Legislature(1999 - 2000)

04/28/1999 01:15 PM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         HOUSE RESOURCES STANDING COMMITTEE                                                                                     
                   April 28, 1999                                                                                               
                     1:15 p.m.                                                                                                  
MEMBERS PRESENT                                                                                                                 
Representative Jerry Sanders, Co-Chair                                                                                          
Representative Beverly Masek, Vice Chair                                                                                        
Representative John Harris                                                                                                      
Representative Carl Morgan                                                                                                      
Representative Ramona Barnes                                                                                                    
Representative Reggie Joule                                                                                                     
Representative Mary Kapsner                                                                                                     
MEMBERS ABSENT                                                                                                                  
Representative Scott Ogan, Co-Chair                                                                                             
Representative Jim Whitaker                                                                                                     
COMMITTEE CALENDAR                                                                                                              
CS FOR SENATE JOINT RESOLUTION NO. 20(RES)                                                                                      
Relating to the removal of beaver from Washington, D.C.                                                                         
     - MOVED CSSJR 20(RES) OUT OF COMMITTEE                                                                                     
* 2d SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 203                                                                                  
"An Act relating to loans from the agricultural revolving loan                                                                  
fund; and providing for an effective date."                                                                                     
     - MOVED 2d SSHB 203 OUT OF COMMITTEE                                                                                       
HOUSE BILL NO. 104                                                                                                              
"An Act revising the procedures and authority of the Alaska                                                                     
Commercial Fisheries Entry Commission, the Board of Fisheries, and                                                              
the Department of Fish and Game to establish a moratorium on                                                                    
participants or vessels, or both, participating in certain                                                                      
fisheries; and providing for an effective date."                                                                                
     - HEARD AND HELD                                                                                                           
(* First public hearing)                                                                                                        
PREVIOUS ACTION                                                                                                                 
BILL: SJR 20                                                                                                                    
SHORT TITLE: SAVE THE BEAVER IN WASH D.C.                                                                                       
SPONSOR(S): SENATOR(S) TAYLOR, Ward                                                                                             
Jrn-Date    Jrn-Page           Action                                                                                           
 4/08/99       828     (S)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/08/99       828     (S)  RES                                                                                                 
 4/08/99       828     (S)  RES WAIVED PUBLIC HEARING NOTICE,                                                                   
                            RULE 23                                                                                             
 4/09/99               (S)  RES AT  3:00 PM BUTROVICH 205                                                                       
 4/09/99               (S)  MOVED CS (RES) OUT OF COMMITTEE                                                                     
 4/09/99               (S)  MINUTE(RES)                                                                                         
 4/12/99       884     (S)  COSPONSOR(S): WARD                                                                                  
 4/13/99               (S)  RLS AT 11:40 AM FAHRENKAMP 203                                                                      
 4/13/99               (S)  MINUTE(RLS)                                                                                         
 4/13/99       898     (S)  RES RPT  CS  3DP 2NR      SAME TITLE                                                                
 4/13/99       898     (S)  DP: HALFORD, TAYLOR, GREEN;                                                                         
 4/13/99       898     (S)  NR: MACKIE, PETE KELLY                                                                              
 4/13/99       898     (S)  ZERO FN TO SB AND CS (S.RES)                                                                        
 4/14/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
 4/14/99               (H)  <PENDING REFERRAL> SCHU BUT NOT HEARD                                                               
 4/23/99      1063     (S)  RULES TO CALENDAR  AND 1 OR 4/23/99                                                                 
 4/23/99      1066     (S)  READ THE SECOND TIME                                                                                
 4/23/99      1067     (S)  RES  CS ADOPTED UNAN CONSENT                                                                        
 4/23/99      1067     (S)  ADVANCED TO THIRD READING Y15 N5                                                                    
 4/23/99      1067     (S)  READ THE THIRD TIME  CSSJR 20(RES)                                                                  
 4/23/99      1068     (S)  PASSED Y13 N7                                                                                       
 4/23/99      1068     (S)  ELLIS  NOTICE OF RECONSIDERATION                                                                    
 4/26/99      1120     (S)  RECONSIDERATION NOT TAKEN UP                                                                        
 4/26/99      1120     (S)  TRANSMITTED TO (H)                                                                                  
 4/27/99      1019     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/27/99      1019     (H)  RESOURCES                                                                                           
 4/28/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
BILL: HB 203                                                                                                                    
SHORT TITLE: AGRICULTURE LOANS                                                                                                  
SPONSOR(S): REPRESENTATIVES(S) HARRIS, James                                                                                    
Jrn-Date    Jrn-Page           Action                                                                                           
 4/16/99       843     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/16/99       843     (H)  RESOURCES, FINANCE                                                                                  
 4/20/99       883     (H)  SPONSOR SUBSTITUTE INTRODUCED                                                                       
 4/20/99       883     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/27/99      1026     (H)  2D SPONSOR SUB INTRODUCED                                                                           
 4/27/99      1026     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/27/99      1026     (H)  RESOURCES, FINANCE                                                                                  
 4/28/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
BILL: HB 104                                                                                                                    
SHORT TITLE: ENTRY MORATORIA ON PARTICIPANTS/VESSELS                                                                            
SPONSOR(S): REPRESENTATIVES(S) HUDSON, Austerman                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 2/19/99       260     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 2/19/99       260     (H)  FSH, RES                                                                                            
 3/08/99               (H)  FSH AT  5:00 PM CAPITOL 124                                                                         
 3/08/99               (H)  MOVED CSHB 104(FSH)                                                                                 
 3/08/99               (H)  MINUTE(FSH)                                                                                         
 3/10/99       408     (H)  FSH RPT  CS(FSH) NT 4DP                                                                             
 3/10/99       408     (H)  DP: KAPSNER, MORGAN, WHITAKER, HUDSON                                                               
 3/10/99       408     (H)  ZERO FISCAL NOTE (F&G)                                                                              
 3/10/99       408     (H)  REFERRED TO RES                                                                                     
 4/14/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
 4/14/99               (H)  HEARD AND HELD                                                                                      
 4/14/99               (H)  MINUTE(RES)                                                                                         
 4/21/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
 4/21/99               (H)  HEARD AND HELD                                                                                      
 4/21/99               (H)  MINUTE(RES)                                                                                         
 4/28/99               (H)  RES AT  1:00 PM CAPITOL 124                                                                         
WITNESS REGISTER                                                                                                                
MEL KROGSENG, Legislative Assistant                                                                                             
   to Senator Robin Taylor                                                                                                      
Alaska State Legislature                                                                                                        
Capitol Building, Room 30                                                                                                       
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-3717                                                                                                      
POSITION STATEMENT:  Presented SJR 20 on behalf of sponsor.                                                                     
PETER FELLMAN, Researcher                                                                                                       
   for Representative John Harris                                                                                               
Alaska State Legislature                                                                                                        
Capitol Building, Room 110                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-4859                                                                                                      
POSITION STATEMENT:  Provided in-depth discussion of 2d SSHB 203,                                                               
                     on behalf of sponsor.                                                                                      
TERESSA KANDIANIS                                                                                                               
P.O. Box 1547                                                                                                                   
Kodiak, Alaska  99615                                                                                                           
Telephone:  (907) 486-3309                                                                                                      
POSITION STATEMENT:  Testified in support of HB 104.                                                                            
LIZ CABRERA, Researcher                                                                                                         
   for Representative Bill Hudson and Committee Aide,                                                                           
   House Special Committee on Fisheries                                                                                         
Alaska State Legislature                                                                                                        
Capitol Building, Room 108                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-6890                                                                                                      
POSITION STATEMENT:  Discussed intent of HB 104 on behalf of                                                                    
GORDON BLUE                                                                                                                     
P.O. Box 1064                                                                                                                   
Sitka, Alaska  99835                                                                                                            
Telephone:  (907) 747-7967                                                                                                      
POSITION STATEMENT:  Testified on HB 104.                                                                                       
JOE KYLE                                                                                                                        
Pacific Associates                                                                                                              
234 Gold Street                                                                                                                 
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 586-3107                                                                                                      
POSITION STATEMENT:  Testified in support of HB 104.                                                                            
JERRY McCUNE                                                                                                                    
P.O. Box 372                                                                                                                    
Cordova, Alaska  99574                                                                                                          
Telephone:  (907) 586-2820 (Juneau)                                                                                             
POSITION STATEMENT:  Testified on HB 104.                                                                                       
ACTION NARRATIVE                                                                                                                
TAPE 99-29, SIDE A                                                                                                              
Number 0001                                                                                                                     
CO-CHAIR JERRY SANDERS called the House Resources Standing                                                                      
Committee meeting to order at 1:15 p.m.  Members present at the                                                                 
call to order were Representatives Sanders, Masek, Morgan, Barnes                                                               
and Joule.  Representatives Harris and Kapsner arrived at 1:20 p.m.                                                             
and 1:27 p.m., respectively.  Co-Chair Sanders noted that Co-Chair                                                              
Ogan was attending another meeting.                                                                                             
SJR 20 - SAVE THE BEAVER IN WASH D.C.                                                                                           
CO-CHAIR SANDERS announced that the first item of business would be                                                             
CS for Senate Joint Resolution No. 20(RES), relating to the removal                                                             
of beaver from Washington, D.C.                                                                                                 
Number 0090                                                                                                                     
MEL KROGSENG, Legislative Assistant to Senator Robin Taylor, Alaska                                                             
State Legislature, came forward on behalf of the sponsor to explain                                                             
the resolution, noting that Senator Taylor was in Washington, D.C.                                                              
She recounted how first one and then three beavers had inhabited                                                                
the tidal basin in Washington, D.C., and were gnawing down "alien                                                               
cherry trees" planted there that were in bloom.  Senator Taylor had                                                             
felt that because these beavers apparently had been eradicated from                                                             
the area some years ago, they should be allowed to inhabit the                                                                  
MS. KROGSENG stated, "After all, in Alaska, we've had our timber                                                                
industry shut down to protect various birds, and in other areas of                                                              
the Western states, there have been many projects that have been                                                                
stopped, and people have been removed to protect endangered species                                                             
in those areas."  Acknowledging the somewhat tongue-in-cheek                                                                    
aspect, she said there is a serious situation, where numerous                                                                   
projects have been stopped by the National Park Service.  She                                                                   
concluded, "The feeling is:  If it's good enough for Alaska, then                                                               
it should be good enough for Washington, D.C."                                                                                  
Number 0259                                                                                                                     
REPRESENTATIVE BARNES asked how the beavers may have arrived back.                                                              
MS. KROGSENG replied that from the large amount of information                                                                  
obtained from supporters of the resolution, news articles said the                                                              
National Park Service believes the beavers floated down the Potomac                                                             
River on some brush during a flood.  She added that U.S.                                                                        
Representative Helen Chenoweth of Idaho has asked the U.S. Fish and                                                             
Wildlife Service to begin a study of these animals, to determine                                                                
whether this is a unique subspecies that should be placed on the                                                                
endangered species list.                                                                                                        
Number 0502                                                                                                                     
REPRESENTATIVE JOULE recounted a trip to New York City, where he                                                                
witnessed a gay-rights parade attended by people who were                                                                       
thoroughly disgusted.  He had wondered why, if those people were                                                                
really disgusted, they were at the parade.  He suggested the best                                                               
statement of disapproval would have been not being there.  He                                                                   
equated that situation to this resolution.  Noting the important                                                                
issues that need to be addressed, he concluded, "We don't need to                                                               
be here with this."                                                                                                             
Number 0665                                                                                                                     
REPRESENTATIVE BARNES agreed there are many important issues.                                                                   
However, she believes it is important to make a point to                                                                        
Washington, D.C., she said, that Alaska has important issues                                                                    
relating to the Endangered Species Act and fish and wildlife, for                                                               
example.  While this is a bit tongue-in-cheek, she believes it does                                                             
really send a message.                                                                                                          
Number 0792                                                                                                                     
REPRESENTATIVE BARNES made a motion to move CSSJR 20(RES) from the                                                              
committee with individual recommendations and the attached zero                                                                 
fiscal note; she asked unanimous consent.  There being no                                                                       
objection, CSSJR 20(RES) moved from the House Resources Standing                                                                
HB 203 - AGRICULTURE LOANS                                                                                                      
CO-CHAIR SANDERS announced that the next item of business would be                                                              
2d Sponsor Substitute for House Bill No. 203, "An Act relating to                                                               
loans from the agricultural revolving loan fund; and providing for                                                              
an effective date."                                                                                                             
Number 0904                                                                                                                     
REPRESENTATIVE HARRIS, sponsor, explained that HB 203 attempts to                                                               
help people in agriculture who have borrowed money from the                                                                     
Agricultural Revolving Loan Fund (ARLF).  It would lower the ARLF                                                               
interest rate from 8 percent to 5 percent, to be more in line with                                                              
other lending institutions.  It would also provide guidelines                                                                   
regarding drought affecting agriculture for three years, intended                                                               
to help individuals meet their loan payment schedules.                                                                          
Furthermore, Section 5 provides for $50,000 loans by approval of                                                                
the board.  Representative Harris deferred to Pete Fellman for a                                                                
more in-depth explanation.                                                                                                      
Number 1053                                                                                                                     
PETER FELLMAN, Researcher for Representative John Harris, Alaska                                                                
State Legislature, came forward, noting that he lives in Delta                                                                  
Junction.  Involved in agriculture in Alaska for 12 years, he said                                                              
although agriculture hit bottom in the late 1980s, many farmers                                                                 
have survived.  Not unlike that elsewhere in the world, agriculture                                                             
in Alaska is highly volatile and subject to the climate.  However,                                                              
when the ARLF was instituted, some provisions in statute weren't                                                                
understanding of that volatility.  Therefore, this bill tries not                                                               
only to bring the ARLF in line with other lending institutions, but                                                             
also to make it a little more farmer-friendly.                                                                                  
MR. FELLMAN advised members that the Farm Service Agency (FSA), a                                                               
federal lending agency that has come into Alaska in the last three                                                              
years, has significantly lower interest rates than the ARLF's.                                                                  
Consequently, many [farmers] have turned to the FSA to borrow                                                                   
money, both for annual operations and long-term loans.  That has                                                                
reduced the number of loans made by the ARLF, which may shorten the                                                             
life of the fund.  Mr. Fellman pointed out that the Division of                                                                 
Agriculture's operating funds come from the ARLF, which has a                                                                   
projected life of about five years.  Reducing interest rates could                                                              
affect that.  However, if another drought is suffered in Delta                                                                  
Junction, or another catastrophic event wipes out a crop, the                                                                   
likelihood of farmers' inability to make payments would greatly                                                                 
increase, which could significantly shorten the life of the fund.                                                               
Number 1240                                                                                                                     
MR. FELLMAN told members they are looking at a reduction to no less                                                             
than a 5 percent interest rate.  A provision would also raise                                                                   
emergency loan amounts from $25,000 to $50,000.  Furthermore, there                                                             
is an important provision whereby loans can be restructured.  In                                                                
statute now, a farmer who has a problem for up to three years can                                                               
roll a loan over, although that doesn't reduce the interest rate,                                                               
stop the interest or reduce the principal; after that three-year                                                                
period, there are no options.  In all likelihood, the state would                                                               
lose that money in a bankruptcy court.  What HB 203 does is make it                                                             
possible that if there are three disastrous years out of five, the                                                              
ARLF could restructure loans, thereby saving the state's interest                                                               
in agriculture.                                                                                                                 
Number 1333                                                                                                                     
REPRESENTATIVE BARNES asked what the balance is in the ARLF.                                                                    
MR. FELLMAN said he believes it is $5 million.                                                                                  
REPRESENTATIVE BARNES recounted that when the Delta barley/rape                                                                 
seed project was first before the legislature and the ARLF was                                                                  
enhanced, she believes that farmers had only agricultural rights,                                                               
not fee simple title to the lands.  They therefore could not go to                                                              
a bank to borrow money.  To her recollection, Senator Lyda Green's                                                              
bill had changed that, to where the land is now owned by the                                                                    
farmers in fee simple title.  She asked if Mr. Fellman knows                                                                    
whether that is the case.                                                                                                       
MR. FELLMAN replied, "Somewhat."  He said the changes in Lyda                                                                   
Green's bill, which he believes was SB 109, have not attracted                                                                  
commercial lenders; he knows of only one loan to date by a                                                                      
commercial bank, National Bank of Alaska (NBA), based on those                                                                  
changes.  The intentions were good, he said, and it did change the                                                              
agricultural designation on land.  However, it also attached an                                                                 
agricultural covenant that still ties up many aspects of mineral                                                                
rights, water rights, and so on, and also makes restrictions on                                                                 
buildings.  It has enticed the FSA, however, by making it possible                                                              
for that agency to lend money to farmers.                                                                                       
Number 1495                                                                                                                     
REPRESENTATIVE BARNES suggested that those covenants are similar to                                                             
those for any land in Alaska owned by individuals, because of                                                                   
inability to own the subsurface mineral rights; many subdivisions                                                               
have restrictive covenants, as well.  She said at her last count,                                                               
investments in Delta Junction were in excess of $200 million,                                                                   
perhaps closer to $300 million.  Furthermore, the investment in                                                                 
Point MacKenzie was something like $350 million.  Much of that                                                                  
money has been lost, she stated, and she has serious concerns about                                                             
all loan programs like this.  She further suggested that if farmers                                                             
keep going broke and declaring bankruptcy, this will have to be                                                                 
recapitalized in the future.  She expressed concern about rewriting                                                             
the program to lower the interest rate, and said these people could                                                             
probably borrow money from the banks for the same amount.                                                                       
Number 1612                                                                                                                     
MR. FELLMAN pointed out that the ARLF has received no funding since                                                             
1988.  Although the fund revolves and the payback has been good,                                                                
its life has been shortened by general fund expenditures from the                                                               
ARLF, not by farmers going broke.  He agreed that the state lost                                                                
lots of money, partly, he said, because of restrictions put on land                                                             
clearing and time limits.  He said it has nothing to do with the                                                                
inability to grow barley in Alaska or lack of a market, because                                                                 
there is a market.  Without the general fund expenditures from the                                                              
ARLF, it would be solvent and last indefinitely, he concluded.                                                                  
REPRESENTATIVE BARNES said that begs the fact of what has been put                                                              
into the fund through the years.  She asserted that the barley                                                                  
project in Delta Junction will never be commercially viable outside                                                             
of Alaska because the bison eat most of the barley, although she                                                                
believes there is a market in Alaska.                                                                                           
Number 1745                                                                                                                     
REPRESENTATIVE JOULE asked whether, under the restructuring, a                                                                  
person could take out a series of $50,000 loans in successive bad                                                               
MR. FELLMAN explained that to qualify to restructure under this                                                                 
bill, there would have to be three out of five years of suffering                                                               
a disaster.  After restructuring in any given year, there would be                                                              
three more years before qualifying to restructure again.  There are                                                             
a variety of loans available, including operating loans and                                                                     
so-called chattel loans for equipment and cattle.  Each has a                                                                   
specific limit, and it would be up to that limit.                                                                               
Number 1854                                                                                                                     
REPRESENTATIVE JOULE recalled dealing with loans relating to bad                                                                
years for commercial fishing, and he asked whether the percentage                                                               
rate for those loans is comparable to those under HB 203.                                                                       
MR. FELLMAN said he doesn't know, although he knows that the FSA                                                                
rate is 5 percent, and, in some cases, 3.75 percent.                                                                            
REPRESENTATIVE BARNES told members she had acquired the information                                                             
[from Jerry McCune, who was present].  She said it is 8 percent,                                                                
plus 1.5 percent over the prime rate, whatever that may be.                                                                     
REPRESENTATIVE JOULE suggested that up to this point, at 8 percent,                                                             
they are equal for fishing and agriculture.  He restated concern                                                                
about parity in those two industries.                                                                                           
Number 1999                                                                                                                     
CO-CHAIR SANDERS asked if there were questions or comments, or if                                                               
anyone else wished to testify; there was no response.                                                                           
Number 2034                                                                                                                     
REPRESENTATIVE BARNES made a motion to move 2d SSHB 203 from the                                                                
committee with individual recommendations and attached fiscal                                                                   
notes; she asked unanimous consent.  There being no objection, 2d                                                               
SSHB 203 moved from the House Resources Standing Committee.                                                                     
HB 104 - ENTRY MORATORIA ON PARTICIPANTS/VESSELS                                                                                
Number 2082                                                                                                                     
CO-CHAIR SANDERS announced that the next item of business would be                                                              
House Bill No. 104, "An Act revising the procedures and authority                                                               
of the Alaska Commercial Fisheries Entry Commission, the Board of                                                               
Fisheries, and the Department of Fish and Game to establish a                                                                   
moratorium on participants or vessels, or both, participating in                                                                
certain fisheries; and providing for an effective date."  Before                                                                
the committee was CSHB 104(FSH), heard previously.                                                                              
Number 2125                                                                                                                     
TERESSA KANDIANIS from Kodiak came forward, advising members that                                                               
she and her husband own and operate the F/V Provider, a scallop                                                                 
boat.  She specified that she was also representing the interests                                                               
of John Duty (ph), who owns the F/V Pursuit.  Both boats have                                                                   
fished in the Alaskan scallop fishery for a number of years.  Ms.                                                               
Kandianis spoke in favor of moving HB 104 forward, explaining that                                                              
the state needs a complete set of tools to manage fisheries.  She                                                               
believes that if there had been a tool available to the                                                                         
administration in 1993, when there was a huge incursion of East                                                                 
Coast vessels into the scallop fishery, it would have cut back                                                                  
dramatically on the number of nonresident vessels that entered and                                                              
stayed in the fishery.                                                                                                          
MS. KANDIANIS explained their chief concern:  If the legislation                                                                
were to fail, and the fishery were to revert to open access when                                                                
the current moratorium expires, a number of new vessels would enter                                                             
the fishery again.  Virtually every fishery in the state is limited                                                             
now, and when a new area is opened, people move in, to do so-called                                                             
portfolio building.  She noted that although the fishery is fairly                                                              
limited in Alaska, with only 20 percent occurring inside state                                                                  
waters, those grounds are very important.                                                                                       
MS. KANDIANIS pointed out that the rules since 1993 have managed                                                                
their small fishery conservatively and effectively, more so than                                                                
before that time.  However, with a new influx of vessels in the                                                                 
limited area inside three miles, she believes that the department                                                               
would have a difficult time managing it.  If the department closed                                                              
the area inside three miles, for example, that would be disastrous                                                              
for the fishermen.                                                                                                              
MS. KANDIANIS said they are barely making it now, especially since                                                              
1995, when the Mr. Big incident closed the entire fishery for about                                                             
18 months.  They are waiting for the fishery to settle down, and                                                                
for some of the conservation tools to bring the resource back up.                                                               
They are also learning to fish more wisely and more conservatively,                                                             
she indicated, to be able to break even with their vessel again.                                                                
MS. KANDIANIS pointed out that theirs is a highly specialized                                                                   
fishery.  If there is another influx of boats, the owners will                                                                  
probably mostly be nonresidents, and she believes that what                                                                     
happened in 1993 would happen again.  She emphasized that those in                                                              
the fishery the longest don't have "deep pockets" and couldn't wait                                                             
it out as well as some who are merely portfolio building, or who                                                                
want to "get a leg into the fishery" and then ultimately get                                                                    
something out of it.                                                                                                            
MS. KANDIANIS told members that both boats and crews have become                                                                
specialized.  Their crews have spent 25 years in this fishery, and                                                              
although highly skilled, they don't know how to do other fisheries.                                                             
She asked for consideration that HB 104 provides another two years                                                              
to get a permanent system in place, to replace this temporary                                                                   
moratorium and to let this fishery survive.                                                                                     
Number 2404                                                                                                                     
REPRESENTATIVE BARNES said she has looked at the list of boats                                                                  
holding permits in that fishery, and the lion's share of owners                                                                 
live outside of Alaska.  She emphasized that she won't support                                                                  
anything that allows Alaska's resources to be controlled by people                                                              
outside the state.  She suggested that there are many ways to                                                                   
manage under the sustained yield principle without establishing a                                                               
moratorium that grandfathers in all of these out-of-staters.  She                                                               
will oppose this bill going out of committee, she said, and will                                                                
oppose it on the floor.  She added that she had supported the first                                                             
moratorium, and she believes that lasted long enough to get this                                                                
fishery under control.                                                                                                          
MS. KANDIANIS responded that if the Commercial Fisheries Entry                                                                  
Commission (CFEC) had had a tool in 1991, when boats first started                                                              
heading to Alaska from the East Coast, all those out-of-staters                                                                 
wouldn't be on the list.  She emphasized that there is nothing she                                                              
can do about what already happened.  However, she asks that the                                                                 
legislature give the scallopers another couple of years, because                                                                
the moratorium's expiration will make the fishery unmanageable                                                                  
inside three miles, and more nonresidents will come in.  The people                                                             
who will go bankrupt will be Alaska residents who don't have deep                                                               
REPRESENTATIVE BARNES restated that the Board of Fisheries is                                                                   
charged by the legislature to manage those resources under the                                                                  
sustained yield principle, which she believes they must do through                                                              
limiting the harvest amounts, making it more difficult for                                                                      
out-of-state boat owners to come to Alaska to harvest the resource.                                                             
She said she is tired of Alaskans' paying to manage the resources                                                               
through the Department of Fish and Game (ADF&G), while nonresidents                                                             
reap the benefits.  She restated concern that by allowing another                                                               
moratorium, they will be in the same place after another two years.                                                             
Number 2601                                                                                                                     
MS. KANDIANIS replied that she didn't want to be back here.  She                                                                
noted that the board made some major conservation changes in the                                                                
fishery; it is 100 percent observer-covered, and there are very                                                                 
restrictive TACs [total allowable catches] and bycatch limits.                                                                  
Furthermore, the industry has voluntary programs to monitor the                                                                 
fishery and bycatch.  "If a permanent system were in place now,                                                                 
that would be our preference," she concluded.  "But it's not, and                                                               
the only other alternative is this expires and it goes back to open                                                             
Number 2648                                                                                                                     
LIZ CABRERA, Researcher for Representative Bill Hudson and                                                                      
Committee Aide, House Special Committee on Fisheries, Alaska State                                                              
Legislature, came forward on behalf of the sponsor to clarify what                                                              
the bill does or doesn't do.  First, it doesn't establish any                                                                   
moratorium for any fishery, she said.  The scallop fishery                                                                      
moratorium, for example, was established by the legislature several                                                             
years ago.  And second, it doesn't extend a moratorium.  Rather, it                                                             
gives the CFEC the authority to extend a moratorium, if necessary.                                                              
REPRESENTATIVE BARNES responded that if this is passed, the new                                                                 
moratorium will be adopted the day after it is signed into law.                                                                 
Number 2688                                                                                                                     
MS. CABRERA explained that part of the reason for the extension is                                                              
that when the legislature passed the moratorium on scallops, they                                                               
did it as a vessel-based limited entry.  However, the CFEC doesn't                                                              
have authority to limit a fishery based on vessels.  Therefore, the                                                             
legislature has to pass another statute establishing a vessel-based                                                             
program, but it hasn't done that.  As the moratorium ends, this                                                                 
bill is an effort to prevent that fishery from going into open                                                                  
access before new statutes are put into place.                                                                                  
REPRESENTATIVE BARNES stated her belief that there is enough                                                                    
limited entry in Alaska's fisheries now.  She said the boards                                                                   
should find a better way to do it.                                                                                              
Number 2787                                                                                                                     
GORDON BLUE from Sitka came forward, noting that he is co-owner and                                                             
manager of two vessels that fish Korean hair crab in the Pribilof                                                               
Islands; he sometimes operates those boats, as well.  He said the                                                               
vessels are "partners with the community development quota holder,                                                              
the association for Saint Paul Island, Central Bering Sea                                                                       
Fishermen's Association, and with the village Native corporation,                                                               
the TDX Corporation."  Mr. Blue explained that the fishery for                                                                  
Korean hair crab takes place almost entirely in the waters around                                                               
Saint Paul Island, so it is very much of interest to the locals                                                                 
there.  He stated:                                                                                                              
     We came to you several years ago and asked you to establish a                                                              
     bill for limited entry for these fisheries, to try to help                                                                 
     protect us and others in the fisheries.  We also were very                                                                 
     cognizant of the desire of people on Saint Paul to try to                                                                  
     develop a small-boat fishery for the area.  Unfortunately, the                                                             
     biology of the crab is such that they've been unable to do                                                                 
     that, because when the crab are in a fishable condition, it's                                                              
     winter months, and that's definitely not a time or a place                                                                 
     where small boats can be utilized.  So, they've done the                                                                   
     next-best thing and participate in these vessels with us.                                                                  
     I hear the passion in Representative Barnes' position, and the                                                             
     statement ..., by and large, I agree with.  I also support the                                                             
     fisheries that we develop bringing the most benefit to us in                                                               
     this state. ...                                                                                                            
     In 1981, my vessel, the Ocean Cape, made some of the first                                                                 
     deliveries of brown king crab from the Dutch Harbor area.  And                                                             
     we stayed with that fishery until 1989.  In the interim, we                                                                
     fished in Dutch Harbor and the Aleutian Chain, helped to                                                                   
     develop the techniques that are used there to fish nowadays,                                                               
     using longline/pot systems, and so forth.  And the vessel is                                                               
     a hundred-foot vessel, and by 1989 we were run out by larger,                                                              
     better-financed operations, most of them from outside the                                                                  
     We moved our operation to the Pribilofs, and in 1990 we - with                                                             
     one other vessel, which was owned in-state at that time -                                                                  
     helped to develop this hair crab fishery which is under                                                                    
     discussion today.  We two vessels, I think were the only ones                                                              
     in '91 that actually targeted that fishery.  '92, the fleet                                                                
     began to build up a bit, and by the time there were 12 vessels                                                             
     involved, about half of them were actually Alaskan-registered                                                              
     and Alaskan-owned vessels.                                                                                                 
     What happened then is pretty illustrative of ... the features                                                              
     of our fishery management system ... that frustrate us.  We                                                                
     had a big influx of boats, most of them larger,                                                                            
     better-financed, and from outside the state.  Now, these boats                                                             
     came into the fishery because we were making some money at it.                                                             
     And so, it was a very attractive opportunity.  By the time                                                                 
     there were 22 boats, we'd hit a critical ... [ends mid-speech                                                              
     because of tape change]                                                                                                    
TAPE 99-29, SIDE B                                                                                                              
[Numbers run backwards because of tape machine]                                                                                 
MR. BLUE reported that during the time in which all this effort                                                                 
built up, a number of in-state vessels left the fishery.  Two sank:                                                             
one, the Pacesetter (ph), sank with all hands, and one sank en                                                                  
route to Kodiak.  As far as he knows, the moratorium permits are                                                                
still in the estates, he added.  In addition, one of the two                                                                    
vessels that helped start the fishery was bankrupted because of                                                                 
being a smaller, less competitive vessel.                                                                                       
MR. BLUE noted that a major fishery involving the Bering Sea crab                                                               
fleet is the Opilio crab fishery, with harvests of up to 333                                                                    
million pounds.  In contrast, the hair crab fishery has had a                                                                   
maximum harvest of 1.8 million pounds.  "Real small potatoes," he                                                               
said.  "When you get this huge influx of effort, represented by                                                                 
only 22 to 25 vessels, it overwhelms that resource."  He pointed                                                                
out that there have been diminishing catches, even during the                                                                   
moratorium.  They support a vessel limited entry bill that would                                                                
establish a reasonable-sized fleet and also stabilize it.  He                                                                   
believes it is necessary to reduce the number of vessels for a                                                                  
long-term sustainable fishery, and such a bill would enable that to                                                             
occur.  There is no tool to do that today.                                                                                      
MR. BLUE mentioned efforts through the Board of Fisheries, as well                                                              
as trying to resolve these sorts of difficulties for the federally                                                              
managed fisheries, and stated, "We've been getting trashed."  He                                                                
would love to see the state maximize the benefits from this, he                                                                 
said, but doesn't know how.  He requested help in this endeavor,                                                                
asking for suggestions if a moratorium won't do it.  He pointed out                                                             
that a moratorium is not intended as a long-term solution; it is                                                                
just a freeze while they try to work out details of vessel limited                                                              
entry or whatever program will establish this stability.                                                                        
MR. BLUE told members there aren't too many fisheries left to                                                                   
develop out there.  He recounted going after a sea snail fishery,                                                               
using pots, in the mid-1990s, noting that it had been self-limiting                                                             
because of a weak market.  He concluded:                                                                                        
     I don't know what utility this general moratorium may have in                                                              
     the larger scheme of things, but I know, from my experience,                                                               
     that had we had it, we would have well-managed, stable                                                                     
     fisheries in the interim to a more permanent solution.  And                                                                
     so, I share your frustration, and ... rather than propose any                                                              
     particular solution, I ask you to help us to solve that.  I                                                                
     think this is, in prospect, one of the tools that may do that.                                                             
     But without it, I despair.                                                                                                 
Number 2787                                                                                                                     
REPRESENTATIVE BARNES responded that rather than making a bad                                                                   
situation worse, the committee ought to invite the ADF&G to the                                                                 
Capitol to sit down and work out a plan that will not grandfather                                                               
in all of these out-of-state boats.  She restated her earlier                                                                   
concerns, saying there must be another way around it.                                                                           
MR. BLUE replied that he would welcome that, and would love to                                                                  
participate in that process, should it occur.  He would also like                                                               
to see, when they go out there with their boats to try to develop                                                               
the next little niche fishery, a rule in place that will help keep                                                              
it for Alaskans, which he believes this bill will accomplish.  He                                                               
acknowledged that the bill won't roll back the damage already done                                                              
to these fisheries.                                                                                                             
REPRESENTATIVE BARNES reiterated her concern that continuing these                                                              
moratoriums will give nonresidents increasingly stronger footholds                                                              
in the fisheries.                                                                                                               
Number 2698                                                                                                                     
MR. BLUE agreed.  "That's not what we're asking for with our                                                                    
vessels," he added.  "What we're asking is when we do the next                                                                  
fishery development project, we have protection in place, so that                                                               
you can put the brakes on when the time arrives.  And we're asking                                                              
that you solve this other problem with the hair crab and the                                                                    
scallop fisheries, possibly through a vessel limited entry bill,                                                                
such as the one that has been introduced in the Senate."  He said                                                               
there are two separate problems.                                                                                                
Number 2650                                                                                                                     
JOE KYLE, Pacific Associates, came forward.  He said he represents                                                              
quite a few fishery clients, primarily who work in the "federal                                                                 
fisheries."  Although a voting member of the North Pacific Fishery                                                              
Management Council, he specified that he wasn't speaking on the                                                                 
council's behalf.  As "an Alaska resident who happens to have a lot                                                             
of interest and insight into the way the federal fisheries are                                                                  
managed," he sees this bill giving the CFEC the tools to keep what                                                              
Representative Barnes is concerned about from occurring in state                                                                
water fisheries.                                                                                                                
MR. KYLE explained that right now, the major problem in fisheries                                                               
throughout the world is overcapitalization; there is way too much                                                               
effort out there.  That is happening in the federal fisheries, and                                                              
those participants are looking for other places to go, including                                                                
state water fisheries.  Likewise, some nearshore state water                                                                    
fisheries in Oregon and Washington are being shut down and "pushed                                                              
out," and those participants are starting to come to Alaska to get                                                              
into new and emerging state water fisheries here.                                                                               
MR. KYLE stated that while this bill has something in it about the                                                              
hair crab and scallop moratoriums passed a couple of years ago, the                                                             
main thrust is preserving the state water fisheries for small-boat                                                              
Alaska operators, before the influx from out of state occurs.  He                                                               
believes the legislature needs to give the ADF&G and the CFEC this                                                              
tool to manage the nearshore state water fisheries, to close the                                                                
door before it is too late.  He urged that HB 104 be moved out.                                                                 
Number 2554                                                                                                                     
REPRESENTATIVE HARRIS noted that he had heard this in the House                                                                 
Special Committee on Fisheries, as well.  He expressed his                                                                      
understanding that under this bill, a moratorium established now                                                                
may be extended for two more years.  However, after that there can                                                              
be no moratorium for five years.  He asked if that is correct.                                                                  
MR. KYLE said that is how he understands the bill.                                                                              
REPRESENTATIVE HARRIS asked if Mr. Kyle believes that two years is                                                              
enough time.                                                                                                                    
MR. KYLE responded that the Board of Fisheries and the ADF&G                                                                    
certainly have their hands full in being able to do that.  "My                                                                  
short answer is yes," he added.                                                                                                 
REPRESENTATIVE BARNES stated that the answer to Representative                                                                  
Harris is that one legislature cannot bind another.  Therefore, it                                                              
isn't true that it couldn't be done again for another five years.                                                               
Number 2445                                                                                                                     
JERRY McCUNE came forward.  He recounted how he had pioneered the                                                               
herring gillnet fishery in Cordova, pointing out that in such                                                                   
cases, word soon gets around that there may be limited entry on a                                                               
fishery, or that a fishery is a potential money-maker.  Therefore,                                                              
there is a big influx of people.  He emphasized the need for the                                                                
ability, whether vessel-based or person-based, to close these small                                                             
fisheries off quickly enough so that resident-owned boats are                                                                   
included, but before outside boats can get there.  Unfortunately,                                                               
in the scallop fishery the big boats jumped in, and now it will be                                                              
difficult to resolve.  He suggested that without a moratorium, the                                                              
scallop fishery won't be able to function with that amount of                                                                   
boats, which will also cut out state residents.                                                                                 
Number 2312                                                                                                                     
REPRESENTATIVE BARNES responded that, admittedly, the board might                                                               
have to close it to everybody for a short time, but they could                                                                  
limit who comes back into it, by limiting the size of boats coming                                                              
into the fishery, for example, once these permits are no longer                                                                 
valid under the moratorium.                                                                                                     
MR. McCUNE replied that it depends on how the program is structured                                                             
by the CFEC.  He agreed that those large-boat owners may perhaps                                                                
lose interest if it closed, leaving a handful of locals to reenter                                                              
the fishery, which could then be closed again quickly.                                                                          
REPRESENTATIVE BARNES restated her earlier concerns about managing                                                              
the fishery for primarily out-of-state operators.  She also                                                                     
restated the desire to get with the ADF&G to find a way to manage                                                               
these programs for the benefit of Alaskans first.                                                                               
MR. McCUNE said he is all for that.  He again emphasized the need                                                               
to close off developing fisheries fast enough so that residents                                                                 
retain "ownership" within the three-mile limit.                                                                                 
Number 2112                                                                                                                     
CO-CHAIR SANDERS asked if anyone else wished to testify.  He                                                                    
announced that HB 104 would be held over.                                                                                       
There being no further business before the committee, the House                                                                 
Resources Standing Committee meeting was adjourned at 2:22 p.m.                                                                 

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