                                                                 
4:12:18 PM                                                                                                                    
SENATOR STEDMAN said  he had a meeting on the  bill earlier today                                                               
and  the  version  that  was   discussed  wasn't  Version  R.  He                                                               
appreciated  the additional  time  to consider  the bill  because                                                               
that alone has created confusion.                                                                                               
CHAIR  WAGONER said  a suggested  CS  came out  of the  sponsor's                                                               
office,  but  there  would  be a  Senate  Resource  Committee  CS                                                               
presented on Friday.                                                                                                            
MR.  FISK commented,  "The  version that  we've  been working  on                                                               
reflects a  lot of the  changes that have  been worked on  in the                                                               
Interim... We've  just tried to  address some of  the hatcheries'                                                               
concerns." There is nothing in  it that is drastically different.                                                               
He noted that  he had a list  of the changes that  have been made                                                               
as the  bill moved  through the  process to  accommodate concerns                                                               
and the idea is to work with the hatcheries to keep it optional.                                                                
SENATOR BEN STEVENS asked if Version B is the work draft.                                                                       
MR. FISK  said Version B  is a  work draft that  reflects changes                                                               
made in response  to hatchery concerns. Those changes  are not in                                                               
Version R.                                                                                                                      
CHAIR  WAGONER clarified  that  Version B  was  discussed in  the                                                               
meeting Senator Stedman mentioned.                                                                                              
CHAIR WAGONER opened public testimony.                                                                                          
4:15:23 PM                                                                                                                    
KEVIN   MCDOUGALL,   President,   Northern   Southeast   Regional                                                               
Aquaculture  Association (NSRAA)  Board of  Directors, said  cost                                                               
recovery is a difficult issue but  HB 218 is a knee-jerk reaction                                                               
to low  returns. The  NSRAA Board  is open to  ways to  deal with                                                               
this issue  and has decided it  will not oppose the  bill but the                                                               
fact remains  that it does  have reservations about it.  He urged                                                               
the committee  to review the  documents that NSRAA  has submitted                                                               
before  making  a  decision   on  the  legislation.  [Abbreviated                                                               
testimony due to audio difficulties.]                                                                                           
4:20:05 PM                                                                                                                    
DIANE  PLATT, Cordova  District Fishermen  United (CDFU),  stated                                                               
support for  HB 218.  CDFU believes  that many  fishermen support                                                               
the  effort to  get away  from existing  processor practices  and                                                               
this is a good starting point.                                                                                                  
4:20:51 PM                                                                                                                    
ERIC  JORDAN,  Sitka  commercial  fisherman, said  HB  218  needs                                                               
further  consideration, but  he  applauds  the direction  because                                                               
there is  a problem with the  current cost recovery. There  was a                                                               
fundamental  error when  cost  recovery  was established  because                                                               
there was no intention to pay  for it through the common property                                                               
fishery. He  said that HB  218 is  going in the  right direction,                                                               
but the  details require work. He  suggested a change on  page 2,                                                               
lines 7-10  and said it  would be a good  idea to appoint  a task                                                               
force to  look at  the problem  of cost recovery  not going  to a                                                               
common property fishery.                                                                                                        
4:26:40 PM                                                                                                                    
SENATOR ELTON  explained that  component of  the bill  is telling                                                               
the  Board of  Fisheries  it can  adopt  regulations regarding  a                                                               
fisheries  management plan  that includes  allocation plans,  but                                                               
doesn't preclude  anything else. He  said it might make  sense to                                                               
use the  language that's  there and  do it  through the  Board of                                                               
Fisheries process  rather than  micromanaging the  regulations in                                                               
statute. He asked Mr. Jordan to respond.                                                                                        
MR. JORDAN  said he  agreed with concept,  but the  more specific                                                               
guidance the legislature  provides as to intent  the better. This                                                               
is a  big issue,  he said,  and we need  to rethink  the terminal                                                               
harvest or special harvest areas  if we're going to conduct these                                                               
types of fisheries for all gear groups.                                                                                         
4:28:43 PM                                                                                                                    
DEBRA  LYONS,  Secretary/Treasurer,  NSRAA  Board  of  Directors,                                                               
asked the  committee not to  not pass HB  219 until more  work is                                                               
done.  She  noted  that  the  fiscal notes  state  zero  and  the                                                               
Department of Revenue  fiscal note comments say  the bill doesn't                                                               
authorize  it   to  enforce  assessments.  She   asked  when  the                                                               
enforcement would  occur if  nothing is  budgeted to  enforce the                                                               
language in the bill. A  further comment states that a successful                                                               
program needs regular staffing yet nothing is budgeted for that.                                                                
As a member  of the NSRAA board, she is  interested in preserving                                                               
flexibility  to respond  to changes  during the  season. If  this                                                               
were to  pass, she  understands that  NSRAA would  be bound  to a                                                               
common  property fishery  at the  assessment established  for the                                                               
year  regardless of  the strength  of the  return. This  would be                                                               
particularly  problematic  in  years  in  which  the  anticipated                                                               
return was stronger than what  materialized. The bill has further                                                               
inflexibility  in that  it  would bind  NSRAA's  ability to  fund                                                               
operating reserves to 100 percent  and it doesn't allow the board                                                               
flexibility  in   setting  financial   policies  and   in  making                                                               
financial decisions.                                                                                                            
A further concern relates to  risk. A worst-case scenario is that                                                               
the  NSRAA Board  and  the  fishermen agree,  in  good faith,  to                                                               
participate in the  common property fishery, but  when the season                                                               
comes along the fishermen choose  not to participate. NSRAA would                                                               
have no  fish taken for cost  recovery and would have  nothing in                                                               
place with  buyers to conduct  a tradition cost  recovery fishery                                                               
on such short notice.                                                                                                           
MS.  LYONS referenced  subsection  (d) on  page  2 and  suggested                                                               
changing the wording to, "The  Department of Revenue will set the                                                               
assessment based on the recommendation  of the board of directors                                                               
of the  affected hatchery."  She said  she didn't  understand the                                                               
difference between  this assessment and a  tax and why it  can be                                                               
adopted without a vote of the fishermen.                                                                                        
MS.  LYONS   said  there  is  little   understanding  of  NSRAA's                                                               
strategic  plans to  diversify their  cost recovery  fishery over                                                               
time to  allow more Chinook and  Coho to be harvested  and reduce                                                               
the  burden  on  the  Chum  fishery.  She  suggested  that  other                                                               
alternatives could  be explored. Perhaps the  sport fishery could                                                               
contribute   something   toward   NSRAA's   operation   and   the                                                               
aquaculture tax could  be increased a little.  That combined with                                                               
relying  on  other  species  for revenue  would  be  a  preferred                                                               
solution to HB 218. She reiterated her request to hold the bill.                                                                
4:36:19 PM                                                                                                                    
DAN  CASTLE,  President,  Southeast  Alaska  Seiners  Association                                                               
(SEAS), said a  vast majority of the SEAS  membership accepts the                                                               
idea  of   doing  something  different  with   cost  recovery  in                                                               
Southeast  Alaska. Cost  recovery programs  have evolved  and are                                                               
required to take an increasing  amount of hatchery return and the                                                               
benefit is  spreading to  the fishermen. SEAS  would like  to see                                                               
the returns  pass through  the fish holds  of the  fishermen that                                                               
are  making a  living  from fishing.  This  would strengthen  the                                                               
relationship that individual fishermen have with processors.                                                                    
MR.  CASTLE  emphasized   that  the  language  in   the  bill  is                                                               
permissive and reiterated supported for HB 218.                                                                                 
4:39:03 PM                                                                                                                    
BRUCE WALLACE,  commercial fisherman from Ketchikan,  said SB 218                                                               
is just  a tool.  The cost  recovery program  is not  working and                                                               
change  needs  to  occur.  He  agreed  with  Senator  Elton  that                                                               
micromanaging cost  recovery through  statute probably  isn't the                                                               
answer and  the decisions are  probably better left to  the Board                                                               
of  Fisheries.  Since  the language  is  permissive  and  doesn't                                                               
mandate that NSRAA  or any non-profit use the  tool, he suggested                                                               
it is an appropriate vehicle to  expand the toolkit. He urged the                                                               
committee to support HB 218.                                                                                                    
4:41:21 PM                                                                                                                    
JERRY McCUNE, United  Fishermen of Alaska, stated  support for HB
218.  He thanked  the sponsor  for accommodating  the hatcheries'                                                               
Referencing  page  2,  line  10,  he  noted  that  the  Board  of                                                               
Fisheries already  has the authority  to review  allocation plans                                                               
among user groups of hatchery stocks  and to close a fishery if a                                                               
run is weak and isn't sufficient  for cost recovery or to get the                                                               
brood  stock. All  this bill  does is  let fishermen  come to  an                                                               
agreement with  a hatchery to be  able to take fish  under common                                                               
property and  sell them  to the processor  so the  fishermen have                                                               
access and aren't  sitting around waiting for the  hatchery to do                                                               
the common property harvest.                                                                                                    
With  regard  to subsection  (b)  he  said the  attorney  general                                                               
advised that  it has to  be in the bill;  it is part  of existing                                                               
4:44:49 PM                                                                                                                    
BOB  THORSTENSON, Executive  Director,  Southeast Alaska  Seiners                                                               
Association (SEAS),  referenced Ms.  Lyons' concern  regarding an                                                               
assessment fishery without  a vote of the  fishermen and reminded                                                               
her  that the  current cost  recovery is  without a  vote of  the                                                               
fishermen.  He  said if  SEAS  members  were polled,  they  would                                                               
overwhelmingly vote  to eliminate cost recovery.  Furthermore, he                                                               
said,  SEAS  fishermen are  willing  to  pay  to cover  the  cost                                                               
recovery goals  in Southeast,  but they don't  want to  put those                                                               
costs on the back of  other gear groups. Regarding the suggestion                                                               
for a task  force, he said that approach has  been tried for many                                                               
years and HB 218 is partially the result of a task force.                                                                       
Under this  legislation the people  who catch the fish  would pay                                                               
the tax. "We're willing  to pay the tax so we  can have our boats                                                               
working and not have just a  few people catching all the fish and                                                               
one processor  processing all the  fish," he said.  SEAS believes                                                               
it  has  to  be  in  statute  and that  paying  the  tax  is  the                                                               
responsible thing to do.                                                                                                        
4:47:46 PM                                                                                                                    
MITCH EIDE,  Petersburg, Board  Member, Southeast  Alaska Seiners                                                               
Association, asked  the committee  to support  HB 218  because it                                                               
will  give  fishermen access  to  more  fish through  the  common                                                               
property fishery.                                                                                                               
CHAIR WAGONER closed public hearing  and held HB 218 in committee                                                               
to allow time to prepare a committee substitute.                                                                                

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