Legislature(2017 - 2018)GRUENBERG 120
02/16/2017 10:00 AM House FISHERIES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Commercial Fisheries Entry Commission (cfec) | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
February 16, 2017
10:07 a.m.
MEMBERS PRESENT
Representative Louise Stutes, Chair
Representative Zach Fansler
Representative Jonathan Kreiss-Tomkins
Representative Geran Tarr
Representative Mike Chenault
Representative David Eastman
MEMBERS ABSENT
Representative Mark Neuman
OTHER LEGISLATIVE MEMBERS PRESENT
Representative Dan Ortiz
COMMITTEE CALENDAR
PRESENTATION: COMMERCIAL FISHERIES ENTRY COMMISSION (CFEC)
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BEN BROWN, Commissioner
Commercial Fisheries Entry Commission (CFEC)
Alaska Department of Fish & Game (ADF&G)
Juneau, Alaska
POSITION STATEMENT: Provided an opening statement and responded
to questions, during the Commercial Fisheries Entry Commission
(CFEC) overview.
CRAIG FARRINGTON, Acting Project Leader
Research and Planning
Commercial Fisheries Entry Commission (CFEC)
Alaska Department of Fish & Game (ADF&G)
Juneau, Alaska
POSITION STATEMENT: Provided the Commercial Fisheries Entry
Commission (CFEC) overview.
ACTION NARRATIVE
10:07:27 AM
CHAIR LOUISE STUTES called the House Special Committee on
Fisheries meeting to order at 10:07 a.m. Representatives
Stutes, Tarr, Eastman, and Chenault were present at the call to
order. Representatives Fansler and Kreiss-Tomkins arrived as
the meeting was in progress.
^PRESENTATION: Commercial Fisheries Entry Commission (CFEC)
PRESENTATION: Commercial Fisheries Entry Commission (CFEC)
10:07:49 AM
CHAIR STUTES announced that the only order of business would be
a presentation by the Commercial Fisheries Entry Commission
(CFEC).
10:08:24 AM
BEN BROWN, Commissioner, directed attention to the committee
packet and the CFEC memorandum to Chair Stutes office, 2/15/17,
which synopsizes the brief history of the $3,000 statutory
permit fee, established by the 24th Alaska State Legislature,
2005. At that time it was a $300.00 ceiling in the statute,
which was not generating enough revenue to ensure that CFEC was
a self-sustaining agency, expected to be entirely supported by
designated funds generated by program receipts. Currently, the
agency generates funds in excess of operational requirements,
and the trend is to continue bringing in more revenue while
minimizing expenses. He noted that an additional memorandum was
also provided, which contains further information on the
entities/individuals that would be affected if the cap is
modified.
10:12:13 AM
CRAIG FARRINGTON, Acting Project Leader, Research and Planning,
Commercial Fisheries Entry Commission (CFEC), began the CFEC
presentation.
The committee took a brief at-ease at 10:14.
10:14:55 AM
MR. FARRINGTON directed attention to the committee packet, and
the handout labeled, "Alaska Commercial Fisheries Entry
Commission," [the home page of the commission's website], page
2, and pointed out the list of over 300 permit types available
for fishermen to access. The permits are organized by species
of fish or shellfish, further demarcated by the area of the
state, gear type, and finally by the size of the fishing vessel.
He said permits are issued to persons, not vessels, thus the
skipper is the holder of the permit.
10:17:00 AM
CHAIR STUTES confirmed that it must be the skipper, not just
anyone on the boat, who holds the permit.
MR. FARRINGTON concurred, and said crew members are required to
be licensed.
CHAIR STUTES stated her understanding that anyone on the boat
could hold the permit card; not necessarily the skipper.
COMMISSIONER BROWN interjected that it's a matter of
nomenclature, and whomever holds and presents the permit for
landing purposes is legally, considered the skipper.
10:18:09 AM
MR. FARRINGTON described the two broad categories of CFEC
permits. Category one: The limited entry permits apply to the
80 fisheries deemed necessary for limited participation, such as
the Bristol Bay salmon drift fishery. The limits CFEC imposes
are designed to improve conditions for a fishery. Access to a
fishery is handled via a one-time, point ranking system, based
on a fisherman's ability to demonstrate their historic
participation and economic dependence. The number of permits
granted will be less than the number of fisherman previously
engaged in a given fishery, with the intent to provide
opportunity to those who ranked high and eliminate others.
CHAIR STUTES asked whether, once limited, a fishery remains
limited indefinitely.
MR. FARRINGTON responded, yes.
10:19:48 AM
MR. FARRINGTON characterized category two: The interim-use
permits are for open-access fisheries, not limited, and
available to all comers on an annual basis, such as the halibut
fishery for longline vessels that are less than 60 feet. He
pointed out that the majority of permits issued are for limited
entry fisheries conducted in state waters.
10:20:36 AM
COMMISSIONER BROWN interjected that although the CFEC considers
halibut to be an open access fishery, the federal government
requires an Interim Use Permit (IUP), as per the International
Pacific Halibut Commission (IPHC) treaty.
10:21:19 AM
MR. FARRINGTON said that, of the total CFEC permits issued,
interim-use permits represent a minority, including those for
federal water fisheries; occurring outside of the three mile
limit. The latest reportable data, 2015, shows that limited
entry permits garnered $480 million, and interim-use permit
sales brought in $1.34 billion.
10:22:41 AM
MR. FARRINGTON provided a pie chart to illustrate the
distribution of the 1,729 estimated permits for issuance in
2017, showing that the most popular limited entry permit is for
participation in the Bristol Bay salmon drift fishery and
representing about 10 percent of the total. The previously
described halibut permit is the most popular interim-use permit,
also 10 percent of the total. A small percentage of the total
permits are distributed to the 15 permit types that are capped
by a fee ceiling of $3,000. He said permit fees are calculated
on four tenths of one percent of the market value of the limited
entry permit, or the same fraction of the average earnings made
with the permit. The exception are the 15 capped permits,
comprised of five groupings which include: King crab, fin fish;
miscellaneous fin fish, tanner crab, and weathervane scallop.
He reiterated that permits are for persons and not vessels. The
commonality for the 15 capped fishery types is the high value of
the permit, due in part to the high value of the bounty for
crab, and the sheer volume for the miscellaneous fin fish
categories.
10:27:06 AM
MR. FARRINGTON defined ex-vessel value as the dockside value of
the catch, and provided a pie chart illustrating the share of
the $1.82 billion ex-vessel earnings garnered by permit type:
$105 million for the Bristol Bay drift permits, $88 million for
halibut, and $1.03 billion by the five capped ceiling groups.
He said CFEC expects to issue approximately 485 of the permits
capped by the fee ceiling for the 2017 season, and pointed out
that these permits carry a fee of $3,000, which represents about
one tenth of one percent of a captain's earnings.
10:29:18 AM
MR. FARRINGTON reported that the majority of the CFEC permits
are issued to Alaskan residents; approximately 76 percent. The
ceiling capped permits are primarily held by non-residents; 83
percent versus 17 percent. Given the current fee ceiling, there
is an estimated $2.2 million, which could have been collected
for 2017, considered foregone revenue to the state. Thus, if
the foregone revenue were to be collected only 10 percent would
come from Alaska residents.
10:30:14 AM
CHAIR STUTES noted that the CFEC formula is complex and removing
the $3,000 cap will have effects that need to be understood.
She asked specifically about any impacts on vessels under 60
feet.
10:30:54 AM
COMMISSIONER BROWN explained that limited entry and interim-use
permits are issued to individual skippers; however, the skippers
may not benefit from the full ex-vessel value. Individuals may
purchase an interim-use permit for use on a vessel that they
own, or they may also use the same permit to fish on a vessel
owned by someone else. Only one permit is necessary to fish in
a given fishery. Thus, someone who owns a 58 foot vessel may
purchase a permit for use on that vessel. However, they could
also purchase an interim-use permit for the 125 foot and larger
vessel category and act as a relief skipper on a larger boat for
a quota entity or on a corporate vessel out of Seattle. The
anomaly occurs due to CFEC not being able to fully account for
the landing data. He said although the information known
includes the IUP holder, the vessels they fished, and the ex-
vessel values of each vessel, what is not known is whether the
individual paid the IUP fee and what percentage of the landing
revenues is retained by that individual. Thus, earnings for
individuals are averaged with the longer vessel class, but not
with the under 60 foot vessel class, and the result creates a
distortion of the statistics related to the IUP renewal, or
purchase, fees. A concern exists for removing the cap, as
fishermen purchasing IUP's who don't fully benefit from the
revenue earned, will pay a significantly larger interim-use fee.
He said:
If strictly rational, economical behavior were to
result, from lifting the fee cap, an individual would
only buy an IUP for the length of vessel that that
individual owned and was planning to fish on, and
wouldn't have the option of being a free agent and
being a relief skipper on a much larger boat.
CHAIR STUTES surmised that there is no disincentive for the
owner/operator of a 58 foot vessel to not purchase the $3,000
permit; the same license fee paid by vessels in excess of 125
feet.
COMMISSIONER BROWN concurred, and offered the analogy of someone
purchasing firepower. He said:
You can either have a handgun, a .22, a shotgun, or a
cannon. Right now, someone who only needs a handgun
can pay the same amount and get a cannon, because of
the $3,000 fee cap. And then that individual can go
out ... to the range with his or her handgun when they
want, ... but also has the option to go and fire that
cannon off and catch a whole bunch more fish.
COMMISSIONER BROWN explained that the CFEC doesn't know who
keeps the revenues garnered from the larger vessel, in these
situations, and it would be helpful for the agency to gather
specific data on the interim-use permit practices, to determine
if the fees are fair and reasonable. Evaluating the vessel
length categorizations in relation to fees prior to removal of
the cap, would help to avoid shocking the system and the fleet.
He concurred that there is no disincentive for not purchasing
the interim-use permit, because of the cap.
CHAIR STUTES surmised:
If we just took the cap off, people that are buying up
on their licenses now could conceivably decrease their
expense by buying the appropriate license under the
current categorization, and the 350 footers going to
get nailed.
COMMISSIONER BROWN explained that there is a three year process
of averaging the gross earnings, and if the cap were eliminated
today, the effects would not be immediately apparent. He said
CFEC strongly recommends that any change be aligned with the
calendar year versus the fiscal year. Thus, if in January 2018,
the fee cap were removed, fishermen would need to make personal
determinations regarding what permit to purchase. By purchasing
the permit for the under 60 foot vessel, the earnings for the
season would no longer be averaged in with the larger vessel
category. Over a three year period the market would correct
itself, he predicted.
10:37:52 AM
CHAIR STUTES pondered whether, in the anticipation of removing
the cap, it would be fair and reasonable to have minimal
increments of an increase to the current cap, over a three year
period possibly. At the end of the three year period a new
categorization could be introduced that would reflect a fair and
equitable system.
COMMISSIONER BROWN responded that the means for altering the
situation represents a policy call for the legislature, and
offered that the $3,000 cap was established through a phase in
process. He acknowledged that any change is difficult but a
compromise may be struck with the appropriate approach.
10:39:28 AM
REPRESENTATIVE FANSLER expressed concern for barriers faced by
new fishermen trying to enter the industry. He asked about the
constitutionality for allowing a lower fee/license percentage
for first time fishermen as an incentive to encourage new
skippers.
COMMISSIONER BROWN said the equal protection law, of the Alaska
constitution is strictly upheld, and no provision exists in the
limited entry act to allow those types of incentives. The
renewal fees for open-access fisheries could be set at a more
approachable level, he suggested. The CFEC makes no attempts to
manipulate prices of permits being transferred between
fishermen, although oversight of the transfer is held by the
agency. The CFEC continues to work with legislators and
regional committees to enhance the ability of Alaskans seeking
to join the fleet, he noted. Many approaches can, and are,
being considered legislatively, to address the greying of the
fleet; however, inclusion of an age discriminatory exception
would be challenged under the equal protection clause.
10:42:47 AM
REPRESENTATIVE CHENAULT directed attention to the committee
handout, page 6, to note that 485 permits fall under the capped
fee ceiling, which should garner about $1.455 million in fees.
He said the capped permits earned fishermen $1.03 billion in
2015, and asked what the projection is for the vessel take
versus the income to the state, mentioning that it represents
the use of a state resource.
COMMISSIONER BROWN responded that the figures are gross earnings
and the CFEC has no means to determine how the funds are
disbursed. Further data would be helpful and the permit
application could be changed to include questions that would
track disbursal of the earnings.
REPRESENTATIVE CHENAULT expressed an interest in knowing what
the fishing industry pays to the state; the net receipts. He
said it is important to not damage the fishing industry;
however, there needs to be assurance that the state is receiving
a fair share of the profits garnered from the resource.
CHAIR STUTES added that figures are available and offered to
provide further information to members.
COMMISSIONER BROWN responded that the CFEC fees are not above
scrutiny, but more information should be gathered prior to
removal of the fee cap.
10:48:24 AM
REPRESENTATIVE KREISS-TOMKINS asked about the home ports for the
vessels that participate in the fisheries under the capped fee
permits; the vessels that constitute the majority of the ex-
vessel value of the Alaskan catch.
COMMISSIONER BROWN said the permits are not vessel based, but,
when the catch is landed, CFEC is able to collect information
for who holds the permit, the name of the vessel, and the home
port can then be ascertained. Although that information is
available, it doesn't answer the question of where the money is
going, he pointed out, and offered to provide further
information. He directed attention to the committee handout,
final page, and the resident, non-resident comparison for
removing the fee cap. He noted that the 485 permits, estimated
for issuance in 2017, will be held by Alaska residents, although
83 do not list an Alaskan address. Not having an Alaskan
address doesn't mean that the skipper doesn't work for a
community quota entity. Thus, a large share of the earnings
that a Seattle based person realizes may end up in a CQE in
Western Alaska. He agreed that more questions should be asked
to get a better understanding of how the fishery revenues are
being disbursed.
10:51:06 AM
REPRESENTATIVE TARR asked if a legislative action is needed to
empower the CFEC to alter the permit application information
that is being collected.
COMMISSIONER BROWN said the statutory authorization already
exists, and the 2017 interim-use permits have already been
issued by CFEC. The questions can be inserted into the 2018
permit applications, he suggested.
10:52:29 AM
REPRESENTATIVE TARR questioned the time-line involved and when
the new data analysis would be available for reporting to the
legislature.
COMMISSIONER BROWN said the 2018 application would be targeted
for revision and in 2019 the report could be provided. Phasing
in a change in the fee cap could also begin in 2018, he
suggested.
10:54:08 AM
REPRESENTATIVE EASTMAN noted that the greying of the fleet is a
continuing concern that requires a response, and asked whether
CFEC has considered an approach.
COMMISSIONER BROWN said solving the greying of the fleet issue
can best be approached by encouraging young people to see
fishing as a great industry to enter into. The state fishing
loan program a valuable means to bolster the industry, he
stressed, and pointed out that only two loan programs can use
CFEC permits as collateral. The CFEC dialogs with fishing
organizations to approach young people and discuss fishing as a
career opportunity and the United Fishermen's Association (UFA)
is certainly active in the effort.
10:58:13 AM
CHAIR STUTES thanked the presenters and announced the next
meeting.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 10:58
a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CFEC Permit Fee Cap H FSH 2 16.pdf |
HFSH 2/16/2017 10:00:00 AM |
House Fisheries CFEC Cap |
| CFEC Memo Statutory Fee Ceiling Feb 2017.pdf |
HFSH 2/16/2017 10:00:00 AM |
House Fisheries CFEC Cap |
| CFEC Memo Maximum Fee Aug 2016.pdf |
HFSH 2/16/2017 10:00:00 AM |
House Fisheries CFEC Cap |