Legislature(2017 - 2018)GRUENBERG 120

03/06/2018 10:00 AM House FISHERIES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 231(FSH) Out of Committee
Moved HB 386 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                         March 6, 2018                                                                                          
                           10:03 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Louise Stutes, Chair                                                                                             
Representative Geran Tarr                                                                                                       
Representative Mike Chenault                                                                                                    
Representative David Eastman                                                                                                    
Representative Jonathan Kreiss-Tomkins                                                                                          
Representative Mark Neuman                                                                                                      
MEMBERS ABSENT                                                                                                                
Representative Zach Fansler                                                                                                     
Representative Bryce Edgmon                                                                                                     
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 386                                                                                                              
"An Act relating  to abandoned and derelict  vessels; relating to                                                               
the registration  of vessels; relating  to certificates  of title                                                               
for  vessels;  relating  to  the  duties  of  the  Department  of                                                               
Administration;  relating  to the  duties  of  the Department  of                                                               
Natural  Resources; establishing  the derelict  vessel prevention                                                               
program;  establishing  the  derelict vessel  prevention  program                                                               
fund; and providing for an effective date."                                                                                     
     - MOVED HB 386 OUT OF COMMITTEE                                                                                            
HOUSE BILL NO. 231                                                                                                              
"An  Act  relating  to  the  Alaska  Commercial  Fisheries  Entry                                                               
Commission; and providing for an effective date."                                                                               
     - MOVED CSHB 231(FSH) OUT OF COMMITTEE                                                                                     
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 386                                                                                                                  
SHORT TITLE: VESSELS: REGISTRATION/TITLES; DERELICTS                                                                            
SPONSOR(s): REPRESENTATIVE(s) SEATON                                                                                            
02/21/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/18       (H)       FSH, FIN                                                                                               
02/27/18       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
02/27/18       (H)       Heard & Held                                                                                           
02/27/18       (H)       MINUTE(FSH)                                                                                            
03/06/18       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
BILL: HB 231                                                                                                                  
SHORT TITLE: CFEC: BD. SALARY; STAFF CLASSIFIED SERVICE                                                                         
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
04/15/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/15/17       (H)       FSH, FIN                                                                                               
05/02/17       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
05/02/17       (H)       Heard & Held                                                                                           
05/02/17       (H)       MINUTE(FSH)                                                                                            
02/22/18       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
02/22/18       (H)       <Bill Hearing Postponed to 2/27/18>                                                                    
02/27/18       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
02/27/18       (H)       Heard & Held                                                                                           
02/27/18       (H)       MINUTE(FSH)                                                                                            
03/06/18       (H)       FSH AT 10:00 AM GRUENBERG 120                                                                          
WITNESS REGISTER                                                                                                              
BRYAN HAWKINS, Harbormaster                                                                                                     
City of Homer;                                                                                                                  
Vice President                                                                                                                  
Alaska Association of Harbormasters and Port Administrators                                                                     
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HB 386.                                                                          
MATT GRUENING, Staff                                                                                                            
Representative Louise Stutes                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions and explained Amendment                                                               
1 to Version D of HB 231.                                                                                                       
FATE PUTMAN, Chair                                                                                                              
Commercial Fisheries Entry Commission                                                                                           
Alaska Department of Fish & Game (ADFG)                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the hearing on HB
DALE KELLEY, Member                                                                                                             
Commercial Fisheries Entry Commission                                                                                           
Alaska Department of Fish & Game (ADFG)                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during the hearing on HB
ACTION NARRATIVE                                                                                                              
10:02:30 AM                                                                                                                   
CHAIR  LOUISE  STUTES  called  the  House  Special  Committee  on                                                             
Fisheries meeting to order at  10:03 a.m.  Representatives Stutes                                                               
Tarr,  Chenault, Eastman,  were  present at  the  call to  order.                                                               
Representatives Neuman and Kreiss-Tomkins  arrived as the meeting                                                               
was in progress.                                                                                                                
         HB 386-VESSELS: REGISTRATION/TITLES; DERELICTS                                                                     
10:03:55 AM                                                                                                                   
CHAIR STUTES announced that the  first order of business would be                                                               
HOUSE BILL  NO. 386  "An Act relating  to abandoned  and derelict                                                               
vessels;  relating to  the registration  of vessels;  relating to                                                               
certificates of title for vessels;  relating to the duties of the                                                               
Department  of  Administration; relating  to  the  duties of  the                                                               
Department  of  Natural   Resources;  establishing  the  derelict                                                               
vessel  prevention  program;  establishing  the  derelict  vessel                                                               
prevention program fund; and providing for an effective date."                                                                  
10:05:40 AM                                                                                                                   
CHAIR STUTES opened public testimony on HB 386.                                                                                 
10:06:18 AM                                                                                                                   
BRYAN  HAWKINS,  Harbormaster,  City of  Homer;  Vice  President,                                                               
Alaska  Association  of  Harbormasters and  Port  Administrators,                                                               
stated that the  city of Homer supports HB 386  and its companion                                                               
in the Senate, SB 92.   He said the city demonstrated its support                                                               
for the  bill with a  resolution passed  this past December.   He                                                               
pointed out that  he is also representing  the Alaska Association                                                               
of Harbormasters  and Port  Administrators, which  supports these                                                               
efforts  to  bring new  legislation  for  management of  derelict                                                               
10:07:36 AM                                                                                                                   
CHAIR STUTES, after  ascertaining that there was no  one else who                                                               
wished to testify, closed public testimony on HB 386.                                                                           
10:07:56 AM                                                                                                                   
CHAIR STUTES  reiterated that  HB 386 has  a further  referral to                                                               
the House Finance  Committee and that she would like  to move the                                                               
bill this day.  She pointed  out that there are four fiscal notes                                                               
attached  to  HB  386:     two  zero  notes,  one  Department  of                                                               
Administration  note that  has no  fiscal impact,  and one  fund-                                                               
capitalization note that reflects  the revenue generated from the                                                               
new fee structure.                                                                                                              
10:08:23 AM                                                                                                                   
REPRESENTATIVE TARR moved to report  HB 386 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no objection, HB 386 was moved from committee.                                                                      
10:08:44 AM                                                                                                                   
The committee took an at-ease from 10:08 a.m. to 10:11 a.m.                                                                     
       HB 231-CFEC: BD. SALARY; STAFF CLASSIFIED SERVICE                                                                    
10:11:48 AM                                                                                                                   
CHAIR STUTES announced that the  final order of business would be                                                               
CS FOR HOUSE  BILL NO. 231(FSH), "An Act  reducing the membership                                                               
of  the  Alaska  Commercial  Fisheries Entry  Commission  to  two                                                               
individuals; providing  that a  single commissioner  may exercise                                                               
all powers and duties of the  commission if there is a vacancy on                                                               
the   commission;   providing  for   commissioner   compensation;                                                               
relating to tie  votes of the commission;  assigning employees of                                                               
the commission  to the classified  service; and providing  for an                                                               
effective date."   [Before  the committee,  adopted as  a working                                                               
document on  2/27/18, was the proposed  committee substitute (CS)                                                               
for  HB 231,  Version  30-GH1053\D,  Bullard, 2/14/18,  ("Version                                                               
10:12:34 AM                                                                                                                   
CHAIR STUTES  moved to adopt Amendment  1, labeled 30-GH1053\D.1,                                                               
Bullard, 3/1/18, which read as follows:                                                                                         
     Page 1, line 2:                                                                                                            
          Delete "member of the commission"                                                                                   
          Insert "commissioner"                                                                                               
     Page 1, line 3, following "commission":                                                                                  
          Insert "if there is a vacancy on the commission"                                                                    
     Page 1, line 13:                                                                                                           
          Delete "A"                                                                                                            
          Insert "If there is a [A]"                                                                                        
          Delete "does not impair the authority of"                                                                             
         Insert ", [DOES NOT IMPAIR THE AUTHORITY OF]"                                                                      
     Page 1, line 14:                                                                                                           
          Delete "[QUORUM OF COMMISSIONERS] to"                                                                                 
          Insert "may [QUORUM OF COMMISSIONERS TO]"                                                                         
     Page 2, lines 3 - 4:                                                                                                       
          Delete "A single member [TWO MEMBERS] of the                                                                      
     commission constitutes [CONSTITUTE]"                                                                                   
          Insert "Unless there is a vacancy on the                                                                          
        commission, two [TWO] members of the commission                                                                     
REPRESENTATIVE TARR objected for purposes of discussion.                                                                        
10:13:00 AM                                                                                                                   
MATT GRUENING, Staff, Representative  Louise Stutes, Alaska State                                                               
Legislature, on  behalf of  Representative Stutes,  prime sponsor                                                               
of HB 231, came forward to  explain the change Amendment 1 brings                                                               
to Version  D of HB  231.  He directed  the committee to  page 1,                                                               
lines  12-14  of  Version  D,  and  stated  that  the  effect  of                                                               
replacing  the  term  "quorum   of  commissioners"  with  "single                                                               
commissioner" was  fully intended in  the drafting of  Version D.                                                               
However,  he   stated  it   was  not   intended  that   a  single                                                               
commissioner could  establish a quorum if  the other commissioner                                                               
was merely out  of the office for  a short time period,  as it is                                                               
indicated in  Version D,  on page 2,  lines 3 and  4.   He stated                                                               
that the intent  is to allow a single  commissioner to constitute                                                               
a quorum and exercise all powers  of the commission only if there                                                               
is a  vacancy on the  commission.  He  said it is  not considered                                                               
desirable for a  single commissioner to be able to  form a quorum                                                               
and  exercise   the  power  of   the  commission  if   the  other                                                               
commissioner is temporarily  out of the office due  to illness or                                                               
for some other common reason.                                                                                                   
10:14:30 AM                                                                                                                   
REPRESENTATIVE  NEUMAN   asked  if   there  would  still   be  an                                                               
opportunity to have a commissioner's decision reviewed.                                                                         
MR.  GRUENING responded  by explaining  that  a review  initially                                                               
begins with  a hearing  officer, but  it can  be elevated  to the                                                               
commissioner if the  person requesting the review  does not agree                                                               
with the hearing  officer's decision.  A further  review would be                                                               
directed to the  Alaska Superior Court.  He said  this is how the                                                               
process  currently  works  and this  structure  would  remain  in                                                               
place.   He added that  it is only in  the event of  a one-to-one                                                               
tie  that  the decision  of  the  hearing  officer would  be  the                                                               
decision of the commission.                                                                                                     
10:15:40 AM                                                                                                                   
REPRESENTATIVE  EASTMAN asked  if  there might  be a  grammatical                                                               
error in  the amended language, specifically,  with the insertion                                                               
of the word "may" on page 1, line 14 of Version D.                                                                              
10:17:21 AM                                                                                                                   
MR.  GRUENING said  that an  associated change  found on  page 1,                                                               
line 13 of  Version D, in conjunction with  the change identified                                                               
by  Representative  Eastman  on  line  14,  provides  for  proper                                                               
grammar in the amended bill.                                                                                                    
10:17:33 AM                                                                                                                   
CHAIR STUTES,  hearing no  further questions  regarding Amendment                                                               
1,  asked   Representative  Tarr  if  she   was  maintaining  her                                                               
REPRESENTATIVE TARR removed her objection.                                                                                      
CHAIR STUTES,  announced that there  being no  further objection,                                                               
Amendment  1 was  adopted.    She mentioned  that  HB  231 has  a                                                               
further referral to the House  Finance Committee.  She stated her                                                               
intent to move it from the  Fisheries Committee on this day.  She                                                               
noted that there are two letters  of support, one from the United                                                               
Fishermen  of  Alaska  and  another  from  the  Southeast  Alaska                                                               
Fishermen's Alliance.                                                                                                           
10:18:04 AM                                                                                                                   
REPRESENTATIVE  CHENAULT  referenced  the fiscal  note  from  the                                                               
Commercial  Fisheries Entry  Commission (CFEC)  and said  that it                                                               
shows  a savings  of  $124,400  but the  amount  should be  about                                                               
$83,628.  He  said he didn't know if the  committee would want to                                                               
change the fiscal  note or leave the change to  the House Finance                                                               
Committee to make.                                                                                                              
CHAIR STUTES pointed  to the attached fiscal note  showing a cost                                                               
savings of $125,500 annually, starting  in fiscal year 2019.  She                                                               
said the Office  of the Governor had not updated  the fiscal note                                                               
to Version  D because  the next  stop for the  bill is  the House                                                               
Finance Committee.   She added that the updated  fiscal note will                                                               
still  show a  cost savings,  but the  immediate savings  will be                                                               
less due to  the change adopted under Version  D, which maintains                                                               
the chairman position [one of  the two commissioners at CFEC,] at                                                               
a Range  27 pay  level.  She  noted that over  the long  term the                                                               
cost  savings will  be greater  because of  the reduction  in the                                                               
number of commissioners on the commission from three to two.                                                                    
10:20:16 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS pointed out  that the committee has                                                               
discussed in length  the matter of the number  of permit issuance                                                               
decisions per  year at CFEC, and  the fact that there  are only a                                                               
"handful"  of cases  remaining.   He  suggested  that CFEC  might                                                               
effectively be  "working itself out  of a  job," and it  would be                                                               
reasonable to consider the "notion  of a sunset [provision] after                                                               
three years  or however many  years" to account for  the settling                                                               
of  the  remaining  cases.     He  added  that  CFEC  might  then                                                               
transition  into  an  entity solely  for  ongoing  annual  permit                                                               
renewals and authorizations.  He  asked for CFEC's perspective on                                                               
this idea.                                                                                                                      
10:21:24 AM                                                                                                                   
FATE  PUTMAN, Chairman,  Commercial  Fisheries Entry  Commission,                                                               
Alaska Department  of Fish  and Game,  responded by  pointing out                                                               
that there are two mandates for CFEC.   He said that for the last                                                               
35-45 years, CFEC has been  involved with the issuance of initial                                                               
limited entry permits.   He added that some of  these permits are                                                               
still pending in  the Alaska Superior and Supreme Courts.   Of 26                                                               
cases  that were  at  the commission,  13  remain unresolved,  he                                                               
MR. PUTMAN  said the other  clear mandate for  CFEC is for  it to                                                               
conduct optimum number studies for  fisheries, and he offered his                                                               
understanding  that this  mandate  has not  been  addressed.   He                                                               
explained  that  optimum number  studies  occur  after a  limited                                                               
fishery  is established  and the  permits for  that fishery  have                                                               
been  issued.   He said  every  fisherman who  can demonstrate  a                                                               
history of participation in a fishery  has the right to apply for                                                               
a permit if that fishery becomes  limited to entry.  He said some                                                               
people appealed  [their denial  for a  permit], and  this created                                                               
the cases that CFEC has been  dealing with in the Alaska Superior                                                               
and Supreme  Courts.  He pointed  out that CFEC has  been working                                                               
on two of  these cases since he began his  position there.  Those                                                               
two  cases  went to  the  Alaska  Superior  Court but  have  been                                                               
remanded back to CFEC for reconsideration.                                                                                      
MR. PUTMAN  explained that  the number  of limited  entry permits                                                               
initially  issued  for  a  fishery  is based  on  the  number  of                                                               
fishermen  that participated  in  the fishery;  however, he  also                                                               
said that a  fishery may eventually receive  enough pressure that                                                               
it  must be  evaluated  to determine  the  appropriate number  of                                                               
permits it should  have for sustained yield management.   He said                                                               
that this evaluation  is referred to as an  optimum permit number                                                               
study, and  it includes examining  the history of the  fishery in                                                               
terms  of  past  management  action  by ADFG  and  the  Board  of                                                               
Fisheries.   He said the aware  of only two studies  performed by                                                               
CFEC,  and there  are 68  fisheries that  must be  examined.   He                                                               
summarized by  saying that there is  an ongoing need for  CFEC so                                                               
that  these types  of decisions  can be  made independently  from                                                               
ADFG and the Board of Fisheries.                                                                                                
10:23:45 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS  asked for information on  the last                                                               
two  optimum   number  studies,  specifically,  when   they  were                                                               
performed and the fisheries that were evaluated.                                                                                
MR. PUTMAN  said that his  information on this matter  comes from                                                               
the report  produced by  former Administrative  Services Director                                                               
Tom Lawson and from the legislative  audit performed on CFEC.  He                                                               
said  the new  commissioner  [appointee], Dale  Kelley, may  have                                                               
better information on  these fisheries.  He said that  one of the                                                               
two optimum number studies resulted  in a reduction in the number                                                               
of permits through a buyback program.   In a later optimum number                                                               
study,   questions  about   the  associated   buyback  eventually                                                               
resulted in the buyback being discontinued.                                                                                     
10:25:22 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  asked  what would  happen  if  an                                                               
optimum  number study  conducted by  CFEC indicates  a number  of                                                               
permits that is different from the current number.                                                                              
MR.  PUTMAN answered  the question  by saying  a buyback  program                                                               
would be initiated and that this  is clearly laid out in statute.                                                               
He gave the  example of where a study might  recommend 40 permits                                                               
for  an existing  60-permit  fishery.   In  this situation,  CFEC                                                               
would work toward  buying permits from fishermen  willing to sell                                                               
them.   He said the  cost of such a  study is paid  by fishermen.                                                               
The  initial funds  to purchase  the  permits would  come from  a                                                               
federal loan, but  the money to pay off the  loan would come from                                                               
10:26:20 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  asked  what would  happen  if  an                                                               
optimum number study recommends a  greater number of permits than                                                               
currently exist in the fishery.                                                                                                 
MR. PUTMAN said he assumes more  permits would be issued for that                                                               
fishery.   He  noted  that this  is not  the  direction for  most                                                               
fisheries, because, in his opinion,  all fisheries in Alaska will                                                               
become  limited to  entry.   He indicated  that fisheries  become                                                               
limited  as fishing  pressure builds  and biomass  declines.   He                                                               
said  this outcome  is  "just a  matter of  time."   However,  he                                                               
stated  there  are other  consequences  that  must be  considered                                                               
[when limiting  a fishery or restricting  permits], including the                                                               
constitutional  requirements for  sustained yield  management and                                                               
ensuring  that fisheries  are available  to everyone.   He  added                                                               
that  CFEC must  also consider  standards established  in statute                                                               
and in regulation.                                                                                                              
10:27:07 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS commented  that  he has  "caution"                                                               
over  the assumed  obligation to  conduct  future optimum  permit                                                               
studies, given that so few  studies have been conducted since the                                                               
first  limited entry  fisheries  were established  over 30  years                                                               
ago.   Further,  he expressed  concern  over the  prospect of  an                                                               
optimum number study indicating that  new permits might be issued                                                               
for a fishery that has been limited to entry for 40 years.                                                                      
10:27:59 AM                                                                                                                   
REPRESENTATIVE  NEUMAN asked  for additional  information on  the                                                               
lawsuits that  exist at CFEC  - specifically, how  the plaintiffs                                                               
are affected by the lengthy duration of their cases.                                                                            
10:28:42 AM                                                                                                                   
MR. PUTMAN responded by saying  that CFEC serves as a specialized                                                               
court.  He referred to it  as an appellate court for lower trials                                                               
that occur under  a hearing officer.  A hearing  officer makes an                                                               
initial  recommendation,  which  may  then  be  appealed  to  the                                                               
commissioners, who in turn make  a determination based on whether                                                               
the law  was followed.   He  stated that  decisions are  based on                                                               
facts  related to  a fisherman's  economic situation,  history of                                                               
participation in  the fishery, and whether  appropriate access to                                                               
the fishery was  provided.  The commissioners can  agree with the                                                               
decision,  remand   it  back  for   a  hearing,  or   take  other                                                               
appropriate actions.   The commissioner's  final decision  can be                                                               
appealed to the Alaska Superior and Supreme Courts.                                                                             
MR. PUTMAN pointed  out that while a decision  is being appealed,                                                               
CFEC is required  to offer an interim use permit  that allows the                                                               
fisherman to  continue to  fish in the  fishery for  which he/she                                                               
has been denied access.  He  added that this is a concern because                                                               
it creates  a situation  where the number  of permits  may exceed                                                               
the  optimum  recommended  level  for  that  fishery.    In  some                                                               
instances,  these interim  use permits  have been  active for  35                                                               
years.  He said these cases need  to be resolved so that they can                                                               
get back  to optimum number studies.   He stated that  there have                                                               
been  70  cases that  have  gone  to  the Alaska  Supreme  Court,                                                               
probably  hundreds to  the Alaska  Superior Court,  and thousands                                                               
that have  been dealt with  by CFEC.   Currently, there  are very                                                               
few  remaining  cases pertaining  to  an  initial issuance  of  a                                                               
limited entry  permit, and CFEC is  trying to resolve these.   He                                                               
noted that  appeals in  these cases are  expected because  of the                                                               
large sums of money at stake for the fishermen.                                                                                 
10:31:07 AM                                                                                                                   
DALE   KELLEY,    Commissioner,   Commercial    Fisheries   Entry                                                               
Commission,  Alaska  Department  of  Fish  and  Game,  introduced                                                               
herself  with the  statement, "As  much as  I know  about limited                                                               
entry, I  know I have a  great deal to learn."   She acknowledged                                                               
that  while providing  information  to the  committee, she  might                                                               
have  to get  back to  them  later to  correct her  record.   She                                                               
offered her  opinion that one  advantage of  CFEC is that  it has                                                               
always acted in support of  commercial fishing, conservation, and                                                               
"keeping people on  the water."  Regarding the  latter point, she                                                               
said  this is  evident  because  there are  people  still in  the                                                               
system contesting their denial of  a transferrable permit back in                                                               
the 1970s.   Ms. Kelley  indicated that  some have made  a career                                                               
out of keeping their cases  alive in the "quasi-judicial process"                                                               
at CFEC.   She pointed  out that some  have kept claims  alive by                                                               
choice  not because  of CFEC  "dragging them  along.   She stated                                                               
that an  advantage of the  CFEC system  is in its  claim process,                                                               
which consists  of several initial  layers prior to  bringing the                                                               
case  to the  courts.   She suggested  that working  with a  CFEC                                                               
attorney  is likely  much less  expensive.   She said  CFEC leans                                                               
toward  assisting fishermen  during this  process, attempting  to                                                               
find  any way  possible  for them  to keep  fishing  if they  are                                                               
worthy of a permit.                                                                                                             
10:32:42 AM                                                                                                                   
REPRESENTATIVE NEUMAN  offered his  understanding that  there are                                                               
approximately 1,200 permit applications  for Cook Inlet fisheries                                                               
each year,  but only about 750  permits are fished.   He said the                                                               
cost of these  permits is roughly $75  to $100.  He  asked if the                                                               
discrepancy  between the  number of  permit applications  and the                                                               
number of permits fished might  be a result of persons submitting                                                               
applications for the sole  purpose of demonstrating participation                                                               
in  a fishery.    He indicated  that  this might  be  a means  of                                                               
becoming  eligible for  a limited  entry permit  and an  eventual                                                               
buyback if the fishery is to become limited to entry.                                                                           
10:33:46 AM                                                                                                                   
MS. KELLEY said  that people do hang on to  permits and fish them                                                               
sporadically based  on the current  market.  She stated  that the                                                               
system is very  dynamic.  When optimum numbers for  a buyback are                                                               
considered, it is important not  to issue additional permits, but                                                               
also not  to make the  fishery too "super exclusive"  [by issuing                                                               
too few], because the fishing  industry is chronically ebbing and                                                               
flowing.  She  stated she has seen this in  many of the fisheries                                                               
in which  she has  participated.   She said,  "People hold  on to                                                               
them for a  lot of different reasons, but sometimes  they do come                                                               
and go from the fishery."                                                                                                       
10:34:33 AM                                                                                                                   
REPRESENTATIVE  EASTMAN  asked  how  the value  of  a  permit  is                                                               
determined during a  buyback program and what would  happen if no                                                               
one is interested at selling his/her permits at that price.                                                                     
10:34:59 AM                                                                                                                   
MR. PUTMAN said economists at CFEC  follow the sale of permits by                                                               
fishery to  determine their value,  and this information  is used                                                               
to calculate  an individual's  annual fee of  0.4 percent  of the                                                               
permit value.  He added that  this fee pays for all operations at                                                               
CFEC.   Regarding  Representative Eastman's  second question,  he                                                               
said  motivation for  a  fisherman to  participate  in a  buyback                                                               
program could  fall into many  categories; however,  most reasons                                                               
would be related to the value of  the permit.  As one example, he                                                               
cited  circumstances   where  [a  fishermen's]   valuable  upland                                                               
leases, through  the Department of  Natural Resources  (DNR), can                                                               
be  part of  a permit  buyback.   He acknowledged,  however, that                                                               
there doesn't  seem to be  any requirement for fishermen  to sell                                                               
their permits  back to  CFEC.   He said  the committee  should be                                                               
aware that the Alaska State  Legislature always retains the right                                                               
to claim  all permits without  compensation; however,  this would                                                               
not likely happen given the economics of such a situation.                                                                      
10:36:27 AM                                                                                                                   
MS. KELLEY pointed  out that fishermen vote on  whether they want                                                               
to implement  a buyback program;  it is not a  "voluntary seizure                                                               
because somebody  thinks it's a  great idea."   She spoke  to the                                                               
matter of optimal numbers and  the question of whether to further                                                               
limit  or  issue  additional permits,  pointing  out  that  every                                                               
permit is a potential job and  therefore a matter of economics as                                                               
well as resource conservation.                                                                                                  
10:37:11 AM                                                                                                                   
REPRESENTATIVE  EASTMAN  provided  a  hypothetical  situation  in                                                               
which CFEC might quickly resolve  some of the remaining "dozen or                                                               
so" outstanding  legal cases,  and he asked  if Mr.  Putman would                                                               
consider  shifting CFEC's  focus to  the work  of optimal  number                                                               
studies if that situation developed.                                                                                            
10:37:42 AM                                                                                                                   
MR. PUTMAN answered yes.  He  added that the 13 lawsuits referred                                                               
to at this hearing  have been pending for 35 to  45 years as they                                                               
are  the  more  complicated  cases.   He  said  they  can  affect                                                               
fisheries "all  the way up the  line," such that an  error on the                                                               
part of CFEC  could result in the Alaska Supreme  Court opening a                                                               
fishery  to all  other individuals  who were  initially denied  a                                                               
permit.  He  stated that Ms. Kelley and he  have a "very daunting                                                               
task" as they  must understand every case already  decided by the                                                               
courts before  investigating why the other  cases remain pending.                                                               
He  pointed out  that these  cases remain  despite the  many good                                                               
commissioners, lawyers,  and retired  judges that have  served at                                                               
CFEC.  He said he does not have  an answer to the question of how                                                               
long it might  take to resolve the remaining cases  and stated he                                                               
has been working at  CFEC for 12 weeks.  He  said there were many                                                               
other  issues  identified  in  the   legislative  audit  and  the                                                               
aforementioned Lawson report  that are being addressed.   He said                                                               
these items are intended to  streamline and modernize CFEC and to                                                               
make  it operate  more efficiently.   As  one example  of changes                                                               
being  considered,  he cited  new  computer  systems for  issuing                                                               
permits  and  possibly  allowing  for  multi-year  permits.    He                                                               
pointed out  that fishermen and  fish buyers are  currently using                                                               
the old credit card embossing  tool, which produces a carbon copy                                                               
that is sent to CFEC as a  record of a transaction.  He concluded                                                               
by  that a  lot updating  is  needed at  CFEC and  he stated  his                                                               
intent to work on this.                                                                                                         
10:39:44 AM                                                                                                                   
CHAIR STUTES asked if  a permit is passed on to  an heir when the                                                               
individual who made the original claim dies.                                                                                    
10:40:12 AM                                                                                                                   
MR.  PUTMAN said  there is  a case  currently pending  before the                                                               
Alaska Superior Court  in which the original plaintiff  died.  It                                                               
is now  the owners  of the original  plaintiff's estate  that are                                                               
appealing  the  case, and  they  can  continue  to fish  with  an                                                               
interim use permit  during the appeal process and  until the case                                                               
is  resolved.   CFEC  is  working toward  settling  two cases  by                                                               
offering a time-certain,  interim use permit, for roughly  3 to 5                                                               
years.   The  rights to  fish  would be  extinguished after  that                                                               
period  if  the individuals  agree  to  not continue  the  appeal                                                               
process beyond the Alaska Superior Court.                                                                                       
 10:41:25 AM                                                                                                                  
REPRESENTATIVE EASTMAN  noted CFEC's desire to  undertake optimum                                                               
number studies that  have not been conducted in the  past, and he                                                               
asked if  there is  sufficient funding  for this  or if  it might                                                               
have to ask the legislature for additional funding.                                                                             
10:41:47 AM                                                                                                                   
MR.  PUTMAN   said  he  recognizes  Alaska's   current  budgetary                                                               
constraints  and anticipates  CFEC will  be able  to conduct  its                                                               
studies within  its existing  budget.   He explained  that CFEC's                                                               
existing budget  was allocated to  fund a staff of  22 employees,                                                               
including  three   commissioners;  however,  the   current  staff                                                               
consists of 15 employees, including  two commissioners.  He noted                                                               
the staff consisted of 45 persons in  the past.  He said the loss                                                               
of  one commissioner  will,  as  Representative Chenault  pointed                                                               
out, provide  a cost savings.   He  said CFEC expects  to request                                                               
additional  hiring   to  fill  positions,  particularly   in  the                                                               
research division  that would conduct  optimum studies.   He said                                                               
that there are only two  employees within that research division,                                                               
a director  and one economist,  but additional staffing  could be                                                               
provided under the existing budget.                                                                                             
10:42:56 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS  asked  how many  years  it  would                                                               
require to resolve the remaining  legal cases if, hypothetically,                                                               
optimum number studies  are not undertaken "given  that's how the                                                               
commission  has operated  in these  last few  decades."   He also                                                               
asked  if it  seemed  reasonable  to establish  a  sunset on  the                                                               
commissioner  positions   if  optimum  number  studies   are  not                                                               
conducted.    He  clarified  that   such  a  sunset  would  allow                                                               
sufficient time for the remaining legal cases to be resolved.                                                                   
10:43:35 AM                                                                                                                   
MR.  PUTMAN  answered  that  those are  questions  asked  in  the                                                               
legislative audit and the report  by Tom Lawson on CFEC's overall                                                               
performance.  He said that  Mr. Lawson concluded that CFEC should                                                               
continue to  exist.  He stated  that one of the  reasons for this                                                               
recommendation  is  that  CFEC   has  autonomy  to  make  certain                                                               
difficult decisions,  and another  is because all  fisheries will                                                               
eventually be limited to entry.   He said that HB 231 is intended                                                               
to  streamline CFEC  for  this current  period  in which  fishery                                                               
closures  are  not   anticipated.    He  suggested   there  is  a                                                               
possibility CFEC  may need  to hire a  third commissioner  in the                                                               
future if  it becomes necessary to  close a fishery or  limit the                                                               
number of  permits, although this  is not  currently anticipated.                                                               
He  added  that  the  reduction  to  two  commissioners  and  the                                                               
potential for  operating under only  one of them is  intended for                                                               
the  current  and  foreseeable  future.     He  said  it  is  his                                                               
understanding that  CFEC is very important  to commercial fishing                                                               
because  it provides  an immediate  response to  individuals "not                                                               
having a  permit and things  of that nature"  as well as  for the                                                               
research it performs.                                                                                                           
10:44:52 AM                                                                                                                   
CHAIR  STUTES   added  that   it  is   important  to   have  CFEC                                                               
commissioners  making  these  types  of  decisions  as  they  are                                                               
impartial  and do  not have  vested interests  in the  fisheries.                                                               
She indicated that  CFEC, rather than ADFG, is  the better agency                                                               
for making such decisions.                                                                                                      
10:45:08 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS  stated he was not  suggesting that                                                               
CFEC "go  anywhere."   He said he  was specifically  referring to                                                               
the commissioners  when he asked if  they might not be  needed in                                                               
the future.   He added the  idea that the hearing  officers could                                                               
maintain objectivity  and impartiality  in the decisions  made at                                                               
CFEC.   He also pointed out  that the first part  of his question                                                               
pertained to the  number of years CFEC might  require to complete                                                               
the cases that remain unresolved.                                                                                               
10:45:29 AM                                                                                                                   
MR. PUTMAN stated that it is  his intent to resolve the remaining                                                               
13  cases by  the next  legislative  session.   He explained  the                                                               
general  concern with  these legal  cases  in the  manner it  was                                                               
explained to  him, with the  analogy of removing the  wrong piece                                                               
from a stack of items such  that the entire pile of items tumbles                                                               
over.   He said this  is something  that must be  considered when                                                               
resolving these cases.  He added  that the easiest way to resolve                                                               
them is without the use of  an interim use permit (IUP); however,                                                               
he pointed  out that  these fishermen  are in  their 70s  and may                                                               
want  to continue  the appeal  process to  be able  to fish  with                                                               
their families, and CFEC cannot prevent that from happening.                                                                    
10:46:12 AM                                                                                                                   
REPRESENTATIVE  EASTMAN asked  why  there  are new  commissioners                                                               
starting now, "from  scratch," to resolve these cases.   He asked                                                               
this with the understanding that  the administrations have likely                                                               
been  very interested  in seeing  the cases  settled and  because                                                               
CFEC  has had  so many  other lawyers,  judges and  commissioners                                                               
with legal experience working on the cases.                                                                                     
MR. PUTMAN  answered by first  reiterating that he  was appointed                                                               
to a  vacant seat on the  commission just 12 weeks  ago, when one                                                               
commissioner left in the middle of  his term.  His position is an                                                               
interim  seat lasting  three  years.   He  said  that the  former                                                               
chairman of  the commission, who  served for 37 years  retired on                                                               
March 1, and that four-year seat  is being filled by Dale Kelley.                                                               
He pointed  out that people who  worked at CFEC before  them also                                                               
struggled with  these cases.   He noted  that there were  26 open                                                               
cases  only  three  years  ago  but now  only  13  of  those  are                                                               
remaining.  He  reiterated that it is his intent  to complete the                                                               
remaining  cases before  the  next  legislative session,  through                                                               
either settlement or resolution.                                                                                                
10:48:00 AM                                                                                                                   
REPRESENTATIVE  TARR commented  that  the work  done  by CFEC  is                                                               
important.  She  said it is important to  have separation between                                                               
the department  [ADFG], the commission  [CFEC], and the  Board of                                                               
Fisheries  to  depoliticize  the  decision process  and  keep  it                                                               
science-based.   She pointed  out that as  recently as  this year                                                               
there has been talk of a  buyback program in the upper Cook Inlet                                                               
area because of  fishing pressure.  She said  this CFEC's buyback                                                               
function,  as   well  as  optimum   number  studies,   should  be                                                               
considered  because so  much  has  changed in  four  years.   She                                                               
stated that a broader concern,  related to what is happening with                                                               
the budget right now, is that  of attempts to grab any money that                                                               
is not allocated.  She said  this does not seem to be appropriate                                                               
for  this   organization,  as  funds  should   be  available  for                                                               
"something" that  might need to happen  in the future.   She said                                                               
her   concern  stems   from  this   occurring  with   the  Alaska                                                               
Performance  Scholarship, the  Power  Cost Equalization  program,                                                               
and any pot  of general fund money not otherwise  obligated.  She                                                               
stated she  appreciates the streamlining and  greater efficiency,                                                               
because "we can  always be doing things better."   However, given                                                               
the importance  of Alaska's  fisheries, she  said the  mission of                                                               
CFEC is significant and she wants to see that mission retained.                                                                 
10:49:40 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS said  that he  is excited  to hear                                                               
about the recent resolution of  two of the remaining legal cases.                                                               
He noted  that pending cases  dropped from 15  to 13 in  the last                                                               
two weeks.   He indicated that it  seems CFEC is now  "on a tear"                                                               
to resolve the  remaining 13 cases which have haunted  CFEC for a                                                               
long  time.   He added,  "Putting these  to bed  would be  a real                                                               
accomplishment."   He  went on  to  say that  his "one  question"                                                               
relates  to the  optimum permit  numbers study.   He  said he  is                                                               
returning to  this matter because  "it definitely opens  his eyes                                                               
and  ears"  to hear  that  conducting  such  studies might  be  a                                                               
renewed  focus  of CFEC.    He  asked  if,  aside from  the  very                                                               
infrequent  instances in  which there  is a  buyback and  a large                                                               
amount  of  stakeholder  buy-ins,  there are  current  plans  for                                                               
optimum number studies  on specific fisheries.   He clarified his                                                               
question by  asking how  mature the  thinking or  planning stages                                                               
might be for future studies of this nature.                                                                                     
10:50:44 AM                                                                                                                   
MR. PUTMAN said the reason he  spoke of optimum number studies is                                                               
because of  two mandates from  the legislature in 1975  when CFEC                                                               
was  established.   The first  mandate  is for  CFEC to  annually                                                               
recommend legislation that would  enable it to regulate fisheries                                                               
better, and  the second  mandate is for  CFEC to  conduct optimum                                                               
numbers studies.  He acknowledged  that while only "two or three"                                                               
studies  have been  performed, the  mandate for  CFEC to  conduct                                                               
these studies exists.   He said that CFEC has  been spending most                                                               
of  its time  on permit  applications  and adjudications,  rather                                                               
than on  optimum number studies.   He  reiterated that it  is the                                                               
legislative  mandate that  prompted  him to  raise  the issue  of                                                               
optimum number studies.  He  said there are no specific fisheries                                                               
scheduled  for  such  studies;   however,  he  pointed  out  that                                                               
pressures  on all  fisheries exist,  and a  determination of  the                                                               
optimum number of permits is  necessary when biomass in a fishery                                                               
is reduced.                                                                                                                     
10:51:45 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS asked for  Ms. Kelley's thoughts on                                                               
this matter.                                                                                                                    
MS. KELLEY said that she is  new at CFEC, having worked there for                                                               
only  a  few  days.   However,  she  absolutely  understands  the                                                               
mandate of limited  entry law and that it includes  the matter of                                                               
optimum numbers.   She  said that  "if we were  going to  go down                                                               
that  path,"  then it  is  important  to  her to  consider  which                                                               
fisheries seem  more likely [for  an optimum number study].   She                                                               
added that  some fisheries  appear to  be likely  candidates, but                                                               
final analysis sometimes  shows they are not.  She  said that she                                                               
is "walking  slow" regarding  optimum number  studies as  she has                                                               
asked  a lot  of questions  about them  over the  years, favoring                                                               
them  at  times and  not  favoring  them  at  other times.    She                                                               
acknowledged that  she would like  Mr. Putman's feedback  on this                                                               
matter.  She said she does  not want optimal number studies to be                                                               
conducted  randomly but  instead through  a thoughtful  selection                                                               
process,  because "some  fisheries  would  be great  candidates."                                                               
She  added that  the  reasons for  conducting  an optimal  number                                                               
study  might be  due  to  pressures on  a  fishery  and not  only                                                               
because of  a shortage  in the  resource.   She pointed  out that                                                               
salmon, as well as every other species, are dynamic.                                                                            
MS. KELLEY  recalled Representative Eastman's  question regarding                                                               
the suitability  of current funding  for optimal  numbers studies                                                               
and  responded  by  saying that  they  probably  have  sufficient                                                               
funding  at this  time.   However,  additional  funding would  be                                                               
needed if there  is to be greater focus placed  on those kinds of                                                               
studies.   She  reminded the  committee that  CFEC is  completely                                                               
self-funded by  the commercial fishing industry,  with no funding                                                               
from the general  fund.  She said CFEC gives  millions of dollars                                                               
to  ADFG as  a "pass-through"  which is  totally appropriate  for                                                               
management  of  our  resources.     She  also  pointed  out  that                                                               
capability is needed  to perform these tasks  to expectations and                                                               
to  "broaden  and  bring  into  the new  age  the  limited  entry                                                               
commission [CFEC]."   She reiterated that  optimum number studies                                                               
are within  the original law,  however she said she  believes the                                                               
legislature expected  implementation of the studies  would depend                                                               
on current circumstances as CFEC evolved.                                                                                       
10:54:13 AM                                                                                                                   
REPRESENTATIVE  NEUMAN pointed  out that  CFEC has  not conducted                                                               
many of  the optimum  number studies, despite  its mandate  to do                                                               
so.   He  asked why  this has  been the  case and  whether it  is                                                               
because they receive pressure from  fishermen who may not want to                                                               
cover the cost of the studies through higher fees.                                                                              
MS KELLEY  explained that  CFEC has been  busy with  70 lawsuits,                                                               
some  of which  she described  as "big  thorny issues"  that have                                                               
been in  addition to  adjudications and  general operation.   She                                                               
cited the example  of the Internal Revenue  Service (IRS) wanting                                                               
to  seize fishing  permits and  said  this was  a very  important                                                               
issue  for  fishermen.   She  said  it  is  her guess,  based  on                                                               
conversations over the years, that  CFEC has been busy with other                                                               
priorities that had  to be addressed immediately.   She indicated                                                               
that the only time they  produced optimum number studies was when                                                               
they were specifically  requested, as when the  court requested a                                                               
study for the Johns v. CFEC case.                                                                                             
10:56:25 AM                                                                                                                   
REPRESENTATIVE  EASTMAN asked  if there  is a  process where  the                                                               
commissioners  have final  say  over the  results  of an  optimum                                                               
numbers  study, such  that each  commissioner would  vote for  or                                                               
against the recommendation set forth in the staff report.                                                                       
10:57:09 AM                                                                                                                   
MR. PUTMAN said  that, going forward, he  and Commissioner Kelley                                                               
intend to work on consensus;  although, there could be times when                                                               
they have a different  opinion on an issue.  He  said that in any                                                               
situation where  there are  opposing points of  view, there  is a                                                               
compromise  point to  which the  parties  can negotiate.   As  an                                                               
example,  he said  that  Ms. Kelley  and he  might  settle on  28                                                               
permits  for a  fishery after  they  initially choose  26 and  32                                                               
permits, respectively.                                                                                                          
MR. PUTMAN  added that  CFEC brings  in approximately  $8 million                                                               
each year  through fees;  all fishermen  must purchase  a license                                                               
whether  they are  in  a limited  or  an open  fishery.   On  the                                                               
"backend" CFEC  charge 0.4 percent  of the value of  the landings                                                               
in an open fishery  or 0.4 percent of the value of  a permit in a                                                               
closed  fishery.   He  said  these are  the  fees  that bring  in                                                               
approximately  $8 million  each year.   He  said that  about one-                                                               
third is  used by CFEC and  two-thirds is used by  ADFG for field                                                               
studies to estimate salmon biomass and return rates.                                                                            
10:58:35 AM                                                                                                                   
MS. KELLEY said  that in recent years,  on average, approximately                                                               
$5 million  dollars of CFEC  fees have  gone to ADFG  for various                                                               
purposes.  She  reiterated that the research section  of CFEC has                                                               
only two staff  members, and therefore, it would be  a burden for                                                               
CFEC  to undertake  optimum number  studies  at this  time.   She                                                               
indicated that  CFEC would need  to know  in advance if  there is                                                               
intent to "go full bore" on optimum number studies.                                                                             
10:59:13 AM                                                                                                                   
REPRESENTATIVE TARR  moved to report CSHB  231, Version GH1053\D,                                                               
Bullard, 2/14/18,  out of committee, as  amended, with individual                                                               
recommendations and  the accompanying  fiscal notes that  will be                                                               
updated in the House Finance Committee.                                                                                         
10:59:36 AM                                                                                                                   
REPRESENTATIVE EASTMAN  objected for  purposes of  discussion and                                                               
commented that  it seemed HB 231  has two opposing aims:  one for                                                               
cost reduction  and the other  for increasing the work  load even                                                               
though there  are now fewer  commissioners on staff.   Rather, he                                                               
said that reducing the number  of commissioners to an even number                                                               
of two is what  he would do if he wanted  to slow the performance                                                               
at CFEC,  as opposed to trying  to resolve cases and  conduct new                                                               
optimum  number  studies.    He  offered  that  it  may  be  more                                                               
efficient in  the short  term to have  two commissioners,  but if                                                               
the  job is  to "get  the work  done...quickly and  efficiently",                                                               
then establishing  an even number  of commissioners would  not be                                                               
his  suggested approach.   He  added that  the legislature  might                                                               
want to  take another look at  what we are asking  the commission                                                               
to do.                                                                                                                          
11:00:58 AM                                                                                                                   
REPRESENTATIVE  KREISS-TOMKINS stated  that he  is excited  about                                                               
the legislation,  with its  suite of  reforms that  retain CFEC's                                                               
independence and save  money, which can hopefully  be returned to                                                               
the commercial  fishing industry  and provide  additional support                                                               
to ADFG's Division of Commercial Fisheries.                                                                                     
11:01:31 AM                                                                                                                   
CHAIR  STUTES  stated  that  she  echoed  Representative  Kreiss-                                                               
Tomkins comments  as she,  too, is excited  to see  CFEC becoming                                                               
streamlined, effective, and efficient.   She said she understands                                                               
there have been a lot of  hurdles and that some of those problems                                                               
were overcome  through the work  of previous commissioners.   She                                                               
added that  CFEC now  has "fresh  eyes taking  a fresh  look" and                                                               
that this is always helpful.                                                                                                    
11:01:59 AM                                                                                                                   
REPRESENTATIVE EASTMAN withdrew his objection.                                                                                  
CHAIR STUTES, hearing no further  objections, announced that CSHB
231(FSH) was reported from the committee.                                                                                       
11:02:57 AM                                                                                                                   
There being no  further business before the  committee, the House                                                               
Special Fisheries Committee meeting was adjourned at 11:03 a.m.                                                                 

Document Name Date/Time Subjects
CSHB 231 Amendment #1 3.1.18.pdf HFSH 3/6/2018 10:00:00 AM
HB 231
HB 386 Fiscal Note DEC 02.26.18.pdf HFSH 3/6/2018 10:00:00 AM
HB 386
HB 386 Fiscal Note Fund Cap DNR 02.28.18.pdf HFSH 3/6/2018 10:00:00 AM
HB 386
HB 386 Fiscal Note DNR 02.28.18.pdf HFSH 3/6/2018 10:00:00 AM
HB 386
HB 386 Fiscal Note DOA 03.01.18.pdf HFSH 3/6/2018 10:00:00 AM
HB 386
HB 231 Supporting Document SEAFA 03.04.18.pdf HFSH 3/6/2018 10:00:00 AM
HB 231
HB 231 Supporting Document UFA 03.04.18.pdf HFSH 3/6/2018 10:00:00 AM
HB 231