Legislature(2017 - 2018)GRUENBERG 120
01/25/2018 11:00 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB188 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 188 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
January 25, 2018
11:08 a.m.
MEMBERS PRESENT
Representative Louise Stutes, Chair
Representative Jonathan Kreiss-Tomkins
Representative Mike Chenault
Representative David Eastman
Representative Mark Neuman
MEMBERS ABSENT
Representative Zach Fansler
Representative Geran Tarr
COMMITTEE CALENDAR
HOUSE BILL NO. 188
"An Act relating to commercial fishing entry permits;
establishing regional fisheries trusts and fisheries trust
regions; relating to commercial fishing entry permits held and
leased by a regional fisheries trust; relating to the duties of
the Alaska Commercial Fisheries Entry Commission and the
Department of Commerce, Community, and Economic Development; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 188
SHORT TITLE: COMM. FISH. ENTRY PERMITS; LOANS; TRUSTS
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS
03/20/17 (H) READ THE FIRST TIME - REFERRALS
03/20/17 (H) FSH, L&C
04/13/17 (H) FSH AT 10:00 AM GRUENBERG 120
04/13/17 (H) -- MEETING CANCELED --
04/20/17 (H) FSH AT 10:00 AM GRUENBERG 120
04/20/17 (H) -- MEETING CANCELED --
04/25/17 (H) FSH AT 10:00 AM GRUENBERG 120
04/25/17 (H) Heard & Held
04/25/17 (H) MINUTE(FSH)
01/25/18 (H) FSH AT 11:00 AM GRUENBERG 120
WITNESS REGISTER
REPRESENTATIVE JONATHAN KREISS-TOMKINS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HB 188 and
answered questions.
REID MAGDANZ, Staff
Representative Kreiss-Tomkins
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions and presented an
overview of the major changes incorporated into Version M of HB
188, on behalf of Representative Kreiss-Tomkins, prime sponsor.
ALVIN OSTERBACK, Mayor
Aleutians East Borough
Sand Point, Alaska
POSITION STATEMENT: Provided testimony on House Bill 188.
ACTION NARRATIVE
11:08:11 AM
CHAIR LOUISE STUTES called the House Special Committee on
Fisheries meeting to order at 11:08 a.m. Representatives
Neuman, Kreiss-Tomkins, Chenault, and Stutes were present at the
call to order. Representative Eastman arrived as the meeting
was in progress.
HB 188-COMM. FISH. ENTRY PERMITS; LOANS; TRUSTS
11:09:20 AM
CHAIR STUTES announced that the only order of business would be
HOUSE BILL NO. 188, "An Act relating to commercial fishing entry
permits; establishing regional fisheries trusts and fisheries
trust regions; relating to commercial fishing entry permits held
and leased by a regional fisheries trust; relating to the duties
of the Alaska Commercial Fisheries Entry Commission and the
Department of Commerce, Community, and Economic Development; and
providing for an effective date."
CHAIR STUTES stated that the committee had heard HB 188 once
last year and that a committee substitute is available today.
REPRESENTATIVE CHENAULT moved to adopt the proposed committee
substitute (CS) for HB 188, Version 30-LS0389\M, Bullard,
1/22/18, as a working document. There being no objection,
Version M was before the committee.
CHAIR STUTES stated that it was not her intention to move
Version M from committee that day because new fiscal notes were
being developed. She said that she would distribute the fiscal
notes to the committee when they become available.
11:11:01 AM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, Alaska State
Legislature, said that he would provide a few initial comments
as prime sponsor of HB 188, prior to his staff member's
presentation, which will include the significant changes
incorporated into Version M. He began by stating that fisheries
trusts are a policy tool developed by working with stakeholders
around Alaska. He said they would be an "elective tool in the
tool box" in that they would not be mandatory but an "opt-in"
tool that regions can use to help new and young fishermen enter
into commercial fishing. He stated that HB 188 would maximize
the benefit of the fishing resource to Alaska communities and
try to create a driver for economic development, particularly in
coastal Alaska where there are limited economic opportunities.
He said that over the past year a lot of work has been
accomplished with stakeholders, responding to their feedback and
ultimately making improvements to the bill. He said that a lot
of these changes will be presented in the overview today.
11:12:21 AM
REID MAGDANZ, Staff, Representative Jonathan Kreiss-Tomkins,
Alaska State Legislature, on behalf of Representative Kreiss-
Tomkins, prime sponsor of HB 188, began his presentation with a
slide titled "New year, New bill." The slide explained that
much work had been done on the bill over the last nine months,
with major revisions in response to the letters received after
many conversations with fishermen and other groups interested in
this idea. Because of the many changes to the bill, Mr. Magdanz
said he wanted to first provide the committee with another
review of fishery trusts and how they function. He stated he
would introduce the major changes to the bill following his
review.
11:13:50 AM
MR. MAGDANZ presented the next slide, which was a "Review" slide
asking the question "What do fisheries trusts look like?" He
explained that the trusts are regional entities and are "opt-in
and self-determined." He pointed out that the Department of
Commerce, Community, and Economic Development (DCCED) in
consultation with the Alaska Department of Fish & Game (ADF&G),
will divide the state into regions based on the Commercial
Fishery Entry Commission's (CFEC's) existing salmon
administrative areas, and these administrative areas are shown
on the next slide. He then explained the "opt-in" and "self-
determined" aspects of fisheries trusts. He stated that HB 188
would not create fisheries trusts automatically, and that they
can only exist in a region if two-thirds of the incorporated
municipalities in that region petition the DCCED to establish a
trust. He said that fisheries trusts are community and
regionally governed, such that the board of each trust is made
up of a representative from each municipality within each
defined region. He stated that there would be "limited
authorization," meaning that no more than three trusts can be
established in the state without further legislative action. To
make that point clear, he said that if Bristol Bay, the Aleut
Region, and Kodiak were to establish trusts, then no other
trusts could be established without further legislation. He
posed the question, "What do fisheries trusts do?" and answered
that they temporarily transfer permits to qualified fishermen
"as stepping stones" that provide access into commercial
fisheries. He said a transfer might occur for up to but no
longer than six years. As a final point, he said that a
fisheries trust can only hold up to 2.5 percent of the permits
in any given fishery.
REPRESENTATIVE KREISS-TOMKINS added that the 2.5 percent cap was
based on the same rationale used in pilot programs where a
limited start is recommended to see how a new program will
perform in the real world. He said that this will provide an
opportunity to learn from what works and does not work, make
changes as needed, and only then allow additional trusts to
exist. He restated an earlier point that additional fisheries
trusts could only occur under further legislation.
11:16:35 AM
REPRESENTATIVE NEUMAN referenced the regional three-permit limit
and said he liked this concept, particularly because of the
nonprofit type status. He asked if the permits would be
transferrable from region to region.
11:17:16 AM
MR. MAGDANZ answered that no more than one fisheries trust would
be allowed to hold permits in any given fishery. In the example
of Bristol Bay salmon drift net and set net fisheries, the only
trust that could acquire permits in those fisheries would be the
Bristol Bay fisheries trust. He said there would be no transfer
of permits between regions or trusts.
REPRESENTATIVE NEUMAN clarified that his question was whether
permits were transferable from one region to another, and he
offered his understanding that the answer is no.
MR. MAGDANZ affirmed that Representative Neuman was correct.
11:18:13 AM
MR. MAGDANZ continued his presentation with a second "Review"
slide that asked, "Why should we care about fisheries trusts?"
He answered this question by addressing each of the five
bulleted points on the slide. The first bullet on the slide
stated that fisheries are the economic engine of coastal Alaska
and, in many communities, they are the primary if not the only
economic driver. The second bullet states that access to Alaska
fisheries has become "highly capital intensive." When limited
entry was first put in place in the mid-1970s, it was much more
feasible to buy a low-cost permit, acquire a "beat-up boat," and
go fishing. Today this is not the case, as becoming a captain
on one's own boat requires hundreds of thousands of dollars.
The third bullet states that access to commercial fisheries has
decreased in much of Alaska, especially rural Alaska, since
1975. It was well documented by the CFEC as well as
organizations like the Institute of Social and Economic Research
(ISER) that over the last 40 years certain communities in Alaska
have lost some of their opportunities to enter into fisheries.
The fourth bullet on the slide indicates that fishermen with
limited access to capital are increasingly "left on shore"
because of capital-related barriers. He said that fishermen who
received initial permits were successful, but those permits did
not always stay in the communities when those fishermen retired.
The final bullet on the slide relates to the negative impact
that barriers to entry have had on rural coastal communities.
Mr. Magdanz stated that is a result of the combined effect of
the two increasing trends he mentioned: higher cost of entry
and loss of permits within communities.
11:20:21 AM
MR. MAGDANZ presented a third "Review" slide that asked two
questions. The first question was, "Will this allow other
entities or individuals the ability to temporarily transfer
permits?" He said the answer to this question is a definitive
no. He reiterated that HB 188 would give fisheries trusts, and
only fisheries trusts, the ability to temporarily transfer
permits. He said that it would not interfere with existing
emergency transfers, and that no other entities would be allowed
to have this temporary transfer arrangement.
MR. MAGDANZ said the second question on the third and final
"Review" slide asked, "Where will the money come from?" He
answered this question by first saying that HB 188 would not
provide any funding for fisheries trusts; it merely would
authorize their establishment. He said that a group of people
in a region wanting to establish a trust would have to raise
money for the purchase of permits on the open market.
11:21:14 AM
REPRESENTATIVE KREISS-TOMKINS added that the reasoning behind
not providing money to the trusts as a "leg-up" was based on the
idea that people in the communities and regions would need to
demonstrate the ability to "bootstrap themselves" for this to be
successful. He said that HB 188 would create the mechanism and
the tool, but it would be up to the communities to use this tool
in a way that it would work. He said that conversations with
people suggest that there is substantial interest in pursuing
this in some regions. He stated that he believes people would
be successful in "bootstrapping" themselves and turning their
trusts into a tool that helps generate economic opportunity
within their regions. He reiterated that the idea is to provide
the tool and nothing more.
MR. MAGDANZ said that his presentation would now move on to
changes that were made to HB 188 since it was last heard by the
committee. He indicated that he would start with the major
changes and then move to some of the minor but still meaningful
changes.
MR. MAGDANZ said that the most important change present in
Version M of the bill is the restructuring of the relationship
between a fisheries trust and a fisherman who received a permit
from a trust. He said the previous version of the bill
structured this arrangement as a lease and Version M structures
it as a temporary transfer. He said this was important because
Version M is more in line with the way CFEC currently manages
commercial fishery permits. He said that temporary transfers
already exist in the form of temporary emergency transfers;
therefore, this change ensures that regional fisheries trusts
would merely be doing what is already allowed under the Limited
Entry Act. He added that while the fisheries trust scenario
would be slightly different, the process would follow precedent
and existing CFEC procedure. He said that an important element
of this change is the provision that CFEC will review temporary
transfers between trusts and fishermen and have the power to
approve or deny them, as it currently does for emergency and
permanent transfers. He summarized this important change by
reading the last line on the slide as follows: "These changes
harmonize the bill with existing CFEC practices and ensure the
legal status of permits does not change."
11:23:50 AM
MR. MAGDANZ continued to the next slide, titled "A little bit
more on temporary transfers." The slide pertains to two issues:
the time limit of a temporary transfer and the possibility of a
transfer being revoked. He said that he had already mentioned
the six-year limit for the temporary permit transfers, and he
added that many trusts would likely transfer them for two-four
years. Regarding the question of whether a transfer can be
revoked, he said that this could occur only in situations where
a transferee violates fishing regulations, fails to make
payments as agreed upon with the fisheries trust, or falsifies
information to the CFEC or other regulatory bodies. He said
that other than these circumstances, a temporary transferee
would hold his/her permit and have the same rights and
privileges to fish as any other permit holder.
11:24:53 AM
REPRESENTATIVE NEUMAN drew attention to statements made by Mr.
Magdanz regarding the current difficulty in obtaining a permit
and the reasons a temporary permit acquired through a trust
could be revoked. He said that it seemed to him that it would
be logical for the commissioner to have some authority for
unique circumstances that might arise. He said that it's not
possible to think of everything in advance, that emergencies can
occur, and that conditions such as the ocean environment can
change.
11:25:46 AM
MR. MAGDANZ offered to speak with Representative Neuman about
that matter. He added that under the proposed legislation, a
temporary transferee could emergency transfer a permit in the
same way any other permit holder currently can if injured or
called into military service.
11:26:14 AM
CHAIR STUTES asked whether [under the proposed legislation] a
temporary transferee could emergency transfer his/her permit to
another individual or if the permit would have to go back to the
permit bank.
MR. MAGDANZ responded to the Representative Stutes saying that a
temporary transferee does not have the power to permanently
transfer a permit.
CHAIR STUTES clarified that she was not referring to permanently
transferring a permit but to a situation within the maximum
transfer limit of six years. She asked if an individual with a
permit from the permit bank, who is suddenly called to military
duty, would have the opportunity to transfer his/her permit to
another fishing individual or if the permit would return to the
permit bank.
MR. MAGDANZ answered by stating that the permit holder could
transfer his/her permit to another individual. He noted that
this provision was still being developed in consultation with
CFEC. He elaborated that in the example of someone called into
military service after fishing a transfer permit for two of its
three years, the permit could be transferred to another
individual who could fish the permit for the permit's one
remaining year. He said the transfer described in this scenario
would have to be approved by CFEC.
11:27:48 AM
REPRESENTATIVE NEUMAN said that he likes the fact that CFEC
would have to approve the transfer again because the original
transferee might not know the financial background of the new
permit holder.
MR. MAGDANZ presented the next slide, titled "The other big one:
Leasing Criteria." He said the other big change to HB 188
pertains to the constitutionality of a provision present in the
original version a provision that would have restricted
transfers to Alaska residents. He said lawyers disagreed on
whether that restriction should be allowed to remain in the
bill. It was decided to choose the most conservative legal
option, which was removal of the residency requirement. This
decision eliminates any federal constitutional challenges that
could be brought against HB 188.
11:29:08 AM
CHAIR STUTES asked who would be eligible for these permits and
if there would be any requirements for prior fishing experience.
She asked if, for example, someone could arrive from the Midwest
and request a permit.
MR. MAGDANZ responded that Sec. 16.44.080, as proposed under
Version M, on page 26, line 12, would require that a permittee
must be able to participate actively in the fishery. He said
that this is the same standard that CFEC uses to judge if
someone is eligible to receive a transferred permit. He added
that this requirement would address the scenario described by
Representative Stutes, of someone arriving from the Midwest with
no gear, no boat, and no fishing experience.
CHAIR STUTES suggested that Mr. Magdanz was stating that an
eligible permittee must simply be an able-bodied human being.
MR. MAGDANZ said he thinks there would be some discretion from
the agencies and the fisheries trust in their determination of
what being able to participate in the fishery means. He said he
cannot say how CFEC currently interprets that language. He also
said there is intent to add a section that would allow a
fisheries trust to place additional qualifications on temporary
transferees.
CHAIR STUTES asked for confirmation that the current language
would allow anyone to be eligible for a transfer permit
regardless of whether they have participated in any type of
fishery.
11:31:07 AM
REPRESENTATIVE KREISS-TOMKINS said that the Chair Stutes'
assessment was correct; however, it is important to
differentiate eligibility from the likelihood of receiving a
permit. He said anyone with no fishing experience could apply
for a loan from the Commercial Fishery Revolving Loan Fund but
the likelihood of them receiving a loan was almost nil. He
added that it would be "financially masochistic" for someone to
acquire a fisheries trust permit, "flail around" in the fishery
for a season, and still be required to pay the same fees as
someone making an emergency medical permit transfer. He said
that this would not be in that person's best interest. He also
said that the preference criteria, specifically the "initial
allocation criteria" under the Limited Entry Act, identified in
the second portion of the current slide, was oriented around
people who are from coastal communities and who depend on
fishing for a livelihood. He indicated that given these
elements of the program, the person from Iowa was "going to
strike out."
CHAIR STUTES said she appreciated that explanation and that she
was simply trying to determine the parameters for eligibility as
they currently exist.
11:32:31 AM
REPRESENTATIVE CHENAULT stated that his concern was that a 2.5
percent cap on the number of permits may not represent very many
permits in some areas. As an example, he said he didn't know
the total number of permits available in Bristol Bay, but
guessed that it was rather large. He didn't know if the 2.5
percent was going to represent 25, 50, or 100 permits being
available. He said he realized that the trust was being set up
to help local communities, increase the growth of the fleet, and
encourage younger people to be involved in fisheries. However,
he wanted to point out that while HB 188 addresses concerns
about the high cost of entry into fisheries, there are those who
are not concerned about the high costs and have money to
purchase a boat or permit or both. With that in mind, he asked
if there was any disadvantage in structuring this program so
nonresidents would come here to use the state's resources and
see a return on their efforts. He said he was unsure if this
was a question or a statement, but that it was something he was
looking at regarding HB 188. He said he is aware that there is
a lot of interest in figuring how to help rural Alaska residents
get into fishing, and he has the same concerns for the Cook
Inlet area where the fleet is aging and fewer young people are
participating in the fisheries. He stated that he does not know
how to help these people and if HB 188 is the correct approach.
He said he has not spoken with too many fishermen about this but
wanted more comments or thoughts about the issue.
11:35:02 AM
MR. MAGDANZ drew attention back to the slide titled "The other
big one: Leasing Criteria" and said he would explain the second
bulleted point, which partially addresses some of the comments
raised by Representative Chenault. He began by reiterating that
legal concerns restrict the availability of fisheries trusts to
only Alaska residents. He supported that statement by pointing
out that legal provisions, particularly in the Alaska
Constitution, make it very clear that the state cannot give
preference to people based directly on their place of residence;
it cannot let people from some communities access a resource
while restricting people from other communities. He said that
this is well established in state law.
MR. MAGDANZ said that when the Alaska residency restriction was
removed from HB 188, constitutionality was further strengthened
by reworking the bill's bid preference criteria. These proposed
changes are found in Sec. 16.44.050(c), on page 24 of Version M.
He directed the committee's attention to a bulleted list on the
slide, which identifies the new bid preference criteria that has
been incorporated into Version M. He stated that these were
based on court- and agency-vetted standards that other state
programs use or have used in resource management cases. These
criteria would allow fisheries trusts to prioritize the granting
of permits to people who have past ties to a fishery, few other
economic opportunities, and a record of participation in fishery
management or with fishery organizations such as the United
Fisherman of Alaska, Fish and Game Advisory Committees, and the
Board of Fisheries. He reiterated that these preference
criteria have been used in the past, in programs such as the
Limited Entry Act, when permits were first allocated, and in
ADF&G's Tier II subsistence hunting permits. He stated that
these criteria are utilized to make sure the competitive bidding
process provides a fair playing field that would assist people
who may have good access to capital as well as those who may
not.
11:38:02 AM
REPRESENTATIVE KREISS-TOMKINS told Representative Chenault that
the comments he offered were well received. He opined that the
two bulleted points on the slide identify elements of the bill
that will ideally align the direction of the program to provide
commercial fishing opportunity for the people that both he and
Representative Chenault know and want to see have that
opportunity - not the "people scooping up the resources from
elsewhere." He said that he is optimistic that this direction
can be created, even while operating within constitutional
parameters.
REPRESENTATIVE KREISS-TOMKINS said that conversations were held
with many young fishermen around Alaska over the last three
years while the bill was being developed, and that many of them
are deck-handing because they love commercial fishing and they
love hard work. He then restated that there are high capital
costs of entering into a commercial fishery. He added that the
Commercial Fishing Revolving Loan Fund has not kept up with the
increasing capital cost of fishing, despite recent efforts by
the legislature. He stated that the fisheries trust program
will create a needed stepping stone, because it is a "huge jump"
for someone who is currently a deckhand to become a skipper. He
added that it is an "all in"; it is a high capital fishery; and
it is a "deep, deep end that you are diving into." Based on the
conversations with fishermen, he said that it would be a huge
benefit to acquire a fisheries trust permit for two to three
years, so you could run your own boat, make some mistakes, learn
from your mistakes, and save some money in the process. He said
that, to some extent, this is the "tool" young fishermen are
using when they access emergency medical transfer permits, even
though those permits were not designed for that purpose. He
stated that accessing permits through a fisheries trust would be
a more transparent means to the same end. He analogized this
situation to that of purchasing other large assets. As an
example, he said that most people don't transition from living
with their parents to purchasing their own house on the open
market. They usually rent an apartment for few years, acquire
some life experiences, and save some money for a down payment.
He said that renting an apartment is a great stepping stone to
becoming a home owner and building equity.
11:41:53 AM
MR. MAGDANZ directed the committee's attention to the final
slide identifying substantive changes incorporated into Version
M of HB 188. He explained while the changes he was about to
show are meaningful, they are of slightly less scope than those
he identified in the prior slides. He stated that the first
bullet on the slide identifies the requirement under Version M
that fisheries trust boards have a diversity of experience, with
at least two board members having background in commercial
fishing. He said this change was made in response to feedback
received from fishermen.
MR. MAGDANZ said that the second bullet identifies a concern
that an individual may find it difficult to acquire a permit in
a small fishery comprised of as few as roughly twenty permits if
a trust had also acquired permits in that small fishery. To
resolve this concern, Version M would restrict a regional
fisheries trust from acquiring permits in fisheries with fewer
than 40 transferable limited entry permits.
MR. MAGDANZ said that the third bullet shows that a regional
fisheries trust could not hold quota share in a federal fishery.
He also stated that it was never intended that a regional
fisheries trust could acquire quota share, but that Version M
makes this explicitly clear. He noted that the fourth bullet on
the slide explains that in the event a regional fisheries trust
dissolves or fails, the permits held by the trust would revert
to CFEC for reissue.
MR. MAGDANZ said that the fifth bullet identifies the
requirement proposed under Version M that a temporary transferee
must pay all the taxes and assessments that any other permit
holder would be required to pay. He pointed out that the
previous version of the bill inadvertently exempted people with
regional fisheries trust permits from paying some fisheries fees
and taxes. He said that the final bullet on the slide explains
that a regional fisheries trust would have to receive fair
market value for a permit it transfers from its possession.
11:44:43 AM
REPRESENTATIVE NEUMAN offered his understanding that state
dollars would not be used to finance the regional fisheries
trusts. He said some regional fisheries trusts may be
recipients of a grant or loan, and if they don't meet the
conditions of the grant or loan, there should be regulations
requiring the conditions of the grant, loan, or permit be met.
MR. MAGDANZ said that a permit held by a regional fisheries
trust would be like a permit held by an individual in that it
cannot be pledged as security for a loan or mortgage. He said
that this is a fundamental tenet of existing limited entry law,
and "we are sticking with that." He said that if a regional
fisheries trust wanted a loan, then it would have to find
collateral other than the permits it may hold.
REPRESENTATIVE NEUMAN said that this was good information.
However, he said his point was that there should be side boards
to ensure the integrity of the program, so that the program does
not fail.
11:47:35 AM
REPRESENTATIVE CHENAULT asked about the costs associated with
holding a permit, specifically, if there is a yearly charge and
if costs vary by region around the state.
MR. MAGDANZ said that the structuring of payment for a temporary
permit would be left up to the regional fisheries trusts. He
added that local control would allow a regional trust to develop
methods that work well within its own region. He said it is
likely that in most cases there would be an annual fee, because
the high cost of full payment up front for a multiple-year
permit would defeat the purpose of the program to some degree.
He also said that regional fisheries trusts would allocate
permits based on a "preference competitive bidding process," and
this process would define the price of a permit. Under this
process, the regional fisheries trust would make permits
available, individuals would submit bids for the permits, and
the trust could adjust the bids with predetermined scoring
criteria. He said that scoring criteria would consist of
factors he mentioned earlier, such as the bidder's history of
participation in the fishery or his/her economic dependence.
11:49:52 AM
REPRESENTATIVE CHENAULT stated that he understood the price of a
permit would depend on the number of people who apply for it.
However, he was curious if there might be a minimum price. He
asked, as an example, if a person might pay $1,000 or if that
person would pay $20,000. He said that he assumed the price was
closer to $1,000, as the intent is to encourage participation at
the entry level.
MR. MAGDANZ said the bill does not specify a minimum bid price.
He said a best guess at the minimum bid price would be the price
people are currently willing to pay for an emergency medical
transfer permit.
11:50:51 AM
REPRESENTATIVE KREISS-TOMKINS added that to some extent, the
market will ultimately provide the answer to the question of
permit pricing. He said that the market for regional fisheries
trust permits would be similar to the market for emergency
medical transfer permits. He said the real value of a regional
fisheries trust permit would be in the flexibility it offers.
He indicated that it would not be in one's best interest to
acquire a permit through a regional fisheries trust if one has
the capital to purchase one on the open market. Purchasing a
permit on the open market rather than through a regional
fisheries trust would be analogous to purchasing your one's own
home versus renting an apartment. The purchase option allows
equity to be built for oneself rather than for another
individual or entity. He reiterated that the value of a
regional fisheries trust would be the flexibility it would
offer, allowing certainty and confidence to be built prior to
making the final investment decision of buying a permit.
REPRESENTATIVE CHENAULT indicated that this was why some people
purchased their own house after moving out of their parent's
house.
11:51:58 AM
REPRESENTATIVE EASTMAN said he was supportive of making it
easier for new fishermen to join the fleet. He said that he
wanted to take the position of devil's advocate and ask a few
questions to make sure the committee has thought this matter
through. He said he understood that under Version M, the
program would not create a lease situation. However, he wanted
to know how a transfer under Version M was different from a
lease arrangement, specifically in situations when a permit can
be revoked because fishing regulations were violated or payments
were not made.
11:52:55 AM
REPRESENTATIVE KREISS-TOMKINS said that the answer to this
question relates to the issue of flexibility. He said that
someone who has taken out a multi-hundred-thousand-dollar loan
to buy a permit and a vessel would be looking at a multi-decade
term. He said that prior to making such a long-term commitment,
one might want to build experience and develop a sense of what
it would be like to manage one's own crew using a regional
fisheries trust permit, and it is for this reason that people
have been pursuing emergency transfer permits.
MR. MAGDANZ pointed out there was one big difference between
leasing under the previous version of the bill and a temporary
transfer under Version M. Under the previous version of the
bill, a regional fisheries trust would set some terms and
provide a permit subject to the statutes, but without any
further approval required. Under Version M, the transaction
would be conducted under the existing structure used by CFEC in
its management of permanent and temporary transfers. He said
that the proposed regional fisheries trust program is based on
CFEC's emergency transfer provisions, where if a person does not
make the payments, the person offering the permit can take it
back.
REPRESENTATIVE KREISS-TOMKINS indicated that the last slide in
the presentation strikes at the intent of the proposed
legislation, which is to create maximum access to economic
opportunity, particularly in communities that presently don't
have a lot of opportunities. Using commercial fishing [as a
mechanism] reaches into rural communities that are becoming
increasingly self-sufficient out of necessity. The idea is to
get as many dollars flowing through the rural communities as
possible.
11:56:50 AM
CHAIR STUTES said the sectional analysis for Version M would be
heard at a later date.
11:57:05 AM
CHAIR STUTES opened public testimony on HB 188.
ALVIN OSTERBACK, Mayor, Aleutians East Borough (AEB), stated
that the borough comprises 6 communities encompassing 15,000
square miles. He stated that the whole lifestyle of the
residents of this borough is fishing. He said that he started
as a commercial fisherman with his father back in 1958 and has
been fishing since then. He said that he holds two limited
entry permits; a set net permit and a seine permit in Area M.
He said that he came to the hearing to request that the
committee consider allowing for an additional name to be listed
on a limited entry permit. He said that he hoped the committee
would consider this idea and added that it has been around for a
while as "part of the committee's substitute language."
MR. OSTERBACK stated that the AEB passed Resolution 18-23 to
make this same request to the legislature. He said King Cove
also passed a resolution in support of this. He said he
discussed this idea at the Southwest Alaska Municipal
Conference, at the 2016 Alaska Sea Grant workshop on "Long-term
Challenges to Alaska's Salmon and Salmon-Dependent Communities,"
and the idea has been well-received everywhere. He said that
allowing an additional name on a permit would allow permit
holders to mentor young fishermen and help them become
established financially. It would also help new entrants
establish a work history in their fishing career and eventually
obtain commercial bank loans to purchase a boat and fishing
gear. An additional name on a permit could also allow a
surviving spouse to continue to survive from the sale of salmon.
He said he believes that this concept could help address the
"graying of the fleet" and potentially solve the outmigration of
permits, which is a serious dilemma for AEB.
MR. OSTERBACK added that there have been a lot of problems with
alcohol in the area for quite some time, and his proposal would
give young fishermen hope to be able to access fisheries that
are becoming very expensive. He said that his permits were
granted to him during the initiation of the limited entry
program, but things have changed since then. He said, "As a
young person back then, we never looked at what was going to
happen in the future as we got older". Regarding his request,
he said he would "be able to take a young person, bring him on
my boat, put their name on the permit, get them started, get
them a track record, a history that we could take to the bank,
and he could buy it."
12:00:23 PM
CHAIR STUTES announced that public testimony would remain open
and HB 188 was held over.
12:00:46 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 12:01
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB188 Sectional Analysis ver M 1.24.18.pdf |
HFSH 1/25/2018 11:00:00 AM |
HB 188 |
| HB188 Sponsor Statement ver M 1.24.18.pdf |
HFSH 1/25/2018 11:00:00 AM |
HB 188 |
| HB188 Summary of Changes ver U-ver M 1.24.18.pdf |
HFSH 1/25/2018 11:00:00 AM |
HB 188 |
| HB188 Sponsor Statement ver M 1.24.18.pdf |
HFSH 1/25/2018 11:00:00 AM |
HB 188 |
| HB188 Draft Proposed Blank CS ver M 1.24.18.pdf |
HFSH 1/25/2018 11:00:00 AM |
HB 188 |
| HB188 Additional Document-Version M PPT 1.25.18.pdf |
HFSH 1/25/2018 11:00:00 AM |
HB 188 |