Legislature(1995 - 1996)

04/19/1995 05:02 PM House FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              HOUSE SPECIAL COMMITTEE ON FISHERIES                             
                         April 19, 1995                                        
                           5:02 p.m.                                           
 MEMBERS PRESENT                                                               
 Representative Alan Austerman, Chairman                                       
 Representative Carl Moses, Vice Chair                                         
 Representative Scott Ogan                                                     
 Representative Gary Davis                                                     
 Representative Kim Elton                                                      
 MEMBERS ABSENT                                                                
 COMMITTEE CALENDAR                                                            
 *HJR 43:    Relating to commercial fishing and subsistence use in             
             Glacier Bay National Park.                                        
             PASSED OUT OF COMMITTEE                                           
 *HB 284:    "An Act relating to the Alaska Commercial Fishing and             
             Agriculture Bank."                                                
             PASSED OUT OF COMMITTEE                                           
 (* First public hearing)                                                      
 WITNESS REGISTER                                                              
 RON SOMERVILLE                                                                
 P.O. Box 22394                                                                
 Juneau, AK  99802                                                             
 Telephone: 780-4812                                                           
 POSITION STATEMENT: Provided background on HJR 43                             
 BRUCE WEYHRAUCH, Attorney                                                     
 Allied Fishermen of Southeast Alaska                                          
 302 Gold Street                                                               
 Juneau, AK 99801                                                              
 Telephone: 586-2210                                                           
 POSITION STATEMENT: Provided background on HJR 43                             
 CHERYL SUTTON, Administrative Assistant                                       
 Representative Carl Moses                                                     
 Alaska State Legislature                                                      
 Capitol Building, Room 204                                                    
 Juneau, AK  99801                                                             
 Telephone: 465-6848                                                           
 POSITION STATEMENT: Provided information on HB 284                            
 ED CRANE, President                                                           
 Commercial Fishing and Agricultural Bank                                      
 2550 Denali Street                                                            
 Anchorage, AK  99503                                                          
 Telephone: 276-2007                                                           
 POSITION STATEMENT: Provided information on HB 284                            
 DICK ELIASON, Director                                                        
 Commercial Fishing and Agricultural Bank                                      
 P.O. Box 92070                                                                
 Anchorage, AK 99509                                                           
 Telephone: 276-2007                                                           
 POSITION STATEMENT: Supported HB 284                                          
 PREVIOUS ACTION                                                               
 BILL:  HJR 43                                                               
 SPONSOR(S): SPECIAL COMMITTEE ON FISHERIES                                    
 JRN-DATE     JRN-PG               ACTION                                      
 04/07/95      1173    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/07/95      1173    (H)   FISHERIES                                         
 04/19/95              (H)   FSH AT 05:00 PM CAPITOL 124                       
 BILL:  HB 284                                                                
 SPONSOR(S): SPECIAL COMMITTEE ON FISHERIES                                    
 JRN-DATE     JRN-PG               ACTION                                      
 03/27/95       933    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/27/95       933    (H)   FSH, LABOR & COMMERCE, FINANCE                    
 04/05/95              (H)   FSH AT 05:00 PM CAPITOL 124                       
 04/19/95              (H)   FSH AT 05:00 PM CAPITOL 124                       
 ACTION NARRATIVE                                                              
 TAPE 95-24, SIDE A                                                            
 Number 000                                                                    
 CHAIRMAN ALAN AUSTERMAN called the meeting to order at 6:02 p.m.              
 and noted for the record Representatives Davis and Ogan were in               
 attendance and that a quorum was present.                                     
 HJR 43 - FISHING AND SUBSISTENCE IN GLACIER BAY                             
 Number 010                                                                    
 CHAIRMAN AUSTERMAN read the sponsor statement aloud, "This                    
 Resolution has been introduced by the House Special Committee on              
 Fisheries in response to concerns expressed by Southeast commercial           
 fishermen and subsistence users.  Glacier Bay has been a National             
 Monument since 1925.  Congress created the Glacier Bay National               
 Park as part of ANILCA (Alaska National Interest Lands Conservation           
 Act) in 1980.  In 1990, environmental groups sued the National Park           
 Service for, among other things, allowing commercial and                      
 subsistence fishing within Glacier Bay National Park.  In 1991, the           
 National Park Service promulgated draft regulations that would                
 phase out commercial fishing in and around Glacier Bay within seven           
 years, and completely prohibit subsistence fishing.  Last year, a             
 federal judge ruled that ANILCA did not prohibit commercial fishing           
 in Glacier Bay National Park, but that ruling has since been                  
 appealed to the Ninth Circuit Court of Appeals.  Elimination of the           
 commercial and subsistence fisheries in the vast area contained in            
 the Glacier Bay National Park would significantly harm the coastal            
 communities of northern Southeast.  Both fisheries have utilized              
 this area long before park designation.  Also, if the area were               
 closed to commercial fishing, other fisheries in Southeast would be           
 harmed from increased pressure by those fishermen displaced by a              
 closure of Glacier Bay waters."                                               
 REPRESENTATIVE CARL MOSES joined the committee at 5:05 p.m.                   
 Number 050                                                                    
 RON SOMERVILLE testified, "As a member of the Alaska Department of            
 Fish and Game previously, I dealt with this specific issue for                
 about four years."  He said, "When ANILCA passed in 1980, the                 
 extensions to Glacier Bay National Park were limited to mean high             
 tide, although the only portions that really extended were in the             
 northern portions.  The whole issue here really revolves around               
 whether or not the state of Alaska still retains authority to                 
 regulate and authorize subsistence fishing and commercial fishing             
 within what the Park Service claims is the boundary of the park.              
 We, of course, have claimed for a long time that in fact their                
 authority really doesn't extend into territorial waters.  We came             
 close to a resolution of this issue two years ago, and right at the           
 dying moments of Congress, we were unable to finalize a bill and              
 thus we went back to kind of a status quo.  Since then, the Park              
 Service has been proceeding with the concept, that's why you see it           
 in Resolution here, of adopting regulations to authorize some                 
 subsistence taking and commercial taking within the Park."                    
 MR. SOMERVILLE continued, "We've always contended that these are              
 not park resources.  The bulk of them that are taken in the waters            
 adjacent to Glacier Bay National Park because most of them are in             
 essence passing through those waters and we claim that they really            
 don't have any jurisdiction over them as being park resources.  We            
 tried to work with the Park Service to develop a process whereby              
 the Parks and the state could work together to maintain some kind             
 of cooperative effort, if you will, but we still maintained that we           
 had the authority to regulate taking for subsistence or commercial            
 purposes.  If the Park Service goes forward with their regulations,           
 which they now have found out that they can allow the taking of               
 commercial purposes within the park, just to give you kind of a               
 glimpse of what we've seen in those regulations:  One is they would           
 like to phase out fishing within the Glacier Bay proper, within the           
 Park which would then affect some of the subsistence fisheries                
 within the Park."                                                             
 REPRESENTATIVE KIM ELTON joined the committee at 5:10 p.m.                    
 Number 168                                                                    
 REPRESENTATIVE GARY DAVIS voiced concern about page 2, line 11 of             
 HJR 43 where it says, "WHEREAS the State of Alaska has a claim to             
 ownership of the submerged lands and navigable waters of the Park."           
 MR. SOMERVILLE replied, "Glacier Bay was included in the general              
 encompassing litigation called the Babbitt case, which the Governor           
 dropped.  That included jurisdictional aspects related to all of              
 the waters of the state," and clarified, "The position of the state           
 has been, I think it still is, that lands underlying the waters,              
 adjacent to Glacier Bay out to three miles are submerged lands                
 belonging to the state of Alaska.  We just have never filed in                
 court to claim those titles."                                                 
 Number 205                                                                    
 BRUCE WEYHRAUCH, Attorney, Allied Fishermen of Southeast Alaska,              
 described the geographic area encompassed in the Glacier Bay                  
 National Park and testified, "What happened is, when Congress                 
 passed ANILCA they created this park and that's when they created             
 the marine water area of the park.  Fishing has continued in that             
 area for centuries and these communities have sprung up because of            
 that.  In 1990, the Alaska Wildlife Alliance and American Wildlands           
 sued the National Park Service, the Secretary of the Interior, and            
 said, in part that `You're violating the Marine Mammal Protection             
 Act because there's whales affected.  The vessel management plan              
 for the park that allows vessels going in there is implicated.  The           
 concessionaires are implicated because of the vessels you're                  
 allowing in there.  But they also said that ANILCA prohibits                  
 commercial fishing and that issue was addressed by federal district           
 Court Judge Holland who said that ANILCA does not prohibit                    
 commercial fishing in the non-wilderness waters of Glacier Bay                
 National Park.  The environmental groups have now appealed that to            
 the Ninth Circuit and it has not been briefed yet, but it's                   
 probably going to be briefed this year."                                      
 MR. WEYHRAUCH then suggested some amendments:  Inserting ",                   
 environmental," after "economic" on page 1, line 12.                          
 On page 1, line 13, delete "northern".  On page 2, line 23, insert            
 "if it promulgate regulations" and delete "proceed expeditiously to           
 amend its regulations in order to".  On page 2, line 25, insert               
 "authorize continued" and delete "allow".  On page 2, line 26,                
 delete "non-wilderness areas of the park" and insert "marine waters           
 of Glacier Bay National Park".  He also suggested that language be            
 added to the Resolution to amend ANILCA to authorize subsistence              
 and commercial fishing.                                                       
 MR. WEYHRAUCH added, "The National Park Service is maybe searching            
 for some hook if it's going to prohibit commercial fishing to do              
 that.  It's not easy (for them) because (1) commercial fishing does           
 not harm park values, it has been going on there for more than a              
 century; (2) there's been no environmental harm.  This is not an              
 environmental issue; and (3) the fisheries that are caught are not            
 resident fish species of the park, they're migratory.  The salmon             
 and halibut move in and out.  There are some resident crab                    
 populations perhaps."  He also said, "So it's not clear that they             
 will promulgate regulations.  I think that it's important that they           
 get the idea if they're going to do it, that this is a                        
 longstanding, environmentally safe, economically sound and well-              
 managed fishery by the state of Alaska that should go on.  This is            
 not a problem.  And if it is prohibited, it's going to wreck                  
 serious economic and environmental harm in this state and on the              
 fishermen that work in that area."                                            
 Number 412                                                                    
 REPRESENTATIVE ELTON asked if the first resolve was necessary.                
 MR. WEYHRAUCH indicated that there are ongoing research projects              
 which the state would like to stay apprised of.                               
 Number 434                                                                    
 REPRESENTATIVE OGAN moved that the suggested amendments be adopted.           
 There were no objections.                                                     
 REPRESENTATIVE OGAN moved to pass CSHJR 43(FSH) out of committee.             
 There were no objections.                                                     
 HB 284 - AK COMMERCIAL FISHING & AGRICULTURE BANK                           
 Number 452                                                                    
 CHERYL SUTTON, Administrative Assistant to Representative Carl                
 Moses, testified saying, "HB 284 seeks to modify and refit the                
 Commercial Fishing & Agriculture Bank's (CFAB's) enabling statute             
 to reflect evolving commercial law and present day fishing                    
 economies needs.  CFAB was created in 1978 and much has changed in            
 both commercial law and fishing economies since that time.  There             
 are two significant changes which would be enacted with the passage           
 of HB 284.  The first is permanent ownership by the state through             
 retirement of all but $1 million of the state's initial investment            
 of $32 million.  Second, broadening of the purposes and                       
 circumstances for which a fisherman may use his limited entry                 
 permit as collateral.  Some of these include loans for lease or               
 purchase of quota shares, IFQs, other licenses, and the purchase,             
 construction, maintenance, repair or improvement of commercial                
 fishing boats, sites, gear and improvement."                                  
 ED CRANE, President, CFAB, said, "We're really not creating                   
 something new here.  We're simply redoing and revising, and                   
 mechanically this is the easiest way to handle what was intended."            
 He testified, "When CFAB was established by a 1978 act which was              
 implemented in 1980, the state of Alaska invested $32 million as              
 seed capital in the form of stock in CFAB.  And the statute                   
 provided for CFAB to retire, that it return all the money, to                 
 retire that stock within 20 years, by the year 2000.  The theory              
 was as that money was returned by the state, it would be replaced             
 by money invested by members, users, borrowers of CFAB.  That                 
 process has taken place.  Actually seven years ago, the state wrote           
 off the entire $32 million that has been carried for the last few             
 years as zero on the books of the state.  Nevertheless, we have               
 been retiring that stock.  We have now retired $21,750,000 to be              
 specific.  And also we have accumulated roughly sixteen and a half            
 million dollars of replacement equity that represents investments             
 of fishermen or borrowers or fisherman and farmers.  Unfortunately,           
 there was a catch, as near as I know, an inadvertent catch-22 in              
 the existing statute.  On the one hand it says that if CFAB does              
 not retire, fails to retire all of the $32 million in stock by the            
 year 2000, the Commissioner of Commerce can take steps to dissolve            
 the bank, to liquidate the bank.  Then, in another part of the                
 statute, it says that when CFAB has retired all of the $32 million,           
 the statute lapses.  Well, if the statute lapses, there is no CFAB,           
 it's gone.  So we had that particular concern that this bill                  
 addresses.  But in addition to that is the fact that CFAB, as we              
 discussed some time ago, CFAB is the only private entity,                     
 nongovernmental entity which has the statutory authority to accept            
 a lien on a limited entry permit and allow fishermen to use permits           
 as devices through which they can finance their operations."  He              
 then indicated that in order to justify CFAB's unique status with             
 the state, it is necessary for CFAB to retain $1 million in CFAB as           
 a "perpetual investment."  He pointed out there is considerable               
 responsibility and accountability to the state.                               
 Number 578                                                                    
 REPRESENTATIVE ELTON asked if Mr. Crane was comfortable with the              
 three year terms of board members appointed by the Governor.                  
 MR. CRANE said yes.                                                           
 REPRESENTATIVE ELTON pointed out that one of the board members is             
 required to be a "resident farmer."                                           
 MR. CRANE indicated that the original statute was even more                   
 restricting.  He said, "The original statute required that it be a            
 farmer with ten years of experience farming in Alaska.  Also in the           
 original statute, directors were required to be active members,               
 that is current borrowers, of CFAB."  He said CFAB has made very              
 few loans to farmers historically, due to the state's agricultural            
 loan program.                                                                 
 REPRESENTATIVE ELTON asked if that seat would be better designated            
 to a timber harvester or processor.                                           
 MR. CRANE indicated that the definition of commercial agriculture             
 can be found on page 17 of the bill and it includes forest                    
 REPRESENTATIVE ELTON contended that a timber harvester would not be           
 a resident farmer.                                                            
 Number 639                                                                    
 MR. CRANE said probably not unless it was on their own land on a              
 sustained yield basis.                                                        
 REPRESENTATIVE ELTON asked about changes in indemnity for officers            
 and employees of CFAB.                                                        
 MR. CRANE said, "Our intention here is simply to say that CFAB's              
 directors and employees may have the same indemnification in                  
 insurance provisions as any private corporation in the state, no              
 more and no less."                                                            
 REPRESENTATIVE ELTON said he viewed page 8, paragraphs 14 and 15 as           
 granting questionably "broad authorization" to CFAB.                          
 MR. CRANE replied, "I cannot imagine our board doing anything                 
 spectacular, if you will, which would appear to be supportive of              
 one small segment of the total fishing community and not have a               
 significant reaction from other CFAB members.  (Indisc.) CFAB                 
 members over time, and it has taken us some time to get there, are            
 beginning to be more and more attuned to the fact that what CFAB              
 does directly affects their pocketbook."                                      
 TAPE 95-24, SIDE B                                                            
 Number 000                                                                    
 MR. CRANE continued, "It was written broadly, mostly because we did           
 not have anything specific in mind."                                          
 REPRESENTATIVE ELTON indicated that he is somewhat more comfortable           
 with those sections and asked about page 11, section 20, paragraph            
 5.  He said, "With that paragraph, if somebody runs up a huge bill            
 at Nordstroms, they can pledge their permit at your financial                 
 institution to pay off a Nordstrom's debt that has absolutely                 
 nothing at all to do with fisheries or timber or agriculture."                
 MR. CRANE replied, "We make loans for the purpose of commercial               
 fishing related purposes and for many fishermen, particularly those           
 that simply operate as sole proprietors as opposed to having their            
 fishing business incorporated.  There's essentially no distinction            
 between their personal obligations and their fishing obligations.             
 We have, to my knowledge, we have never been asked to finance the             
 kind of debt which you mentioned."  He added, "The other side of it           
 is we, it is not unusual for fishermen or a fisherperson to come to           
 us with kind of a panacea of obligations that often do include                
 credit card debt, miscellaneous, not necessarily Nordstrom's but              
 for the things that all of us use credit cards for and we will                
 include that in the financing, again, for working capital                     
 Number 160                                                                    
 MR. CRANE continued, "It is difficult for anybody who has perhaps             
 only one payday a year to live from one payday to the next and it             
 is not unusual for persons in those circumstances to wind up in the           
 tenth month of their year with fuel bills, that is home heating               
 fuel bills, payable and credit card debt payable and a bill at the            
 grocery store that they've got to have taken care of before they              
 can actually obtain financing for their upcoming fishing season."             
 REPRESENTATIVE MOSES said that he suggests to fishermen friends to            
 pay with credit cards so they don't lose receipts, as they might              
 with paying cash.                                                             
 REPRESENTATIVE OGAN asked if the chairman's intent was to move the            
 bill out of committee today.                                                  
 CHAIRMAN AUSTERMAN said yes.                                                  
 Number 215                                                                    
 DICK ELIASON, CFAB Director, testified in support of CFAB, "I was             
 impressed with the operation of the bank.  I remember not too many            
 years ago, we looked upon CFAB as maybe even a mistake because                
 things were going wrong and a lot of bad publicity in the                     
 legislative bodies, and we were wondering if, in fact, it was going           
 to disappear.  However, within the last ten years they've made an             
 astounding comeback."  He stressed the importance of the bank to              
 the rural areas of the state where there are often few financing              
 alternatives.  He added, "Certainly, I'd have no qualms in saying             
 it was a bad deal if it was a bad deal because I don't have a                 
 vested interest, but, I'd just like to reassure you that it's                 
 working and I would like to see it continue to work (indisc.) good            
 service for the state and for the industry at large in Alaska."               
 REPRESENTATIVE ELTON asked, "Are you comfortable with the expansion           
 of duties into the venture capital kind of realm?"                            
 MR. ELIASON said yes, and added, "There was some speculation, that            
 maybe we shouldn't put this large a bill forward at this time                 
 because we know how busy the legislature is, especially this time             
 of the year.  But we thought that it has a lot of merit and there             
 is a lot of support out there."                                               
 Number 303                                                                    
 REPRESENTATIVE MOSES moved to pass the bill out of committee.                 
 There were no objections.                                                     
 CHAIRMAN AUSTERMAN adjourned the meeting at 6:04 p.m.                         

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