Legislature(2001 - 2002)
02/08/2002 01:10 PM House RES
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* first hearing in first committee of referral
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+ teleconferenced
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ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
February 8, 2002
1:10 p.m.
MEMBERS PRESENT
Representative Beverly Masek, Co-Chair
Representative Drew Scalzi, Co-Chair
Representative Hugh Fate, Vice Chair
Representative Mike Chenault
Representative Gary Stevens
MEMBERS ABSENT
Representative Joe Green
Representative Lesil McGuire
Representative Mary Kapsner
Representative Beth Kerttula
COMMITTEE CALENDAR
HOUSE BILL NO. 206
"An Act relating to a vessel-based commercial fisheries limited
entry system, to management of offshore fisheries, and to the
definition of 'person' for purposes of the commercial fisheries
entry program; and providing for an effective date."
- MOVED CSHB 206(2d RES) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 206
SHORT TITLE:VESSEL LIMITED ENTRY FOR COMM. FISHERIES
SPONSOR(S): RESOURCES
Jrn-Date Jrn-Page Action
03/22/01 0691 (H) READ THE FIRST TIME -
REFERRALS
03/22/01 0691 (H) FSH, RES
04/02/01 (H) FSH AT 5:00 PM CAPITOL 124
04/02/01 (H) Moved Out of Committee
04/02/01 (H) MINUTE(FSH)
04/03/01 0826 (H) FSH RPT 2DP 4NR
04/03/01 0827 (H) DP: SCALZI, WILSON; NR:
DYSON,
04/03/01 0827 (H) COGHILL, KERTTULA, STEVENS
04/03/01 0827 (H) FN1: ZERO(DFG)
04/04/01 (H) RES AT 1:00 PM CAPITOL 124
04/04/01 (H) Heard & Held
04/04/01 (H) MINUTE(RES)
04/09/01 (H) RES AT 1:00 PM CAPITOL 124
04/09/01 (H) Scheduled But Not Heard
04/10/01 (H) RES AT 5:30 PM CAPITOL 124
04/10/01 (H) Moved CSHB 206(RES) Out of
Committee
04/10/01 (H) MINUTE(RES)
04/11/01 0952 (H) RES RPT CS(RES) NT 7DP 1NR
04/11/01 0953 (H) DP: FATE, MCGUIRE, GREEN,
CHENAULT,
04/11/01 0953 (H) KERTTULA, STEVENS, SCALZI;
NR: MASEK
04/11/01 0953 (H) FN1: ZERO(DFG)
01/23/02 2053 (H) RETURNED TO RES COMMITTEE
02/08/02 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
MARY McDOWELL, Commissioner
Commercial Fisheries Entry Commission
Alaska Department of Fish & Game (ADF&G)
8800 Glacier Highway, Suite 109
Juneau, Alaska 99801-8079
POSITION STATEMENT: Testified on the proposed CS for HB 206,
Version B.
JOHN WINTHER
(No address provided)
POSITION STATEMENT: Testified in favor of the proposed CS for
HB 206, Version B.
EUGENE ISIKSICK, President & CEO
Norton Sound Economic Development Corporation (NSEDC)
420 L Street, Suite 310
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 206.
LENNIE HERTZOG
(No address provided)
Anchorage, Alaska
POSITION STATEMENT: Testified in favor of [the proposed CS] for
HB 206, Version B.
OLIVER HOLM
P.O. BOX 3865
Kodiak, Alaska 99615-3865
POSITION STATEMENT: Testified on HB 206.
JIM CHASE, Owner
F/V Forum Star
P.O. Box 8245
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in support of the proposed CS for
HB 206, Version B.
ACTION NARRATIVE
TAPE 02-6, SIDE A
Number 0001
CO-CHAIR DREW SCALZI called the House Resources Standing
Committee meeting to order at 1:10 p.m. Representatives Masek,
Scalzi, Fate, Chenault, and Stevens were present at the call to
order.
HB 206-VESSEL LIMITED ENTRY FOR COMM. FISHERIES
CO-CHAIR SCALZI announced that the only order of business before
the committee would be HOUSE BILL NO. 206, "An Act relating to a
vessel-based commercial fisheries limited entry system, to
management of offshore fisheries, and to the definition of
'person' for purposes of the commercial fisheries entry program;
and providing for an effective date."
CO-CHAIR SCALZI reminded the committee that [CS HB 206 (RES)]
was moved out of the House Resources Standing Committee last
year and was in the House Rules Standing Committee. He
explained that he had requested that it be returned to the House
Resources Standing Committee due to a significant change that
was overlooked. [At the end of session] HB 206 was amended to
only deal with a vessel-license limitation program exclusive to
hair crab and scallop fisheries. With that exclusiveness, the
latitude of the Commercial Fisheries Entry Commission was
curtailed. He noted that HB 206 was at the request of the
legislature in 1997, in order to deal with a moratorium that
will terminate this year, and therefore there is a pressing need
to develop some sort of limited entry in these two fisheries.
[There was an invalid motion to adopt HB 206 as the working
document.]
Number 0229
CO-CHAIR MASEK moved to adopt CSHB 206, Version 22-LS0426\B,
Utermohle, 1/30/02, as the working document. There being no
objection, Version B was before the committee.
Number 0320
MARY McDOWELL, Commissioner, Commercial Fisheries Entry
Commission (CFEC), Alaska Department of Fish & Game (ADF&G),
pointed out that Version B is substantially similar to the
Committee Substitute (CS) [Version O] adopted by this committee
last year in that it provides a framework for a vessel-based
limited entry program. Furthermore, Version B maintains the
restriction of the [vessel-based limited entry] program for
consideration in the [hair crab and scallop] fisheries. She
clarified that [Version B] doesn't limit the two fisheries;
rather, the option of a vessel-based program is available if the
commission decides to do a permanent limitation program in those
two fisheries.
MS. McDOWELL highlighted the primary change between Version B
and [Version O]: the removal of the so-called "second
generation" language and the accompanying requirement that the
permit holder be onboard. Those provisions were included in HB
206 because originally it referred to generic authority that
could be used in all fisheries. She explained that those
provisions were an effort to say that as additional fisheries
are limited in the future, there would be an effort to steer the
evolution of those fisheries based on the vessel-based program
towards the owner-operator model on which the current program is
based. However, the hair crab and scallop fisheries are the
least suitable to that provision. Although the scope of the
bill was narrowed to the [hair crab and scallop fisheries] at
the last hearing on [HB 206], the bill wasn't reviewed as to
whether the [second generation] provisions make sense. Upon
further reflection, those in the industry felt that the bill
should be reexamined in regard to whether the provisions make
sense.
Number 0569
MS. McDOWELL turned to Version B. The provisions dealing with
the second generation required that when the permit transfers
the next holder of the permit would be a living individual, and
couldn't be an entity, a partnership, or a company. Removing
that restriction [as is the case in Version B] allows the permit
to transfer to companies and partnerships and be held in the
same manner in which permits are held today for the hair crab
and scallop fisheries. Therefore, those fisheries would likely
remain static. She noted that the other changes in Version B
[attempt] to make the other provisions consistent with the
aforementioned change or mirror the characteristics of the
existing program. For example, [there is a change] to make it
clear that vessel permits are use privileges, not property
rights, and thus aren't seizable and "lienable". Therefore, the
state maintains control of these permits. On page 6, line 5, it
is made clear that the commission will, by regulation, establish
the procedures for transferring these permits. Therefore, all
the paperwork for a transfer comes through the commission, as is
the case with the current program. This ensures that the
movement of the permits is monitored so as to prevent
concentration of ownership, which is another provision of
Version B. In two places in the bill, "shall" is changed to
"may," which addresses the concern regarding the ability of
permit holders to lease a vessel rather than only have permit
used on a vessel that they own wholly or in part. Therefore,
Version B allows the leasing of vessels.
Number 0777
MS. McDOWELL, in response to Representative Stevens, pointed out
that the changes of "shall" to "may" occur on page 6, lines 20-
22, which allows [the use of] a leased vessel. In further
response to Representative Stevens, Ms. McDowell noted that page
6, line 17, of Version B says "may", but there may be an
amendment to change that to "shall". On page 6 [line 6] the
language "commission may require that" was added and thus allows
the flexibility for leased vessels.
CO-CHAIR SCALZI remarked that the aforementioned language
changes might have a dramatic effect. However, he asked whether
the "may" and "shall" language changes will cause portions of
the bill to be in conflict.
MS. McDOWELL answered, "I think it all works fine." She
explained that there has to be enough flexibility to customize
this program to work for two individual fisheries.
Number 1014
JOHN WINTHER testified via teleconference. He concurred with
the testimony given by Ms. McDowell. He suggested that the
changes are necessary to [improve this legislation] and to
[correspond] with the fisheries that are of concern. He
expressed disappointment that this legislation was held over by
the committee last year. He indicated that Version B is better
than the previous version. He explained that he is involved
with some federal fisheries that require him to prove ownership
of the vessel each year. He said that he did not consider that
last year during the legislation of the previous version.
MR. WINTHER remarked that [proving ownership] is a time-
consuming, expensive process. He explained that to prove
ownership, one must pay an annual fee of $6,000-$7,000 per
vessel, and it never changes each year. He said that he is glad
that provision was removed and that there has been this extra
time to identify that issue. He stated that he supports
[Version B] and he thinks that the changes will make it [better
legislation].
CO-CHAIR SCALZI reiterated that the reason that he and Co-Chair
Masek had asked that this legislation be brought back to the
House Resources Standing Committee is because they wanted to
clarify the changes, rather than leave it to the Senate to
reconstruct something that may not come back in the same form.
Number 1160
EUGENE ISIKSICK, President & CEO, Norton Sound Economic
Development Corporation (NSEDC), testified via teleconference.
He informed the committee that NSEDC is one of the six Community
Development Quota (CDQ) groups across Western Alaska. He said
NSEDC represents 15 communities and is probably the newest
[addition] to this fishery. He explained that NSEDC has
purchased three vessels in which it currently has 50 percent
ownership; two of the vessels are licensed to fish the Korean
hair crab. He stated that he was in support of [Version B]. He
commented that the vessels that would be affected by this bill
are new and had been acquired by NSEDC in the last six months.
Number 1245
LENNI HERTZOG testified via teleconference. He told the
committee that he works on a boat based out of Homer, which he
said has a permit for hair crab. He informed the committee that
he would like to see [Version B] go forward.
Number 1273
OLIVER HOLM testified via teleconference. He expressed concerns
some of the "principles" involved in this fishery. He remarked
that he did not directly participate in either of the [hair crab
or scallop] fisheries. He suggested that there have been
problems with vessel ownership and this type of program in the
federal fisheries in halibut. He indicated that it affects
shares, consolidation, and the amount of money that stays in the
community of Kodiak from harvesting halibut. He said that
changing the [language] on the ownership interest from "may" to
"shall" means that the boats can be consolidated and can leave
the state and fish scallops on the East Coast, for instance, and
have one vessel fish the whole fishery. He said that there has
already been some consolidation under the [moratorium]. He
remarked that it has cost the crews in the total amount of
revenue that actually goes to the crews in the scallop fishery.
He explained that it is extremely difficult to track ownership
[of a vessel]. He said that he has to prove ownership for the
halibut [fishery] in the federal system every year, at a cost of
less than five dollars.
MR. HOLM said that in the area of corporate ownership [proving
ownership] can be very difficult. He said in regard to the
state-managed fisheries, he thinks the state should
[incorporate] a policy that stays with the owner-operated,
small-business approach to these fisheries. He remarked that
even though the fisheries are somewhat different, he doesn't
think that the state should [get involved] and change fisheries.
He suggested that there have already been some problems in the
scallop fisheries in regard to consolidation, and this
[legislation] would make it possible in the Korean hair crab
fishery. He added that the Korean hair crab fishery isn't open
because of conservation concerns. He expressed doubt that this
[legislation] would [cause it to open]. Mr. Holm said that the
United Fisherman of Alaska (UFA) was asked to support the bill
as a whole at the last meeting, but [UFA] declined to support
the bill and currently has no position.
Number 1431
JIM CHASE, Owner, F/V Forum Star, informed the committee that he
owns a scallop boat and is in support of the [ proposed CS,
Version B] for HB 206. He remarked that he had problems with
the previous version, but [Version B] is much better.
CO-CHAIR SCALZI reiterated a conversation he had with Mr. Chase
in which Mr. Chase pointed out that regardless of the amendment,
it is important that the bill goes through.
MR. CHASE indicated that he did support the previous version of
HB 206 despite having some major problems with it. He remarked
that his problems were with the so-called "second generation"
[language]. He said in regard to this fishery, it is difficult
for people to come up with the money it takes to buy this type
of operation. He remarked that he has worked in the fishery for
27 years and had hoped to retire from the fishery someday. He
said that these are large boats and they are also involved
businesses; it is [impossible] to run the boat and run all of
the mechanics of a full-blown processing operation while in the
boat. The scallop fishery is approved by the Department of
Conservation (DEC) and the Food and Drug Administration (FDA).
This requires that the [scallop fishermen] pass all of the same
tests that restaurants and food resale [businesses] are required
to pass in Alaska. He remarked that it is an immense amount of
work. He reiterated his point that it is impossible.
Number 1579
CO-CHAIR SCALZI asked Ms. McDowell to address some concerns of
that Mr. Holms had about consolidation in regard to [second]
generation [provisions].
MS. McDOWELL drew attention to page 3, lines 19-23, which
addresses the issue of concentration of ownership. She
explained that the issue in regard to concentration of ownership
is not necessarily whether the next owner is a person or a
company; the question is whether one person or one company can
buy up the company. She said that this provision specifically
directs the commission to develop regulations to prevent
excessive concentration of ownership. She remarked that there
would be a necessity to keep monitoring the [ownership] of the
vessels. Under the so-called "second generation" language, that
would happen at the time of the transfer. She explained that
this [provision] would require them to annual monitoring at
renewal time to ensure that [ownership] is not being
concentrated. She said that during the initial review [CFEC]
would identify and be able to track owner any transfer of
ownership. She remarked that [ADF&G] is very sensitive to the
issue of conservation. One of the basic premises of limited
entry is to keep Alaska's fisheries diversified and not bought-
up by one particular interest. She remarked that it would be a
burden if the [permits] were owned by entities because [CFEC]
would have to identify what entity owns the permit and what
entity owns that entity. She said [ADF&G] would develop
regulations for handling those [situations].
Number 1675
REPRESENTATIVE STEVENS remarked that the excessive
[concentration] of ownership is vague. He commented that
[ADF&G] understands the meaning and would have to put forth a
great deal of effort [determine] corporate ownership. He asked
Ms. McDowell to explain the meaning of concentration of
ownership.
Number 1697
MS. McDOWELL explained that the language in that section was not
defined further than that because originally this [legislation]
would have applied to a broad spectrum of fisheries. She said
that one fishery may have a [small number] of permits, whereas
another fishery may have a [large number] of permits. So rather
than put a number in the [legislation], it was phrased this way.
She suggested that the [committee] could go back and define that
further, if that made members more comfortable [with the
language]. She remarked that this was left to the regulatory
process.
REPRESENTATIVE STEVENS asked if the regulations would define
excessive concentration.
MS. McDOWELL answered, "Specific, yes."
CO-CHAIR SCALZI remarked that he'd struggled with this
[legislation]. He said that the intent of getting the [permit]
to an individual is historically what has been done in this
state. He explained that he'd contacted friends in the crab
fisheries because currently they are under federal moratorium in
the Bering Sea; they will also be looking at some type of
limited entry. He said that after doing research and talking
with some of his friends out there, he found that about 70
percent of [vessels] have owners that are absentee. He remarked
that the make-up of the large-vessel fishery is different from
the limited entry program [regulating] salmon, which is all
owner operated. He indicated that there were big changes in
Version B. He stated that he supports those changes. He said
he thinks that it is [different] from the original intent of the
salmon fishery, but this is definitely a large boat fishery.
Number 1820
CO-CHAIR MASEK drew attention to page 6, line 17. She explained
that she wanted to change the language from "may" to "shall" in
order to ensure that the commission would provide opportunity
for the leasing of vessels.
Number 1885
CO-CHAIR MASEK moved to adopt Amendment 1, which read:
Page 6, line 17,
Delete "may",
Insert "shall"
Number 1891
CO-CHAIR SCALZI asked if there was any objection or discussion
regarding [Amendment 1]. He asked Ms. McDowell if [Amendment 1]
would be [problematic].
MS. McDOWELL said that there was no problem with [Amendment 1].
Number 1922
CO-CHAIR SCALZI asked if there was any objection. There being
no objection, Amendment 1 was adopted.
Number 1928
CO-CHAIR MASEK drew attention to page 3, line 11. She explained
that she wanted to change the language from "consultation with"
to "approval from". She explained that the reason for this is
because once HB 206 takes effect, regulation in fishing capacity
will no longer fall under the jurisdiction of the moratorium.
She remarked that ADF&G has currently adopted a position on this
issue that is very similar to that of the federal regulations.
Number 1989
CO-CHAIR SCALZI reiterated that Amendment 2 would remove the
language "consultation with" and insert the language "approval
from". He said sounds as though this would provide ADF&G a
stronger ability to consult CFEC.
REPRESENTATIVE FATE indicated that Amendment 2 would require
approval from ADF&G before the CFEC could move forward.
REPRESENTATIVE STEVENS asked if there was a representative from
ADF&G that could comment on [Amendment 2].
CO-CHAIR SCALZI answered that there was not. He asked if Ms.
McDowell could address [Amendment 2] and the ramifications.
MS. McDOWELL indicated that she was not aware of [Amendment 2
previously]. She suggested that there may be a misunderstanding
about what "capacity restriction" means in this section. She
referred to Co-Chair Masek's suggestion that once HB 206 takes
effect, regulation in fishing capacity will no longer fall under
the jurisdiction of the moratorium was not true. Ms. McDowell
said the moratorium will stay in place until it expires in 2003;
this would allow CFEC the process of getting regulations in
place to propose limitations in advance. She reiterated that
the moratorium provision will be in effect until such time that
the fishery either goes open-access again or becomes limited
under [HB 206]. She explained that the [purpose] of the
capacity restrictions under the limited entry law is that when
CFEC limits a fishery, it has the ability to set capacity
restrictions that go with that permit.
CO-CHAIR asked if "capacity restrictions" pertain to [CFQs].
MS. McDOWELL answered "no," it usually has to do with the size
of the vessel. She said that if CFEC put capacity restrictions
in a fishery, it would usually indicate that that [particular]
permit is good for a vessel of a [specified] size. She remarked
that that capacity restriction stays with that permit. For
someone who holds a permit that gives the person the ability to
fish a 100-foot vessel; when the person transfers [the permit],
he/she couldn't transfer it to someone who is now going to use a
300-foot vessel with that permit. She reiterated that it is a
capacity restriction that stays with the permit. She said it
does not have anything to do with guideline harvest levels of
the capacity, the fishing effort that is regulated by [ADF&G],
and the Board of Fisheries. She remarked that it is a different
fishing effort restriction - the capacity that goes with that
permit.
Number 2188
CO-CHAIR SCALZI asked if it is out of the realm of ADF&G's
normal regulating sphere.
Number 2205
MS. McDOWELL remarked that it would be helpful for her to
understand what the intent of [Amendment 2] is. She said that
[ADF&G] does fishing capacity restrictions under it's current
limited entry program. She explained that ADF&G always consults
with the fishery managers because [ADF&G] does not have the
expertise on the same fisheries. She said that [CFEC] would
consult the department managers and ask for suggestions for a
reasonable capacity restriction. For example, does the size of
the gear or the size of the vessel matter in fishing? She said
that [CFEC] works with them to develop regulations in a proposal
for limitations. She explained that that is why the [provision]
suggests consulting with ADF&G to [utilize] it's expertise and
the mechanics of the fishery and what capacity restrictions
would make sense in that fishery.
CO-CHAIR SCALZI asked if [CFEC] consults with ADF&G in
regulating the [various] fisheries.
MS. McDOWELL answered "always."
CO-CHAIR SCALZI asked if this is a standard of how [CFEC]
operates with ADF&G.
MS. McDOWELL answered "yes."
CO-CHAIR SCALZI asked Co-Chair Masek if she still felt the
language change was [necessary] now that the definition of
"capacity" has been [explained].
CO-CHAIR MASEK said she thought parts of HB 206 would stop some
of the moratorium anyway. She said that the issue is [due] to
the language consultation. She asked Ms. McDowell if she goes
with the recommendations. She indicated that she was asking
about the language prior to the proposed [Amendment 2].
MS. McDOWELL remarked that in the case of fishing capacity, it
is usually not matter of [ADF&G] saying what needs to be done.
She explained that it is usually a matter of consulting with
[ADF&G] to find out what size vessels are used, how they are
used, and whether it would increase overall fishing effort in
the fleet if there were a range of sizes. She reiterated that
it was a matter of [utilizing ADF&G's] expertise. She said that
her concern with saying "after approval from the department" is
that it would create an additional step, giving another
department veto power that the entire limitation process stops
until or unless ADF&G approves it. She said that she thinks
[CFEC] works closely enough with ADF&G that she doesn't think
that it would be a major impediment, but it would be an unusual
step.
Number 2359
CO-CHAIR SCALZI remarked that it sounds as though it would be
inconsistent with the relationship that [CFEC] has with all of
the other fisheries.
MS. McDOWELL said that there is no provision anywhere else in
[CFEC's] program whereby ADF&G could stop a limitations process.
CO-CHAIR SCALZI said it sounded as though it made sense, but now
he understands what the difference is on the capacity. So it's
probably not necessary, but the amendment is there. He told Co-
Chair Masek that it was up to her if she wanted to withdraw the
amendment or move forward with it.
CO-CHAIR MASEK asked what [CFEC] would allow once the moratorium
expires in 2003.
MS. McDOWELL said that the hair crab moratorium is scheduled to
expire in 2003 and the scallop fishery [expires] in 2004. She
explained that [CFEC] would expect the moratorium to run its
course. By the time it ends, [CFEC] would have to have proposed
and adopted either limitation under the current program or
limitation under this program, or else done nothing and let it
go back to open access when the moratorium expires. She said
that this would not affect any of the provisions during the
moratorium or who's eligible to fish during the moratorium; all
of the criteria for both of those moratoriums were established
by the legislature. She explained that HB 206 would allow
[CFEC] to create a limitation proposal to put out for public
comment under this new framework, to determine what would happen
to that fishery upon termination of the moratorium.
Number 2450
CO-CHAIR MASEK withdrew [Amendment 2].
CO-CHAIR SCALZI remarked that this would [allow] consistency
between the department and all of the other fisheries.
Number 2480
REPRESENTATIVE FATE moved to report CSHB 206 [Version 22 -
LS0426\B, Utermohle, 1/30/02, as amended] out of committee with
individual recommendations and the accompanying zero fiscal
note. There being no objection, CSHB 206(2d RES) was reported
from the House Resources Standing Committee.
ADJOURNMENT
Number 2522
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 1:45 p.m.
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